Romesh Vaitilingam interviews Ian Goldin for Vox

May 2011

Transcription of a VoxEU audio interview [http://www.voxeu.org/index.php?q=node/6608] 

Romesh Vaitilingam:  Welcome to Vox Talks, a series of audio interviews with leading economists from around the world. My name is Romesh Vaitilingam and today's interview is with Professor Ian Goldin, director of the Oxford Martin School at the University of Oxford and coauthor with Geoffrey Cameron and Meera Balarajan of a new book, called Exceptional People: How Migration Shaped Our World and Will Define Our Future. Ian and I met in Oxford in May 2011, and we began our conversation by talking about the front and end papers of the book. These have a particularly personal touch, with maps of the world showing the passages of Ian's maternal and paternal ancestors.

Ian Goldin:  Yeah, this is a great new product of technological progress, that we can all map our genomes. I did mine for about $100 each side, paternal and maternal, so it wasn't an enormous amount of money. It's a great way of proving that we're all Africans because, of course, everyone in the world will trace back to our ancestors in Africa 100,000 years ago or so. I think it serves to really illustrate the point, and certainly the track of my genome, through the Fertile Crescent into parts of what are now northern India, across northern Europe into western Europe really demonstrates to extent to which we are the product of very long migrations. Humans have always had a very strong migratory impulse, and if we didn't have that, of course we wouldn't be around. It's been the reason why we have survived and thrived as a species, because we have had this ability to adapt to very different geographical, climatic, and other zones.

But it's also been the reason why we have advanced so rapidly economically. It's because we diversified into different parts of the world and then, through migration, came together and were able to leapfrog ideas. The great renaissances, the great leaps forward in economic progress, have been associated with this coming together. And of course, when Islam and Christian civilizations met, you had this classical coming together, but also through the voyages of discovery and through many epochs.

It's not to say that these were necessarily happy events, and obviously groups were decimated by disease and for other reasons in this process. Some of it was excruciatingly painful for the individuals concerned, both those that voyaged and those that were confronted with the new colonial and other forces. But there's no doubt that in a long sweep it's what accounts for progress.

What the book argues when we focus on the present is that this remains the driving force of economic progress, and will do into the future. What is absolutely crucial is that we don't suffocate the lifeblood of innovation and dynamism in economies. That is not only through migration of skilled people but crucially of unskilled as well. What we show in the book with the analysis of labor markets and demography, particularly looking forward over the next 40 years, is that both skilled and unskilled migration is going to remain absolutely essential.

It is no accident that the US developed a very vibrant economy over a very sustained period of time through migrants. That's the reason it is what it is. It is a society of migrants. Parts of Europe, of course, have seen a mass exodus as have other parts of the world: a third of Scandinavia, a third of parts of Italy, athird of the Irish population leaving. If they hadn't, they would have been in dire poverty and many of them would have starved.

It's always been the escape from poverty for people. It's always been the escape from persecution. One of the reasons why we see these pockets of poverty in the Sahel and in other parts of the world is because people are trapped by passports and geography. This is a new phenomenon. It's only really been so ubiquitous and effective over the last 100 years or so. And is a startling asymmetry to what's happened in dimensions of economic life. Of course, the classical economists like Smith and Mill were very clear in their minds that the free movement of labor was part of what was necessary for the creation of markets, wealth, and prosperity. Both of them also argued it on moral philosophy grounds, as an ethical part of the development of markets.

What's happened in practice is that as markets have developed, this vital dimension has been left out. One of the ironies, for me, of the new neoclassical economic literature is that while people are aggressively in favor of markets, they're aggressively often anti free movement of labor.

Trade is all very well. Capital liberalization is seen as a tremendous thing, but labor markets? No. And there's a real imbalance in this with, I think, extremely negative consequences.

So we enter the 21st century in this bizarre situation where we've seen the gains from trade. I think economists are pretty clear in their minds about the trade story and on the capital story. In both of them I think the pendulum has swung from the belief in completely free trade liberalization or capital market liberalization towards a progressive realization of that objective, but with policy interventions which smooth the path, in particular the transition path, and also build a degree of domestic resilience. But if you look at the absolute scale of flows and decline of the barriers, there's been enormous progress.

