Showing posts with label migration. Show all posts
Showing posts with label migration. Show all posts
Monday 13 June 2022
Sunday 24 January 2021
On the Indian Farmers' Agitation for MSP
By Girish Menon
In this article I will try to explain the logic behind the Delhi protests by farmers demanding a Minimum Support Price (MSP).
If you are a businessman who has produced say 1000 units of a good; and are able to sell only 10 units at the price that you desired. Then it means you will have an unsold stock of 990 units. You now have a choice:
Either keep them in storage and sell it to folks who may come in the future and pay your asking price.
Or get rid of your unsold stock at whatever price the haggling buyers are willing to pay.
If you decide on the storage option then it follows that your goods are not perishable, it’s value does not diminish with age, you have adequate storage facilities and you have the resources to continue living even when most of your goods are unsold.
If you decide on the distress sale option it could mean that your goods are perishable and/or it’s value diminishes with age and/or you don’t have storage facilities and/or you are desperate to unload your stuff because for you whatever money you get today is important for your survival,
If one were to approach any small farmers’ output, I think such a farmer does not have the storage option available to him. Hence, he will have to sell his output to the intermediary at any price offered. This could mean a low price which results in a loss or a high price resulting in a profit to the farmer.
Whether the price is high or low depends on the volume of output produced by all farmers of the same output. And, no farmer is able to predict the likely future harvest price he would get at the moment he decides what crop to grow.
Thus a subsistence farmer, without storage facilities, is betting on the future price he could get at harvest time. This is a bet that destroys subsistence farmers from time to time when market prices turn really low due to a bumper harvest.
Subjecting subsistence farmers to ‘market forces’ means that some farmers will get bankrupted and be forced to leave their village and go to the city in search of a means of living. In many developed countries, governments have tried to prevent farmer exodus from villages by intervening and ensuring that farmers receive a decent return for their toils,
MSP is a government guarantee of a minimum price that protects farmers who cannot get their desired price at the market, The original draft of the farm law bills passed by the Indian Parliament has no mention of MSP. Also, in Punjab etc., some of these agitating farmers are already being supported with MSP by the state government and they fear that the new bills will take away their protection.
This is a simple explanation of the demand for MSP.
It must also be remembered that:
Unlike the subsistence farmer, the middleman who buys the farmers’ output is usually a part of a powerful cartel and who enjoys more market power than the farmer.
As depicted in ‘Peepli Live’ destitute farmers, if forced to leave their villages, will add to supply of cheap labour in an era of already high unemployment.
These destitute may squat on a city’s scarce public spaces and be an ‘eyesore’ to the better off city dwellers.
Some farmers may even contemplate suicide and this will produce less than desirable PR optics for any 'caring' government.
Friday 25 December 2020
How UK-EU trade deal will change relations between Britain and Brussels
Sam Fleming and Jim Brunsden in The FT
The future relationship deal struck between the UK and the EU (24 Dec 2020) will bring far-reaching changes, as both sides are forced to adapt to the end of Britain’s 30-year membership of the European single market
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The trade agreement between London and Brussels will offer UK and EU companies preferential access to each other’s markets, compared with basic World Trade Organization rules — ensuring imported goods will be free of tariffs and quotas.
But economic relations between the UK and the EU from January 1, when the deal is due to take effect, will be on more restricted terms than they are now.
“Everyone needs to get prepared for a situation next year that will be very different to today,” said an EU official.
A trade agreement along the lines of the one negotiated between the two sides will leave Britain facing a 4 per cent loss of potential gross domestic product over 15 years compared with EU membership, according to the UK’s Office for Budget Responsibility. Failure to secure an agreement would have led to lost potential GDP of almost 6 per cent, the fiscal watchdog estimated.
Below are some of the benefits conferred by the UK-EU future relationship deal, which also includes security co-operation — and the important areas in which Britain’s links with the bloc will fall short of existing arrangements.
1. Trade in goods
The EU and UK’s starting point for the future relationship talks was that they should lead to a deal with no tariffs on trade in goods between the two sides. They also wanted no quantitative restrictions on the volume of goods that could be sold free of tariffs.
That was negotiated, meaning the deal will go beyond what the EU has done with any other advanced economy outside the European single market.
