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Guardian: Losers In The Win-win Migration Game

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http://business.guardian.co.uk/story/0,,1864040,00.html

Losers in the win-win migration game

Larry Elliott, economics editor

Monday September 4, 2006
The Guardian
The government has caved in to "White Van Man". That was the clear message from the decision to impose quotas on workers from Bulgaria and Romania when the two eastern European countries join the European Union.
As one of only three EU states that allowed free movement of labour from the outset for the 10 countries that joined in 2004, ministers are now pandering to xenophobic views, stirred up by tabloid mischief-makers. The comment from an unnamed cabinet minister in this paper last week seemed to support that view. "We have a strong record on accepting migrants from Europe but sometimes politics has to override the economics, and that is what is going to happen in this case"...../
Caution
On the face of it, this seems to be a win-win play. If the impact is to allow the economy to run at higher levels of growth, while keeping inflation in check, that surely settles matters. But I think the government is right to exercise caution, although for different reasons. The first is economic.
As everybody from the Green party to David Cameron agrees, growth is not everything. If the impact of faster growth is a degraded environment; if quality of life suffers as a result of overcrowding or a creaking public infrastructure, then it may be supremely unimportant that the trend rate of growth of the economy is 2.75% rather than 2.5%.
This argument could, of course, have been used during any of the previous waves of migration; what's different this time, is that we have the political and social structures of the nation state trying to grapple with flows of people unleashed by global economic forces. Leaders of global capitalism - such as BNEG - inevitably look at the bottom line. But even those in favour of unrestricted immigration from Romania and Bulgaria concede there comes a point when our physical capacity will be unable to cope. The dispute is over when that will be reached.
To an extent, also, a big rise in population is likely to mean increasing demand for housing, thus driving up prices. Persistently high property inflation creates imbalances and is extremely bad news for those struggling to get on the ladder.
This brings us to a second point, namely how the proceeds of higher growth are distributed.
The assumption is that the benefits of free movement of labour - as with free movement of goods - are spread widely, with a rising tide raising all boats. This is not the case. There will be groups that gain but there will also be groups that do not. Generally, the better off and better educated you are, the more you stand to gain, since the chances that a low-paid worker from Romania will be competing for your job are pretty small. The lawyer, the City trader and the journalist get a double-benefit because they pay less for their domestic servants and tradesmen, increasing their real incomes.

Looks like it s quality of life issue/environment. Do we WANT a crowded country for the sake of low wages and high house prices? :blink:

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"We have a strong record on accepting migrants from Europe but sometimes politics has to override the economics, and that is what is going to happen in this case"...../

This is going to cut off options for the Government - immigrants are vital part to surpressing peoples wages and controlling their borrowing/spending

If they still can't curb people's borrowing/spending they will either have to raise IR or redefine/hide inflation (CPI) again

I can't imagine they'll raise IR to a point that'll crash the housing market

So, looks like a redefiniton of the CPI is on the cards - not surprised really, they've been getting away with hiding it for years

Peoples perception of inflation is vital to controlling their wage demands - heard a story on BBC news this morning about people perceptions of the country - one of them was that the country is getting too expensive (45% thought that IIRC)

Edited by dnd

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I think the important questions are how many more immigrants are likely to move here in the future and will it be enought to keep BTL going? and so prevent the HPC

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Yet another example of Labour's policies doing the exact opposite of the socialist politics they claim to stand for.

Our country must be the laughing stock of the world.

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Looks like it s quality of life issue/environment. Do we WANT a crowded country for the sake of low wages and high house prices? :blink:

Immigrants push up demand for housing but also surpress wages

They help lower inflation through wage supression but increase housing inflation

Is Labour engineering a flexible low wage, landlord/worker society for the new flexible 'global' economy?

Why own a property when you are a flexible worker who has to move regularly?

GULP!!!

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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