Organizations like the WTO, and the IMF, and the BIS, and others have come into existence to help manage this at the global level with global legitimacy and authority, and some executive power. But there's no equivalent on labor, so we're very much like we were with trade over 50 years ago. The data on migration are abysmal. There's no global balances. There's no agreement on what we mean by migration. In this book, I'm talking about cross‑border migration, but some countries class students as part of that. Others don't. Some say you have to be there for a year. Others it's a month, and so forth. And there's no international regime. There's no international migrational organization that includes all countries and that has UN authority.

Romesh:  How can we get to the stage of establishing some kind of international migration organization along the lines of the WTA for trade, and the IMF and the BIS for finance?

Ian:  There is something called the International Migration Organization, but it is an organization that's been built up by voluntary membership of countries, and excludes a number of important countries, and does not have authority. The whole reason why we believe in rules-based organizations is to create transparent rules which, when the umpire blows the whistle, even the big boys know it's time to behave. What you don't get in voluntary organizations is that authority and transparency. Legitimacy, as well, that comes with it. What we need to ensure is that we build this through a UN-type of structure that has that authority. Whether the IMO morphs into that is something which I think is certainly a very good thing to think about.

It needs to have authority on data. It needs to have authority on driving a progressive realization of an agenda towards a freer movement of labor. That is a major stumbling block, because the way it is now, the big counties decide what they want to do like they used to on trade, and then reverse their decisions when it suits them. So we need a progressive realization with negotiated goalposts, and, of course, it needs to be harmonized with some of the other regimes.

On refugees, there is a structure at the UNHCR, High Commission on Refugees. The problem there is burden sharing. As we see now with people leaving north Africa, we need to recognize that migration can be a major burden on communities for economic and social, cultural, political reasons.

For me, this is not a reason to discourage migration. This is a reason to ensure that there's a grown up conversation about it and burden sharing. In other words, it is not right that Malta or a small town in the south of Italy becomes, because it happens to be closest and an entry point for migrants, becomes a place that carries the world's burden on this. I think the European Union should insist on much broader, for example, burden sharing and that the refugees should be distributed to different countries, and that when they are distributed the countries should make every effort to ensure that they're properly treated and assimilated.

The real problem now is that countries decide politically whether they like this particular group of refugees or don't, and it ends up being a lot of arm-twisting in a rather ad hoc manner. At the national level, it's also the case, so I'm very much in favor of more migration, but I also believe that this should be something which is recognized as a national policy thing.

So it should not be the case that Slough, which happens to be near Heathrow Airport, has a disproportionate burden in its schools and its other parts of the system, for example, in the UK, of migrants. So I think this is a recognition that migrants contribute much more than they take out of an economy in the short term and in the long term even more so, because of the dynamic ends associated with migration.

And that, like in the trade debates, certain communities do suffer. In trade we recognize that this should not be a reason to have less trade, and that there are powerful reasons for compensating the losers the losers and for developing means of ensuring that the political process is not held to ransom by people that will lose jobs through trade liberalization or trade reform. No equivalent exists in migration, and what I'm arguing for is to see this much more like trade.

Romesh:  You're publishing a very pro‑migration book at a time when it seems to me that the political cultures of, certainly, the western European and North American countries are fairly anti‑immigration. Can you make the case to the nativist population, the nativist political parties in those countries of the benefits to them of increased global migration rather than what they want, which is much reduced migration?

Ian:  Yes. I hope so. That's really the purpose for writing the book, is to lay out the evidence. It's not meant to be, and certainly it is not, a political book. It's a book that's a scholarly book. It's based on the evidence, and it assembles a huge amount of data. I think it's the biggest collection of data regarding the past, the present and the future ‑‑ to the extent we can have data on the future ‑‑ of migration that I've seen. It's very broad. It covers the implications for the receiving countries, for the sending countries, and for the migrants themselves, and really goes through all the arguments for and against migration and takes the arguments against very, very seriously, and is by no means advocating open borders, although that corner solution, that thought experiment, is one that we do entertain.