But the agreement is still a very different state of affairs to membership of the EU single market and customs union.
Once implemented, from January 1, a hard customs and regulatory border will exist between the EU and UK, and goods will face checks and controls that can be smoothed at the margins only by co-operation.
The deal will include facilitations such as co-operation on trusted trader schemes, but none of these erase border checks.
“The agreement provides for continued and sustainable air, road, rail and maritime connectivity, though market access falls below what the single market offers,” said the European Commission.
2. Fair business competition
The EU’s offer on tariff-free trade was contingent on the UK agreeing to uphold a “level playing field” on fair business competition in areas such as environmental standards.
Brussels was also keen to ensure the UK does not have unfettered scope to disburse state aid to prized industries, giving them a competitive advantage.
The agreement includes common binding principles on state aid, enforceable in both sides’ courts, which would be able to recover illegal subsidies.
It also includes a painstakingly negotiated “rebalancing mechanism” to deal with a situation where the sides’ regulations in areas such as labour rights diverge over time.
The mechanism, which would be subject to independent arbitration, would allow the disadvantaged side to impose tariffs to restore fair competition.
But, crucially for the UK, it will not be required to follow EU rules directly or be subject to the jurisdiction of the European Court of Justice.
Being outside the European single market has other regulatory consequences for Britain. For example, UK businesses will no longer be able to assume that product authorisations from British watchdogs will allow their goods to be placed on the European market.
3. Fish
The deal creates a five-and-a-half-year transition period during which EU fishermen will have guaranteed access to UK waters.
EU quotas in British waters will decline in the transition by 25 per cent compared with current levels, and this will have the knock-on effect of boosting how much UK fishermen can secure. EU boats currently catch about €650m of fish in British waters each year.
Once the transition period is over, EU boats’ access to UK waters will in principle depend on annual negotiations between both sides. Those talks will also determine the overall quantities of different species that can be caught.
Should EU boats’ access to British waters ever be revoked by the UK, the bloc will have the right to take compensatory measures. These include retaliatory closing of EU waters to UK boats, and the imposition of tariffs on British fish.
The deal also links the UK’s access to the EU energy market to access to British fishing waters.
The UK warded off EU demands for a cross-retaliation power to hit other parts of the British economy should a dispute over fish escalate.
Still, the deal does provide a last-resort “safeguard” option that would allow either side to take emergency measures to protect coastal communities, subject to dispute-settlement arrangements in the agreement.
The deal enshrines the principle that Britain is now outside the EU’s common fisheries policy: an independent coastal state with sovereignty over its waters.
4. Financial services
The City of London will exit the EU’s single market for financial services at the end of the Brexit transition period on December 31.
Both sides have said that the new market access arrangements for UK and EU financial services companies should be based on unilateral decisions by Britain and the bloc, rather than be provided for in the trade agreement.
These so-called equivalence decisions involve each side evaluating whether the other’s financial services regulations are as tough as its own.
Banks and traders have acknowledged that the proposed system is more piecemeal than existing arrangements, and less stable. The EU did not announce any fresh equivalence decisions on UK access to the bloc’s markets alongside the trade agreement on Thursday, resulting in uncertainty in key areas including share trading and derivatives.
The two sides plan to put in place a regulatory dialogue on financial services based on a separate memorandum of understanding.
5. Migration
Current British and EU expatriates have their rights safeguarded by the UK’s 2019 withdrawal agreement with the bloc, but big changes to migration arrangements take effect from January 1.
Britons will no longer have the benefit of European freedom of movement: the right to go to any EU member state and seek to work and live there on the same basis as the country’s own citizens.
Instead, Britons will rely on a visa-waiver programme to travel to the EU for short stays, and on member states’ national rules for the right to work.
Ending free movement for EU nationals in the UK was identified by the British government as one of the benefits of Brexit, allowing the country to devise a new immigration system.
6. Security
The EU and UK have been at pains to emphasise the importance of continuing co-operation in the fight against terrorism and organised crime, although talks in this area were complicated by Britain’s determination to escape the ECJ’s jurisdiction.
