Winner of the New Statesman SPERI Prize in Political Economy 2016

Friday 8 August 2014

Nerds, Elitism and Immigration

Noah Smith’s ‘Nerds vs. The Empire’ is a great feel good post for those who try to advance the cause of evidence based analysis. Nate Silver, the statistician who confidently predicted an Obama victory against Romney but who was lambasted by the Republican establishment before he was proved right, is an appropriate hero for the Nerds.

I can see my own complaints against those who want to take credit for the weakest UK recovery in perhaps centuries in the same manner. ‘The 2013 recovery vindicates 2010 austerity’ is perhaps the nearest you can get in macroeconomics to an Orwellian ‘war is peace’ type statement. The Nerds in this case are the large majority of academic economists who know it is nonsense and say so, and The Empire are the politicians, city economists and - tragically - the preeminent financial newspaper that pretend otherwise.

I think this picture is basically right. Yet there is a danger here. The recent post where I argued this case provoked a reaction among some that could be summed up thus: what arrogance you academic economists have! You cannot forecast, you allowed the financial crisis to happen, you are always arguing amongst yourselves, and you expect us to take you seriously?

Now I have argued that this reaction is missing the point. No one, and I mean no one, has tried to argue with me that the statement ‘the 2013 recovery vindicates 2010 austerity’ is actually justified. No one has disputed that the statement is not being repeated over and over again in the public debate. This means the public are being misled. Yet it remains the case that the way I originally put the argument in my posts allowed the discussion to focus not on those who try to create their own reality, but instead on the reputation of academic economics. It is clear enough why I did it this way, but in retrospect I may well have made a mistake in doing so.

Is immigration another area where there is a potential danger that those arguing for evidence based policy may appear elitist? There are some similarities between the public debate over austerity and that on immigration. With austerity there is a popular view that governments should ‘tighten their belts’ at the same time as households are having to. With immigration there is a popular view that immigrants must displace native workers from jobs and thereby raise unemployment and drive down wages. In both cases economic research casts doubt on these popular views. The evidence is that immigration, like trade, raises long run average income per head in an economy: perhaps at a cost for some groups, but perhaps not. There is even a direct link between the two issues: immigration into the UK clearly seems to improve the medium term fiscal position (and therefore decreases the need for austerity), yet popular discussion is all about the need to reduce ‘benefit tourism’.

There are also clear differences between the two issues. The wisdom or lack of it for austerity during a liquidity trap is essentially a narrow macroeconomic issue, and government debt is not at the top of voter concerns. The wisdom or otherwise of tough controls on immigration deals with issues that are not purely economic, and in the UK is at the top of voter concern.

What might link the two issues, nevertheless, is that there seems to be a divide between the views of most experts and the public at large. One of the most vocal critics of the liberal view on immigration, David Goodhart, has a short piece in Policy Network where he makes a more general claim. Entitled ‘Britain’s Growing Cultural Divide’, his argument is summarised thus:

“The gap that has opened up between the secular liberal graduate baby boomer worldview that dominates party, governmental and social institutions and the political and psychological intuitions of the ordinary citizen is the new cultural/class divide in Britain”

Here is part of what he has in mind.

“And the biggest value gap concerns the security and identity issues ‒ most of which boil down to the common sense notion that we value those close to us more than those who are distant. At the national level this takes the form of “fellow citizen favouritism”. This is not about race, it is about fairness. It is the belief that when the interests of a British citizen, of whatever colour or creed, conflict with the interests of a citizen of another country, the interests of the British citizen should normally come first. Too much of modern liberal politics ‒ whether the EU idea of non-discrimination or some aspects of human rights policy ‒ overrides this basic political intuition.”

Is this an example of the Nerds versus the Empire, where simplistic views and natural prejudices are fanned by a right wing press and politicians, and then dressed up by some as a difference in ‘values’ between a cosmopolitan elite and ordinary people? Or is it an example of overreach by the Nerds (including most – but not all - economists), who fail to appreciate the sociological roots behind seemingly economic misperceptions? At present I do not know the answer to these questions. 


  1. This (Goodhart) approach has also been taken by the political correspondents on the BBC who, on the Today programme and elsewhere, will denounce any attempt to moderate the mis-information on immigration by referring to the political realities: "The people think the Earth is flat so policy should be made on that basis."

    To take Goodhart's statement seriously, the point about "the interests of a British citizen ... conflict with interests of a citizen of another country" really begs the question. No British economist I have heard argues for immigration on the basis of benefits to another country (EU economists may take a wider view). The argument is actually which British citizen benefits?

    Is it the person lookng for a job but finds an immigrant willing to work cheaper - the usually cited case - or is it the resident of a care home who can have more and better qualified assistance? Is it the owner of a business or farm who finds himself newly competitive or the customer of a restaurant who gets better service, or the resident of a street who finds a lot of people speaking a different language.