There are interesting examples to show us what might happen. For example, there's the European Union experiment, where borders have been opened. There's also the examples like Puerto Rico and the US where there's no border control and Puerto Ricans are free to move to the US. So there are places in the world where you can look at what might happen when borders are removed, and we look at that very carefully.

The real arguments for it are ‑‑ because I'm an economist ‑‑ economic. That migration has always, currently does, and in the future will, play a vital role in ensuring vibrant economic growth and dynamism. That migrants play a much greater proportionate share in generating wealth for economies and generating jobs for themselves and others, and in ensuring that economies can continue to be dynamic.

So for example, half the patents in the US are taken out by migrants although they're only about 11% of the population. Half the Silicon Valley startups, 60% of the science and engineering graduates, with lots of positive spillover impact.

This is pretty much a global pattern, that we see migrants as a source of this dynamism, not only for the countries they go to, but interestingly back to their home countries as well. So if you imagine: two very big diasporas are, for example, the Israeli and the Taiwanese diasporas. Also the Bangalore diaspora. These economies would not exist as vibrant frontiers of technology and investment without the diasporas, both in the ideas but also in the investment flows. And of course, in the case of Taiwan and Israel, also the political support they get from the diaspora as being absolutely vital for the success of these economies.

It's not the case that it only benefits the countries they go to, although it certainly does. There's remarkable evidence regarding, for example, the share of Nobel Prize winners or the share of people at the frontiers of the arts, or culture, that are migrants. But it's also the case for the societies they leave.

Now, migrants themselves are a much more complicated story. We don't romanticize the life of a migrant. Migrants are extremely brave people. They're risk takers. They're often not making the decision based on their own preferences alone. It's often a family decision or community decision, so they're often, the oldest son or daughter, for example. And they're doing it in order to support themselves, but more particularly, to support their families or their loved ones back home in their communities. And that's the sort of people that do this that then go on to become very successful. They're making personal sacrifices and are prepared to really meet new challenges in new ways.

The diversity that they bring ‑‑ and there's a lot of new evidence from management theory and elsewhere ‑‑ is also extremely important. Workplaces and societies that are homogenous do much less effectively at change, and dynamism, and transformation. Again, it's part of the US story for its success.

We look at the evidence for the receiving communities. We look at this question of wages, for example, which is on a lot of people's minds. Are they driving locals out of work? Are they raising unemployment rates? What is the impact of wages? The evidence there is of virtually negligible negative impact and quite a lot of evidence on positive because of the dynamic effect.

So, for example, if you compare the towns where there are migrants to nonmigrants, there's no evidence that the migrant towns pay lower wages to the locals, to the natives. We look at the evidence on fiscal. Are they taking more out of the system ‑‑ Social Security, health, education ‑‑ than they're putting in as taxes? Again, that story tends to be very misunderstood, but the evidence is that essentially migrants, as a whole and with a lot of generalization--there’s skilled and unskilled, but the book gives detail--that migrants as a whole are putting in much more than they're taking out, partly because they often pay various taxes, including of course the sales tax and other taxes, and don't draw heavily on the system. They often leave before they are pensionable age. They often come alone, not with dependents who would be at school or in social welfare. They have a lower dependence on the system than native dwellers, often.

Now, a lot depends, also, on whether they're legal or illegal. One of the things that we suggest that needs to be looked at very carefully is this question, because if migrants are legal they can be part of the tax system, part of the criminal justice system, and are much more likely to be an effective contributor to society.

One also needs to look at the other side of this, and we do, which is their contribution to vital skills. So you could say, "Oh, well. The migrants are drawing on our hospital services," for example. Then one has to ask the question of who's running the hospitals? Who are the doctors? Who are the nurses? Who are the cleaners in these hospitals? Clearly, you can't have one without the other.

And then, finally, we make arguments for migration based on our commitment to poverty reduction and development on an ethical basis. There the arguments are so very clear. The overwhelming arguments are economic, that this is in our self interest to do, and has become more and more so because of changing demography, collapsing fertility, aging, and because of our need to ensure dynamism in an increasingly competitive world.