But ahead of the deal being finalised, EU chief negotiator Michel Barnier confirmed the sides had found ways to maintain “close co-operation” on crucial matters including the work of the bloc’s crime-fighting agencies Europol and Eurojust, and the sharing of criminals’ DNA data.
Brussels said the deal “builds new operational capabilities, taking account of the fact that the UK, as a non-EU member . . . will not have the same facilities as before”.
The deal establishes that security co-operation can be suspended if the UK breaks away from the European Convention on Human Rights.
Monday 6 April 2020
We're not all in coronavirus together
‘The virus does not discriminate,” suggested Michael Gove after both Boris Johnson and the health secretary, Matt Hancock, were struck down by Covid-19. But societies do. And in so doing, they ensure that the devastation wreaked by the virus is not equally shared writes Kenan Malik in The Guardian
We can see this in the way that the low paid both disproportionately have to continue to work and are more likely to be laid off; in the sacking of an Amazon worker for leading a protest against unsafe conditions; in the rich having access to coronavirus tests denied to even most NHS workers.
But to see most clearly how societies allow the virus to discriminate, look not at London or Rome or New York but at Delhi and Johannesburg and Lagos. Here, “social distancing” means something very different than it does to Europeans or Americans. It is less about the physical space between people than the social space between the rich and poor that means only the privileged can maintain any kind of social isolation.
In the Johannesburg township of Alexandra, somewhere between 180,000 and 750,000 people live in an estimated 20,000 shacks. Through it runs South Africa’s most polluted river, the Jukskei, whose water has tested positive for cholera and has run black from sewage. Makoko is often called Lagos’s “floating slum” because a third of the shacks are built on stilts over a fetid lagoon. No one is sure how many people live there, but it could be up to 300,000. Dharavi, in Mumbai, is the word’s largest slum. Like Makoko and Alexandra, it nestles next to fabulously rich areas, but the million people estimated to live there are squashed into less than a square mile of land that was once a rubbish tip.
In such neighbourhoods, what can social distancing mean? Extended families often live in one- or two-room shacks. The houses may be scrubbed and well kept but many don’t have lavatories, electricity or running water. Communal latrines and water points are often shared by thousands. Diseases from diarrhoea to typhoid stalked such neighbourhoods well before coronavirus.
FacebookTwitterPinterest People in their shanties at Dharavi during the coronavirus lockdown in Mumbai. Photograph: Rajanish Kakade/AP
South Africa, Nigeria and India have all imposed lockdowns. Alexandra and Dharavi have both reported their first cases of coronavirus. But in these neighbourhoods, the idea of protecting oneself from coronavirus must seem as miraculous as clean water.
Last week, tens of thousands of Indian workers, suddenly deprived of the possibility of pay, and with most public transport having been shut down, decided to walk back to their home villages, often hundreds of miles away, in the greatest mass exodus since partition. Four out of five Indians work in the informal sector. Almost 140 million, more than a quarter of India’s working population, are migrants from elsewhere in the country. Yet their needs had barely figured in the thinking of policymakers, who seemed shocked by the actions of the workers.
India’s great exodus shows that “migration” is not, as we imagine in the west, merely external migration, but internal migration, too. Internal migrants, whether in India, Nigeria or South Africa, are often treated as poorly as external ones and often for the same reason – they are not seen as “one of us” and so denied basic rights and dignities. In one particularly shocking incident, hundreds of migrants returning to the town of Bareilly, in the northern Indian state of Uttar Pradesh, were sprayed by officials with chemicals usually used to sanitise buses. They might as well have been vermin, not just metaphorically but physically, too.
All this should make us think harder about what we mean by “community”. In Britain, the pandemic has led to a flowering of social-mindedness and community solidarity. Where I live in south London, a mutual aid group has sprung up to help self-isolating older people. The food bank has gained a new throng of volunteers. Such welcome developments have been replicated in hundreds of places around the country.
FacebookTwitterPinterest South African National Defence Force soldiers enforce lockdown in Johannesburg’s Alexandra township on 28 March 2020. Photograph: Luca Sola/AFP via Getty Images
But the idea of a community is neither as straightforward nor as straightforwardly good as we might imagine. When Donald Trump reportedly offers billions of dollars to a German company to create a vaccine to be used exclusively for Americans, when Germany blocks the export of medical equipment to Italy, when Britain, unlike Portugal, refuses to extend to asylum seekers the right to access benefits and healthcare during the coronavirus crisis, each does so in the name of protecting a particular community or nation.
