Copyright 2007 The Economist Newspapers Ltd. All Rights Reserved The Economist. January 13, 2007 U.S. Edition

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1 Page 1 of 2 Home Sources Site Map What's New Help Search Terms: trade, globalisation FOCUS Search within Edit Search Document List Expanded List KW FUL Pri E-M Document 5 of 41. SECTION: BOOKS & ART LENGTH: 782 words HEADLINE: Waves of fear; Immigrants BODY: Copyright 2007 The Economist Newspapers Ltd. All Rights Reserved The Economist January 13, 2007 U.S. Edition In a controversial new book a British economist asks why so many people are against the free movement of labour This article contains a table. Please see hard copy. FOR years now, free trade and free movement of capital have been respectable economic tenets, espoused if sometimes reluctantly by most politicians. But no sane politician in the rich world would advocate free movement of labour. As aresult, most people are trapped in theirnative lands, never likely to have a legal opportunity to see the world outside. Philippe Legrain, a liberal economist who once worked for The Economist, has already written a book stoutly defending globalisation. Now he takes on an even more emotive subject. There is not a shadow of doubt about his own views. He wants open borders. He believes that they will, on balance, enrich both sending and receiving countries; he thinks diversity generally makes life more interesting; and he detests bureaucratic restrictions on human freedoms. "Immigrants are not an invading army," he points out. "They come in search of a better life. They are no different to someone who moves from Manchester to London, or Oklahoma to California, because that is where the jobs are. Except that a border lies in the way." Mr Legrain has assembled powerful evidence to undermine the economic arguments against immigration. In the case of skilled migrants, that is relatively easy. But the migrants who arrive in the back of lorries and huddled in small boats are unskilled. For them, there are hardly any legal tracks across borders. Yet, argues Mr Legrain, they too bring economic benefits and do "little or no harm" to the wages or employment prospects of native workers. As for the economic impact on sending

2 Page 2 of 2 countries, many now gain more from remittances than from official aid or inward investment. He quotes approvingly a government minister from the Philippines who says: "Overseas employment has built more homes, sent more children of the poor to college and established more business enterprises than all the other programmes of the government put together." Mr Legrain makes a robust economic case though he surely understates the impact of immigrants on holding back the pay of the poorest, often themselves the children of immigrants. He is more successful at rebutting the argument that taxpayers give willingly only to those with whom they feel some kinship and that immigration, therefore, jeopardises support for the welfare state. A willingness to pay taxes to support the poor is independent of levels of immigration, he shows. Less convincing are his proposals for encouraging immigrants to go home after a period of working abroad. If immigration were temporary, he reasons, people might tolerate it more readily. So why not get immigrants to post a bond on arrival, say, or have a portion of their wages withheld until they leave? The trouble with such ingenious ideas is that immigrants from the world's poorer countries have many reasons to stay overseas, especially in Europe or America. The financial gains are huge, but they are by no means the only rewards. Life is much easier where there is the rule of law, less petty corruption and a better health-care system than exists at home. But hostility to immigration is not just, or indeed mainly, about economics. It is based on fear of change and on racism. It has also, since the World Trade Centre attacks, been based on growing worries about Muslim terrorism. Such anxieties are not easily assuaged by economic logic. It is striking, for example, how little serious protest there was in Britain at the absorption of over 500,000 east European immigrants in the two years after Poland and nine other countries acceded to the European Union in May Surely at least one reason was that these white Christian Europeans look and (seem to) thinkextraordinarily like most British people, and their children and grandchildren will be distinguishable only by their unpronounceable names. By contrast, many Muslim immigrants and their children have become more estranged, not less. Their ambivalence towards the West and its secular liberalism has appeared to grow, not diminish. It is, of course, wholly unreasonable to see most Muslims as potential terrorists but reason may not have much chance here. So no government in the rich world is likely to open its borders to all comers, as Mr Legrain urges. For politicians, the tricky question is who to let in. And how to define a coherent policy? The harsh truth is that voters find it easier to accept immigrants who look and behave as they do than those who are different. That, as a basis for policy, still leaves most of mankind outside the gates. GRAPHIC: Immigrants: Your Country Needs Them. LOAD-DATE: January 11, 2007 Terms and Conditions Privacy Copyright 2007 LexisNexis, a division of Reed Elsevier Inc. All Rights Reserved. Document 5 of 41.

