Saturday, August 08, 2015

Relax our borders, reap the benefits — and help millions who want a better life

Millions of people around the world are seeking a better life elsewhere.  Australia should help by relaxing our migration restrictions.

Debating the intricacies of contemporary policy issues makes us lose sight of the fact that what often shapes disagreement and discord is a fundamental tension between the interests of the individual and of the state.

This is true for conceivably every area of policy today, certainly on questions of economic, fiscal, political or social reforms, and a good example is in immigration.

At any given moment, millions of people are seeking to move to another place in the world for numerous reasons, such as securing better economic prospects, improved living standards or a safe haven that removes the threats of discrimination and persecution.

But many people's ability to move freely across political borders is constrained, and often negated, by governments' immigration policy restrictions, for the sake of such things as national security or ensuring that residents maintain stable employment and other economic conditions.

Governments have also justified restricting the entry of migrants on unconscionable race-based grounds, as was so long the case for Australia with its discriminatory white Australia policy.

Australia might now have officially a race-blind immigration policy but this is, in truth, a large step removed from a genuinely non-discriminatory immigration policy, in which restrictions on migration are deservingly relegated to the policy dustbin.

The Commonwealth government enforces a mind-boggling number of visas to control who arrives in Australia, and the obligations and restrictions they are placed under when they arrive.  Many of the visas limit the amount of time people can stay in this country, while the working-visa categories tend to privilege "skilled workers" on conditions nominated by politicians and bureaucrats, with little regard for changing market circumstances.

Of course, Australia maintains heavy restrictions against the entry of refugees, including quotas on the number of people classed as refugees who can arrive here and, controversially, detaining people without the desired official paperwork for long periods.

It certainly appears that our prescriptive immigration regulations garner the support of certain interest groups, such as unions, which demonise foreign workers for having the temerity of working here and contributing to our productive capacity.

Sadly, some voters are at times receptive to xenophobic fear-mongering that Australia risks being "swamped" by future waves of migrants — those allegedly wicked masses who, in truth, are simply our co-workers, friends, even loved ones we just haven't met yet.

That these claims and others, such as migrants adding to infrastructure congestion or milking the welfare state, still hold political sway is unfortunate, because tearing down the walls that are national borders would yield immense benefits for individuals, families and for all humankind.

A 2011 study by American economist Michael Clemens showed the gains from eliminating migration barriers dwarf the gains from eliminating barriers against the cross-border flows of goods or capital.

Removing all barriers to capital flows would raise global GDP by between 0.1 per cent and 1.7 per cent, and removing all barriers to merchandise trade would increase GDP around the world by between 0.3 per cent and 4.1 per cent.

Removing such restrictions would be most welcome for a world struggling under the weight of flagging economic growth, but eliminating all barriers to labour mobility would be estimated to increase global GDP by between 67 per cent and 147.3 per cent.

Allowing people to move freely for work that yields the highest value is therefore enormously beneficial, potentially doubling the world's output and eviscerating global poverty in the process, which should elevate reducing immigration obstacles to becoming the iconic global reform movement of our age.

The benefits accruing to individuals from less restrictive immigration controls should also prove to be substantial, with migrants able to work their way out of poverty in their freely chosen destination country and send remittances to family back home.

The World Bank estimated that the total value of remittances worldwide was a little over $US583 billion last year, with remittances to developing countries accounting for almost three-quarters of the total.  Opening up borders, enabling more migration to economically attractive destinations, should greatly enhance these flows.

There is also plenty of upside for existing residents in countries that would open their borders, not least because migrants contributing to production processes would increase national production, thus raising material living standards for the benefit of all.

And the lobbyists agitating for governments to grab more revenue should salivate over opening the borders, given more people means a larger taxable base for funding the likes of economic and social infrastructure projects.  Incidentally, with businesses forever crying out for more labour, having more people here, courtesy of immigration, should help with the development of extra infrastructure.

Also, consider that the economic benefits from open borders understate the total gains that existing residents may accrue, given the obvious benefits to quality of life associated with a co-mingling of people from all corners of the world, each engaging in their own experiments in living.

Cynically playing the nation-state card to foment damaging "us versus them" agitations against migrants should become a relic of the past, too, thus promoting a greater sense of social harmony.

As well as the economic disadvantages of restricting immigration, the case against opening our borders is also perplexing in that it is inconsistent with observed practices elsewhere.  After all, we rightly extol the clear economic and social benefits of moving freely within a nation-state, either from city to city or from state to state, and our policies also reflect a desire to free up the movement of capital and goods.

Australia proudly proclaims itself to the world to be an immigration nation, with the last two centuries most assuredly grounded in the influx of people from all corners of the earth.  To truly honour those sentiments, we should relax our remaining restrictions against the inbound movement of people, even if no other countries follow our lead, and reap the significant benefits from doing so.


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