The rhetoric of community and nation can become a means not just to discount those deemed not to belong but also to obscure divisions within. In India, Narendra Modi’s BJP government constantly plays to nationalist themes, eulogising Mother India, or Bhārat Mata. But it’s a nationalism that excludes many groups, from Muslims to the poor. In Dharavi and Alexandra and Makoko, and many similar places, it will not simply be coronavirus but also the willingness of the rich, both in poor countries and in wealthier nations, to ignore gross inequalities that will kill.
In Britain in recent weeks, there has been a welcome, belated recognition of the importance of low-paid workers. Yet in the decade before that, their needs were sacrificed to the demands of austerity, under the mantra of “we’re all in it together”. We need to beware of the same happening after the pandemic, too, of the rhetoric of community and nation being deployed to protect the interests of privileged groups. We need to beware, too, that in a world that many insist will be more nationalist, and less global, we don’t simply ignore what exists in places such as Alexandra and Makoko and Dharavi.
“We’re all at risk from the virus,” observed Gove. That’s true. It is also true that societies, both nationally and globally, are structured in ways that ensure that some face far more risk than others – and not just from coronavirus.
We can see this in the way that the low paid both disproportionately have to continue to work and are more likely to be laid off; in the sacking of an Amazon worker for leading a protest against unsafe conditions; in the rich having access to coronavirus tests denied to even most NHS workers.
But to see most clearly how societies allow the virus to discriminate, look not at London or Rome or New York but at Delhi and Johannesburg and Lagos. Here, “social distancing” means something very different than it does to Europeans or Americans. It is less about the physical space between people than the social space between the rich and poor that means only the privileged can maintain any kind of social isolation.
In the Johannesburg township of Alexandra, somewhere between 180,000 and 750,000 people live in an estimated 20,000 shacks. Through it runs South Africa’s most polluted river, the Jukskei, whose water has tested positive for cholera and has run black from sewage. Makoko is often called Lagos’s “floating slum” because a third of the shacks are built on stilts over a fetid lagoon. No one is sure how many people live there, but it could be up to 300,000. Dharavi, in Mumbai, is the word’s largest slum. Like Makoko and Alexandra, it nestles next to fabulously rich areas, but the million people estimated to live there are squashed into less than a square mile of land that was once a rubbish tip.
In such neighbourhoods, what can social distancing mean? Extended families often live in one- or two-room shacks. The houses may be scrubbed and well kept but many don’t have lavatories, electricity or running water. Communal latrines and water points are often shared by thousands. Diseases from diarrhoea to typhoid stalked such neighbourhoods well before coronavirus.
FacebookTwitterPinterest People in their shanties at Dharavi during the coronavirus lockdown in Mumbai. Photograph: Rajanish Kakade/AP
South Africa, Nigeria and India have all imposed lockdowns. Alexandra and Dharavi have both reported their first cases of coronavirus. But in these neighbourhoods, the idea of protecting oneself from coronavirus must seem as miraculous as clean water.
Last week, tens of thousands of Indian workers, suddenly deprived of the possibility of pay, and with most public transport having been shut down, decided to walk back to their home villages, often hundreds of miles away, in the greatest mass exodus since partition. Four out of five Indians work in the informal sector. Almost 140 million, more than a quarter of India’s working population, are migrants from elsewhere in the country. Yet their needs had barely figured in the thinking of policymakers, who seemed shocked by the actions of the workers.
India’s great exodus shows that “migration” is not, as we imagine in the west, merely external migration, but internal migration, too. Internal migrants, whether in India, Nigeria or South Africa, are often treated as poorly as external ones and often for the same reason – they are not seen as “one of us” and so denied basic rights and dignities. In one particularly shocking incident, hundreds of migrants returning to the town of Bareilly, in the northern Indian state of Uttar Pradesh, were sprayed by officials with chemicals usually used to sanitise buses. They might as well have been vermin, not just metaphorically but physically, too.