3 Page 1 of 3 Home Sources Site Map What's New Help Search Terms: trade, globalisation FOCUS Search within Edit Search Document List Expanded List KW FUL Pri E-M Document 33 of 41. SECTION: FINANCE & ECONOMICS LENGTH: 979 words HEADLINE: Be my guest; Economics focus HIGHLIGHT: Economics focus: Temporary migration BODY: Copyright 2005 The Economist Newspapers Ltd. All Rights Reserved The Economist October 8, 2005 U.S. Edition The economic case for temporary migration is compelling; the historical record less so LABOUR is globalisation's missing link. The flow of workers across borders is heavily impeded, leaving the global market for labour far more distorted than those for capital and commodities. The world price of capital may be set in America, and that of oil set in Saudi Arabia. But there is no such thing as a world price of labour. Wages can differ by a factor of ten or more depending only on the passport of the wage-earner, according to Dani Rodrik, an economist at Harvard. Relaxing the movement of labour even a little would thus generate large efficiency gains. Mr Rodrik calculates that letting poor workers into rich countries, in modest numbers (equivalent to 3% of the hosts' labour force) for a limited period, could reap benefits to the developing world worth $200 billion a year. With numbers like that, he and other economists wonder why so much energy is spent freeing trade and capital, and so little expended freeing labour. As if in answer to that rebuke, Kofi Annan, the secretary-general of the United Nations, set up the Global Commission on International Migration almost two years ago. The commission, 19 members of the great and good from around the world plus a secretariat in Geneva, was charged with inspiring debate and reflection on all aspects of international migration and policy. On October 5th, it published its report.

4 Page 2 of 3 Of its 33 recommendations, the most consequential is indeed a call for more temporary migration from poor countries to rich ones. Guest-worker programmes would realise some of the efficiency gains identified by Mr Rodrik. Opening up new avenues of legal migration might also help reduce the flow of illegal migrants, the report hopes. As the commission acknowledges, history lends little support to their optimism. The Gastarbeiter programme in Germany-which invited Turks, Yugoslavs and others needed at the time to fill the factory jobs created by the country's post-war economic miracle-failed, at least on its own terms. Many of Germany's "guests" never left, and their families soon arrived. The bracero programme in Americawhich, from 1942 to 1964, recruited Mexican field hands to pick cotton and sugar beets in Texas and California-fared no better. The entry of hundreds of thousands of farm workers provided camouflage for a substantial flow of undocumented labour. Nonetheless, the logic of temporary migration appears irresistible. Rich countries want migrants' labour, but do not want to look after these newcomers when they grow old. Ideally, rich countries would like a constant rotation of workers, arriving while they are young and active, leaving before they grow old and dependent. For its part, the commission argues that "temporary and circular migration" is also better for poor countries. One reason is remittances: the longer an immigrant stays away from home, the smaller the share of his wages he sends back. If temporary worker programmes make a comeback, how should they be designed? In a paper written for the commission, Martin Ruhs, of Oxford University, explores the options. Some countries set a simple quota, filled on a first-come, first-served basis. The British government is more calculating, allocating visas to specific sectors, such as food processing, that express a need for cheap labour. Singapore is the most ambitious. Its ministry of manpower sets "foreign worker levies" that employers must pay to hire an immigrant. The levies differ by industry and by skill. To hire a skilled foreigner in construction, for example, an employer must pay S$80 ($47) a month. To hire an unskilled migrant, the employer must pay S$470. With these levies, the ministry can fine-tune the demand for immigrant labour. Governments often claim they want to tailor rules on immigration to the needs of the economy. But the economy's needs also adapt to those rules. Philip Martin, of the University of California, Davis, and Michael Teitelbaum, of the Alfred Sloan Foundation, provide two striking examples. California's ketchup industry relied heavily on Mexican braceros to pick its tomatoes in the 1960s. The industry insisted it could not survive without these cheap hands. But when the bracero scheme was ended in 1964, farmers replaced the migrants with machines. Engineers invented a harvester that could shake tomatoes from plants and distinguish red fruit from green. Crop scientists developed new, ovoid tomatoes that the machines found easier to handle. In Germany, Mr Martin and Mr Teitelbaum argue, the same phenomenon happened in reverse. The availability of cheap guest-workers in German factories slowed the adoption of new labour-saving technology. As the saying went at the time: Japan is getting robots while Germany gets Turks. Some economists argue that governments should simply set a quota of visas and auction them. Alternatively, they could set a price for the permits designed to achieve more or less the same number of sales. The principal virtue of both schemes is that they allocate visas according to private perceptions of their worth, not government guesses about need. How can governments ensure that guest workers do not overstay their welcome? In South Korea, temporary workers contribute to a special account that is refunded to them if they leave on time and forfeited if they linger. The British government is thinking of asking some migrants to post a bond, like

5 Page 3 of 3 a defendant on bail, which they will lose if they choose not to return. If the economic gains to migration were not so great, the huddled masses would not be so reluctant to leave the rich world when they get there. "There is nothing more permanent than temporary migration," cynics always say. But equally persistent are the market forces and demographic pressures that make temporary migration worth considering anew. LOAD-DATE: October 6, 2005 Terms and Conditions Privacy Copyright 2007 LexisNexis, a division of Reed Elsevier Inc. All Rights Reserved. Document 33 of 41.