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Thursday, February 17, 2005
HariWatch IV

Johann Hari said on the BBC's 'Question Time' just now that foreigners coming into this country make a net contribution to the rest of us of £2.5 billion "and don't let anyone tell you otherwise". I will now tell you otherwise.

This is wrong: Hari is confusing GDP with GDP per capita. The study he mentioned reports that the effect on national GDP is a rise of £2.5 billion. But the effect is on the overall economy, and those who come here are not excluded from the GDP figure. They share in that higher GDP. The net effect - the increase in GDP minus the share of that GDP they claim - is infinitesimal. They increase GDP - and then take almost all of that increase themselves - the per capita GDP scarcely affected.

The main economic effect of our current migration laws then is not on per capita GDP but on income distribution. We import low-skilled people whose addition to the labour supply forces down the wages of unskilled labour, often ensuring many of our own workers leave the labour force altogether.

A far better immigration policy would do the opposite. Instead of mass immigration, we could have lower and smarter immigration. If we chose to, we could have a reverse of the infamous Healey brain drain, where so many of Britain's brightest and best left the country never to return, by recognising the value of the best and most talented in the world and attracting them here with less punitive taxes. Because the greater labour supply this time would mean competition only for the already successful, income inequality would actually decrease, not increase.

Unlike Johann Hari, I don't see inequality of wealth as a bad thing in itself. But I do think that inequality should reflect genuine differences of ability and skill in meeting the needs and desires of others. It shouldn't - as it now does - reflect an immigration policy that disregards the government's first duty, which is to the people who already live here.

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