All this should make us think harder about what we mean by “community”. In Britain, the pandemic has led to a flowering of social-mindedness and community solidarity. Where I live in south London, a mutual aid group has sprung up to help self-isolating older people. The food bank has gained a new throng of volunteers. Such welcome developments have been replicated in hundreds of places around the country.
FacebookTwitterPinterest South African National Defence Force soldiers enforce lockdown in Johannesburg’s Alexandra township on 28 March 2020. Photograph: Luca Sola/AFP via Getty Images
But the idea of a community is neither as straightforward nor as straightforwardly good as we might imagine. When Donald Trump reportedly offers billions of dollars to a German company to create a vaccine to be used exclusively for Americans, when Germany blocks the export of medical equipment to Italy, when Britain, unlike Portugal, refuses to extend to asylum seekers the right to access benefits and healthcare during the coronavirus crisis, each does so in the name of protecting a particular community or nation.
The rhetoric of community and nation can become a means not just to discount those deemed not to belong but also to obscure divisions within. In India, Narendra Modi’s BJP government constantly plays to nationalist themes, eulogising Mother India, or Bhārat Mata. But it’s a nationalism that excludes many groups, from Muslims to the poor. In Dharavi and Alexandra and Makoko, and many similar places, it will not simply be coronavirus but also the willingness of the rich, both in poor countries and in wealthier nations, to ignore gross inequalities that will kill.
In Britain in recent weeks, there has been a welcome, belated recognition of the importance of low-paid workers. Yet in the decade before that, their needs were sacrificed to the demands of austerity, under the mantra of “we’re all in it together”. We need to beware of the same happening after the pandemic, too, of the rhetoric of community and nation being deployed to protect the interests of privileged groups. We need to beware, too, that in a world that many insist will be more nationalist, and less global, we don’t simply ignore what exists in places such as Alexandra and Makoko and Dharavi.
“We’re all at risk from the virus,” observed Gove. That’s true. It is also true that societies, both nationally and globally, are structured in ways that ensure that some face far more risk than others – and not just from coronavirus.
Monday 24 February 2020
Why well-to-do Indians are fleeing the country and economists aren’t returning
The economic refugees of old have been replaced by well-placed people leaving (or staying away from) India’s unattractive political economy writes TN NINAN in The Print
Montek Singh Ahluwalia, in his non-memoir, Backstage: The Story behind India’s High Growth Years, recounts how he and wife, Isher, decided to return to India from Washington 40 years ago, giving up attractive careers at the World Bank and International Monetary Fund (IMF). Montek joined government as an economic adviser in the finance ministry, and Isher joined a think tank. They would have had modest salaries and below-par government housing, but they felt they were contributing to India’s development process. Along the way, they became the capital’s power couple, so life had its compensations.
Other economists too came back around the same time, some earlier, and some later: Manmohan Singh, Bimal Jalan, Vijay Kelkar, Shankar Acharya, Rakesh Mohan, and so on. They returned after studying at the best universities and working in plum jobs at international organisations. They and others like them became the leading makers (or influencers) of economic policy for the next three or four decades, rising like Montek to high offices and enjoying good reputations, plus of course the bungalows of Lutyens’ Delhi and social cachets that would not be available to them elsewhere.
The question that was posed earlier this week at the release of Montek’s book was: Why aren’t people like them coming back today, bag and baggage, to set down roots here in India? The ones who came more recently were clutching the green cards that gave them an escape hatch through which to return to green pastures: Arvind Panagariya, Raghuram Rajan, Arvind Subramanian, and other perfectly honourable gentlemen like them.
One answer is that India has always had economic refugees, and they went where they could find jobs (in West Asia and Singapore), or a better education that would underwrite good careers. Many have done brilliantly, heading global tech giants and winning Nobel prizes. But there is a darker side to the story. Although India is no longer the desperately poor country of the 1980s and 1990s (having risen a few years ago to lower-middle income status), has ceased to be an economic prison like Cuba, and offers more career options with higher salaries, vastly superior cars and consumer goods, modern hospitals, and new liberal arts colleges, and the simple freedom to travel without signing “P” forms and getting eight dollars to take with you, it seems to have become a less attractive country in which to live and work.