    All attempts to divide 'us' from 'them' should be tested against who the 'us' really are: not always the people being recruited to the cause in question.

  2. Ironically these are two big issues where the right-wing stance is bad for business.

    A third issue that should surely be included in this group where the liberal view is also at odds with the beliefs of the general public is policy regarding the European Union.

  3. This is an interesting area of study. I read an article recently on how to be taken seriously, and one major factor was given as "having authority". So, prior to the 2010 election, Cameron was criticised for his views on immigration a fair bit. But as soon as he won, the criticism just faded away.

    Then we had Osborne telling us there was no Plan B, that his policy was working, and that once the excuse that "it was the last Government's fault" became untenable, that the UK was not recovering because it was somehow the fault of Europe. This at a time when Turkey was exporting more than twice as much to Germany as the UK was...

    So, these two people took on the cloak of authority and suddenly whatever they said became what the mainstream repeated in papers, on TV and in pubs across the land.

    As for understanding the issue about why critics are attacking the reputations of academic economists rather than engaging in the arguments, I believe this is because the argument doesn't matter to them; their goal is persuading the largest number of people to think what they tell them to think. In the same way that giving authority to Cameron and Osborne made them more believable, undermining the authority of academic economists will make them less believable, no matter how much better their arguments actually are.

    1. The media will naturally report what's being said by the Prime Minstor and Chancellor, irrespective of the merits of what is being said. That's part of their job. What's more problematic is the lack of analysis of what is being said, which lends the statements authority. I lose count of the number of times that you hear the most arrant nonsense from government or opposition speakers that goes completely unchallenged. The media generally is more interested in setting up a you said/they said type of dialog, that lends itself to false equivalence (c.f. climate change especially).

  4. Has being a nerd ever been a bad thing in UK culture?

    1. For a long time I think. For example, for years the UK civil service (many of whom read Classics at Oxford) strongly resisted the idea that some civil servants should be experts in subjects like economics. C.P.Snow's two cultures can be seen as the same thing. More here:

  5. David Goodhart: 'It is the belief that when the interests of a British citizen, of whatever colour or creed, conflict with the interests of a citizen of another country, the interests of the British citizen should normally come first.'

    Well as David Sweet points out above this is irrelevant to the economic conclusions about UK welfare impacts! But it is an interesting proposition in its own right if applied to what might be considered to be the sociological issues. Presumably these are to do with the discomfort of finding yourself sharing a neighbourhood or workplace with someone with a different first language, religion or lifestyle from your own. To which self-evidently there are huge potential personal and social benefits! The usual argument is that of course the problem is not these people in themselves but that there are too many of them or that they are appearing too quickly.

    So what is the right proportion of 'foreigners'? What criteria could we use to decide? And what would we feel about being denied entry to another country on the basis of such arbitrary criteria - of which citizenship is itself one? And what is the real evidence that once British citizens get to properly meet their foreign workmates and neighbours they find them different to themselves in any deeply significant way?

    I'm sure that these issues stem not from too much immigration, but too little! Too little willingness and ability of British citizens to go and live and work in other countries. Investigation of the sociological reasons for that would be more fruitful that Mr Goodhart's dangerous pontificating.

  6. "yet popular discussion is all about the need to reduce ‘benefit tourism’."

    This is a deliberate ploy by politicians to distract from the fact they cannot control immigration numbers.

    Immigration is all about jobs and wages. (Congestion and pressures on schools and other public services also a concern but not the main ones.) Nigel Farage knows this and he repeated it over and over again in the debates with Clegg. There is a perception, probably with some truth, that A8 immigration in particular is contributing to intense wage competition at the bottom end in high cost areas like London. When demand rises this does not increase wages as much as increase the influx of this type of immigrant. There are also industries which have become so dominated by certain nationalities they tend to now only recruit from them. With high rates of unemployment, unemployed youth who do not enter workforce will become yet another generation of unemployed contributing yet again to perhaps Britain's biggest social problem.

    When people are out of work and they see large amounts of immigration of flooding in, people think politicians are out of touch. They think why do they do this when it is clearly exactly what we do not need? Is it to add insult to injury?

    But we cannot control A8 immigration - which was purely a result of an unnecessary political decision. So what politicians do is say that we will crack down on benefits even though immigrants rarely use such benefits. Politicians have to look as if they are doing something.

    1. AN honest question: what is A8 immigration. Sorry, I haven't seen the term before.

    2. Poland, Lithuania, Estonia, Slovakia and other members of the former Eastern Bloc who joined the EU after the Soviet Union's collapse. Britain was virtually alone in allowing full access to workers from these countries in 2004. This decision was based on an econometric model which said that only 13000 people would enter. Over a million (and in some cases their families) did I think from Poland alone within the next five years alone. This was a major shock to the jobs market and public services, especially in education, and especially primary education.