The principal argument I would put to people is that this is in your self interest. This is how you are going to guarantee your own futures, your next generation's economic success. But the secondary arguments are that this will help reduce the inequalities in the world, help reduce poverty.

Very small changes in migration ‑‑ for example, a 3% increase in migration ‑‑ would lead to something like three times or four times the impact of all investment, aid, and other flows on developing countries. And so, it's like the trade arguments, but much, much more so and much more broadly distributed. Remittances are very powerful already. Remittances are already three to four times aid flows. So it's the most powerful lever against poverty.

And then the final reason, and this is something which I do understand is in a way personal rather than something that I think everyone might share, is I believe there's an ethical basis for it. We don't make much of this in the book because the book has been written with an economic perspective. But I think if we believe in a common humanity, if we believe that we are all migrants ourselves, and we believe that everyone should have the same chances that we've had it's very difficult to argue why we should force people back into really dreadful situations.

That's not to say that we should open the doors and overwhelm our communities. What we are calling for in the book is a mature discussion on the progressive realization of migration like we've had in trade and other areas.

Romesh Vaitilingam: Final question, Ian. Your analysis of data for the future suggests that migration is going to continue rising. Do you think any a way there is an inevitability to it? These governments that want to restrict numbers, they want to put caps on numbers of migrants allowed in. They want to have point systems. Allocate the number of skilled to unskilled. Do you think they're ultimately fighting a losing battle?

Ian:  Yes, I do. I think there is an inevitability to it for two reasons, on the demand and on the supply side. On the demand side, I think we are going to be ruing the day that we didn't create a better foundation for migration because we will be short of labor. Difficult to argue that in the height of 10% unemployment, but the rich country workforce, assuming that the social contract stays more or less what it is--and of course, it's likely to evolve, that's one of the points we make--it goes down from 800 million to about 600 million over the next 40 years just because of demographics. That's aging populations, but declining fertility, the end of the demographic dividend... So we will have rapidly aging populations. By 2050, we should all be living about 10 years longer than we're living now. Plummeting fertility levels, particularly in those countries that don't have migration. In the US, which has a lot of migration, something like half the kids being born are of migrant descendants, and they have a much healthier demographic basis. In Europe, this is not the case. And also in many emerging markets, interestingly enough.

We will find that we are very dependent for both skilled and unskilled labor. As we get more and more skilled, as well, as a higher share of our population goes into university, their appetite for doing unskilled jobs will decline. It's a double reason why, actually, the growth in demand is going to be greatest on unskilled.

First it is because we are going to need these people, literally, to push us around in our wheelchairs as we age, and to clean the streets, and clean us, and many other things. But also because our desire to do unskilled work will decline rapidly. Also, we will become more and more of a service economy, which has very high demand for unskilled labor.

So, on the demand side is clear in my mind that we will be fighting for more migration. The problem is that on the supply side, which countries are going to want to send, because they're going through an even more rapid transition than we are, both economically and demographically. It's likely that in many of the countries that are send countries now will become absorbing countries. China, of course, is likely to become a very strong absorber as its population declines, interestingly enough, but its economy continues to grow at very rapid rates.

In India and Africa, the population will grow. Africa will be the only country with population growth above replacement levels by 2040. At this rate Africa, because of its lower economic growth rates, is likely to remain a big net exporter of labor.

I think, as the world gets more and more connected, as the cost of travel goes down relative to our incomes around the world, as people move towards the top of the migration hump... The poorest people can't migrate. They don't have the means to even pay for the bus fare to the local town, let alone passage overseas. But as people's incomes rise, their propensity to migrate will grow, up to a certain level, and then it declines again.

The number of people in that situation will grow. The propensity to migrate will grow, and the information and other gaps will begin to close. As networks grow, network chains which bring migration will become more powerful.

So I think on both the demand and the supply side, we're likely to see, perhaps, a doubling of migration. There's been about a 25 million increase in migration over the last 25 years. That number is likely to grow. I would see at least the same happen again, and at probably a more rapid rate, over the next cycles or decades.

Romesh:  Ian Goldin, thank you very much.

Ian:  Thank you.