Businessmen, including some with recognisable names and faces, are becoming “overseas citizens”. They are investing more in other markets where life is simpler. Wealthy professionals with internationally marketable skills and degrees are also taking their money with them (prompting the finance minister in her Budget to introduce a tax on such money transfers). They may be fleeing tax terrorism, prodded by more limited economic opportunities than they had imagined, or simply keeping one foot in India and another overseas because public discourse here has acquired a nasty edge and who knows what’s coming next. Or perhaps it is just the air quality in our cities which is a deterrent. Whatever the reason, the economic refugees of old have been replaced by well-placed people leaving (or staying away from) India’s unattractive political economy. Diplomats from under-populated countries like Australia and Canada report a sudden increase in the number of Indians seeking to emigrate.
The other question is, should our economists look back with satisfaction, or in anger? To be sure, there were high points like the reforms of 1991, the years of rapid growth a decade ago, and transformation in sectors like telecom. But we should not have waited till 1991 to launch the reforms. As Montek writes, Rajiv Gandhi was warned by the IMF chief in early 1988 that a crisis was building up, but he did nothing. The telecom revolution here was not special to India; other countries too engineered dramatic improvements in tele-density. Nor were India’s years of rapid growth unique; emerging markets as a whole grew at 7.9 per cent in 2004-08. Forget China, today India is being bettered in trade by Bangladesh and Vietnam. And the Thai baht is worth Rs 2.25; it was half that in 1991.
Montek Singh Ahluwalia, in his non-memoir, Backstage: The Story behind India’s High Growth Years, recounts how he and wife, Isher, decided to return to India from Washington 40 years ago, giving up attractive careers at the World Bank and International Monetary Fund (IMF). Montek joined government as an economic adviser in the finance ministry, and Isher joined a think tank. They would have had modest salaries and below-par government housing, but they felt they were contributing to India’s development process. Along the way, they became the capital’s power couple, so life had its compensations.
Other economists too came back around the same time, some earlier, and some later: Manmohan Singh, Bimal Jalan, Vijay Kelkar, Shankar Acharya, Rakesh Mohan, and so on. They returned after studying at the best universities and working in plum jobs at international organisations. They and others like them became the leading makers (or influencers) of economic policy for the next three or four decades, rising like Montek to high offices and enjoying good reputations, plus of course the bungalows of Lutyens’ Delhi and social cachets that would not be available to them elsewhere.
The question that was posed earlier this week at the release of Montek’s book was: Why aren’t people like them coming back today, bag and baggage, to set down roots here in India? The ones who came more recently were clutching the green cards that gave them an escape hatch through which to return to green pastures: Arvind Panagariya, Raghuram Rajan, Arvind Subramanian, and other perfectly honourable gentlemen like them.
One answer is that India has always had economic refugees, and they went where they could find jobs (in West Asia and Singapore), or a better education that would underwrite good careers. Many have done brilliantly, heading global tech giants and winning Nobel prizes. But there is a darker side to the story. Although India is no longer the desperately poor country of the 1980s and 1990s (having risen a few years ago to lower-middle income status), has ceased to be an economic prison like Cuba, and offers more career options with higher salaries, vastly superior cars and consumer goods, modern hospitals, and new liberal arts colleges, and the simple freedom to travel without signing “P” forms and getting eight dollars to take with you, it seems to have become a less attractive country in which to live and work.
Businessmen, including some with recognisable names and faces, are becoming “overseas citizens”. They are investing more in other markets where life is simpler. Wealthy professionals with internationally marketable skills and degrees are also taking their money with them (prompting the finance minister in her Budget to introduce a tax on such money transfers). They may be fleeing tax terrorism, prodded by more limited economic opportunities than they had imagined, or simply keeping one foot in India and another overseas because public discourse here has acquired a nasty edge and who knows what’s coming next. Or perhaps it is just the air quality in our cities which is a deterrent. Whatever the reason, the economic refugees of old have been replaced by well-placed people leaving (or staying away from) India’s unattractive political economy. Diplomats from under-populated countries like Australia and Canada report a sudden increase in the number of Indians seeking to emigrate.