      I think a big lesson here for neoliberalism in political science and the new-classical synthesis in economics is that there is no such thing as a universally applicable model. You need context. Polish behaviour with regard to immigration is not the same as Spaniards and Italians for historical, social and other reasons.

      Huge movements of labour since the expansion of the EU and its associated economic and social effects are the key reason for majority support for the EU turning to majority opposition and the rise of far-right anti-EU parties.

      The rushed integration of the eastern bloc has also been a foreign policy fiasco. On the one hand it has provoked Russia as NATO (which now exists for what reason?) has encroached closer to its borders. No wonder it does not want to let the Ukraine go.

      The Neoliberal establishment/Washington Consensus during the 1990s also advocated immediate liberalisation of Russian capital and trade flows and immediate privatisation of industry. The result was chaos and key sectors of the economies controlled by Oligarchs. The CHinese were much more cautious and sceptical of Neoliberalism when it entered the international economy after the collapse of communism. Internal labour flows and External capital and trade flows are heavily controlled. International and financial markets are segregated. You cannot go into business in China unless you have a CHinese partner. Crucial components for computers such as lithium are banned for export for production elsewhere to protect its own industry.

      Who is doing better China or the ex-Soviet Union?

      Of course no-one wants a return to autarky. The collapse of the international trading system in the 1920s was a key factor behind the Great Depression - bigger than monetary factors and central bank behaviour - the fetish of monetarists and much of the macro-economic profession.

      Having said that, some insulation from globalisation to prevent a global war for the survival of the fittest needs to be in place, especially for the more vulnerable. If not, it will destroy itself.

      Globalisation is necessary but it has good and bad effects. That is why you need a pluralist education as the costs are underplayed by orthodox economic theory and neo-liberalism. You need both neo-liberal and neo-Marxian insights.

      I think the big lesson from history is that change must not be too rushed and must be implemented carefully.

    3. The international trading system did not collapse in the 1920s - that happened in the 1930s, but it had fundamental weaknesses that arose out of WWI, including Britain's ability to underwrite it. The US maintained a protectionist position during the interwar period.

  7. I walked passed the office of our local Tory MP who after one term will be standing down in our marginal.

    Either side of his constituency office are shops that have gone into receivership, and on the early Sunday morning I went by he had a working TV screen popping out adverts for himself.

    In this way, Boris Johnson seems to some in the media to be that Tory candidate who can unite the anti-EU press barons with the pro-EU business people. I look forward to the attempt of making that ideal fit the reality of the man and the reality of the Tory Party since 1990.

  8. Anti-immigration and anti-trade is based on non-economists' experiences. The plant is shut down and moved over seas because of trade. Immigrants work harder for less. Plus they speak a different language, have different skin colors and traditions. If the economy isn't delivering prosperity they'll find scapegoats other than a slack labor market. Like the Luddites and technology.

  9. There is, and should be, a difference between cosmopolitanism and non-favouritism. The cosmopolitan outlook is liberally informed about with cultural conditions and circumstances in other lands. The cosmopolitan person moves comfortably in social settings and communities far from the native country, and cultivates a comprehensive, global perspective on human affairs. The cosmopolitan usually as a wider set of sympathies and moral concerns deriving from knowledge that takes a more wordly scope, and from a more extensive sphere of human relationships.

    But cosmopolitanism is compatible with commitments in purpose and action that are based on special regional ties of fidelity and solidarity, and that privilege, at least to some degree, the interests and particular goals of one's own family, region and country.

  10. I note that some of the authors of your immigration fact-check were people behind the policy of mass immigration, including the widely out forecasts that lay behind the decision not to implement transitional controls. This is a good example of the dominance of neo-liberal groupthink that joins academia and the policy making bureaucracy. (Although there have been studies with different conclusions - including a Lords Report which showed that mass immigration has not increased real per capita GNP.)

    In any case it is the equity issues that are important here.

    Two more points: It is not right for the elite to say that if foreigners can do low wage jobs, so can you. It is also not right to say that economic migrants are doing jobs that natives don't want to do. Locals do not want to do them at such wages, unless they want families in multi-occupancy accommodation - even then, at 600 pounds a room in London and other places where the jobs are, probably not possible.

  11. I'm afraid you're skirting the nub of the issue; this is a straightforward question of honesty. All such examples (whether peddled by the Left or the Right of the political spectrum) are instances of choices being made to advance a cause at the expense of an honest exposition. Dishonestly skewing known facts to suit a prior purpose. You know this very well as do many of us viewing the stew that our politics and policy-selection processes has become.

    I suggest those who care confront this honesty issue.


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