The other question is, should our economists look back with satisfaction, or in anger? To be sure, there were high points like the reforms of 1991, the years of rapid growth a decade ago, and transformation in sectors like telecom. But we should not have waited till 1991 to launch the reforms. As Montek writes, Rajiv Gandhi was warned by the IMF chief in early 1988 that a crisis was building up, but he did nothing. The telecom revolution here was not special to India; other countries too engineered dramatic improvements in tele-density. Nor were India’s years of rapid growth unique; emerging markets as a whole grew at 7.9 per cent in 2004-08. Forget China, today India is being bettered in trade by Bangladesh and Vietnam. And the Thai baht is worth Rs 2.25; it was half that in 1991.
Wednesday 30 October 2019
If we’re serious about changing the world, we need a better kind of economics to do it
The pursuit of rapid growth won’t solve the huge challenges we face. A more honest, humane approach is the answer write Esther Duflo and Abhijit Banerjee (joint winners of the 2019 Nobel prize in economics) in The Guardian
‘How can society help all those people whom the markets leave behind?’ A child wait for a plate of food at a soup kitchen in Salta province, Argentina. Photograph: Javier Corbalan/AP
For that to happen, we need to understand what undermines trust in economists. Part of the problem is that there is plenty of bad economics around. The self-proclaimed economists on TV and in the press – chief economist of Bank X or Firm Y – are, with important exceptions, primarily spokespeople for their firms’ economic interests, who often feel free to ignore the weight of the evidence. Moreover, they have a relatively predictable slant towards market optimism at all costs, which is what the public associates with economists in general. It does not help that there is a class of economists who make predictions about broad trends in the economy, which often turn out to be wrong.
Another part of the problem is that, especially in the UK and the US, a lot of the economics that has filtered into government thinking is the most beholden to orthodoxy, and the least able to pay attention to any fact that does not square with it. Economists are therefore naturally seen as those who keep repeating that regulations, taxes, and public spending all need to be slashed to let the market be, and that eventually everything will all “trickle down” to the poor, even as we watch inequality exploding.
But good economics is much less strident, and quite different. It is less like the hard sciences and more like engineering or plumbing: it breaks big problems into manageable chunks and tries to solve them with a pragmatic approach – a combination of intuition and theory, trial and acknowledged errors. Good economics starts with some facts that are troubling, makes some guesses based on what we already know about human behaviour and theories that have been shown to work, uses data to test those guesses, refines (or radically alters) its line of attack based on the new set of facts and, eventually, with some luck, gets to a solution.
We have spent our careers studying the poor, trying to apply this kind of experimental approach to the problems they face. Instead of relying on our intuition, or that of others, we set up large-scale, rigorous randomised controlled trials to understand what works, what does not work, and why. We are not alone: this movement has taken hold in economics. The Abdul Latif Jameel Poverty Action Lab (J-PAL), the network we co-founded in 2013, has 400 affiliated or invited researchers, and together they have finished or are working on nearly a thousand projects on topics as different as the impact of sleep on productivity and happiness, and the role of incentives for tax collectors.
‘Economists have a tendency to adopt a notion of wellbeing that is often too narrow – some version of income or material consumption.’ A homeless man outside Victoria Station in London. Photograph: Victoria Jones/PA
This work is starting to make a difference. To date, 400 million people have been touched by policies that J-PAL affiliates have shown to be effective. Just as importantly, although no single project offers a definitive answer, together they allow us to understand much better some of the mechanisms behind the persistence of poverty. While our own beat has mostly been the poor countries, there are many others doing good economics in countries like the US, which can help shed light on the big issues our societies are grappling with.
Economists have a tendency to adopt a notion of wellbeing that is often too narrow – some version of income or material consumption. Yet we know in our guts that a fulfilling life needs much more than that: the respect of the community, the comforts of family and friends, dignity, lightness, pleasure. The focus on income alone is not just a convenient shortcut – it is a distorting lens that has often led the smartest economists down the wrong path, and policymakers to the wrong decisions. This is a big part of what persuades so many of us that the whole world is waiting at the door to steal our well-paying jobs. It is what has led to a single-minded focus on restoring the western nations to some glorious past of rapid economic growth. It is also what makes the trade-off between the growth of the economy and the survival of the planet seem so stark.
A better conversation must start by acknowledging the deep human desire for dignity and human contact – and treating it not as a distraction but as a better way to understand each other, and to set ourselves free from what may appear to be unresolvable contradictions.
Restoring human dignity to its central place has the potential to set off a profound rethinking of economic priorities and the ways in which societies care for their members, particularly when they are in need. At the very least, this should help persuade some of the disaffected that economics is about them as well, and that we economists have useful contributions to make to the rebuilding that must happen.
Rubbish pickers at the municipal site in Maputo, Mozambique. Photograph: Gianluigi Guercia/AFP/Getty Images
In 2017, a poll in the UK asked: “Whose opinion do you trust the most when they talk about their field of expertise?” Nurses came first – 84% trust them. Politicians came last. Economists were second from bottom on 25%.This trust deficit is mirrored by the fact that the consensus of economists (when it exists) is often systematically different from the views of ordinary citizens. The Booth School of Business at the University of Chicago regularly asks a group of about 40 prominent academic economists their views on core economic topics. Working with the economist Stefanie Stantcheva, we ran a survey: we selected 10 of the questions that were asked of the Booth panel and put them to 10,000 Americans.
On most of these issues, our respondents were sharply at odds with economists. For example, every single member of the Booth panel disagreed with the proposition that “imposing new US tariffs on steel and aluminium will improve Americans’ wellbeing”. Only a third of our respondents shared their view. And the gap is not only because people are not informed of what economists think: telling them does not seem to change their opinion one bit.
Economists are often too wrapped up in models and methods, and sometimes forget where science ends and ideology begins
This is troubling, because questions of economics and economic policy are central to the present crisis. Is migration actually threatening the livelihoods of poor workers? Has international trade worsened inequality? Should we worry about the rise of artificial intelligence or celebrate it? Why are our societies becoming increasingly unequal, and what can we (or should we) do about it? How can society help all those people whom the markets leave behind?
Economists have a lot to say about these big issues: they study immigration to see what it does to wages, taxation to determine if it discourages enterprise, redistribution through social programmes to figure out whether it encourages sloth. They have long worried about what happens when nations trade. They have worked hard to understand why some countries grow and others don’t, and what, if anything, governments can do to help. They gather data on what makes people generous or wary, what makes a man leave home and migrate to a strange place, how social media plays on our prejudices. The most recent research often has surprising things to say about all these issues – especially to those used to the pat answers coming from old high school textbooks and TV “economists”.
It’s not that when economists and the public have different views the economists are always right. We, the economists, are often too wrapped up in our models and methods and sometimes forget where science ends and ideology begins. But good economics can be a source of hope – a way to understand what went wrong but also to explain how our world can be put back together, as long as we are honest in our diagnosis of the problems.
In 2017, a poll in the UK asked: “Whose opinion do you trust the most when they talk about their field of expertise?” Nurses came first – 84% trust them. Politicians came last. Economists were second from bottom on 25%.This trust deficit is mirrored by the fact that the consensus of economists (when it exists) is often systematically different from the views of ordinary citizens. The Booth School of Business at the University of Chicago regularly asks a group of about 40 prominent academic economists their views on core economic topics. Working with the economist Stefanie Stantcheva, we ran a survey: we selected 10 of the questions that were asked of the Booth panel and put them to 10,000 Americans.
On most of these issues, our respondents were sharply at odds with economists. For example, every single member of the Booth panel disagreed with the proposition that “imposing new US tariffs on steel and aluminium will improve Americans’ wellbeing”. Only a third of our respondents shared their view. And the gap is not only because people are not informed of what economists think: telling them does not seem to change their opinion one bit.
Economists are often too wrapped up in models and methods, and sometimes forget where science ends and ideology begins
This is troubling, because questions of economics and economic policy are central to the present crisis. Is migration actually threatening the livelihoods of poor workers? Has international trade worsened inequality? Should we worry about the rise of artificial intelligence or celebrate it? Why are our societies becoming increasingly unequal, and what can we (or should we) do about it? How can society help all those people whom the markets leave behind?
Economists have a lot to say about these big issues: they study immigration to see what it does to wages, taxation to determine if it discourages enterprise, redistribution through social programmes to figure out whether it encourages sloth. They have long worried about what happens when nations trade. They have worked hard to understand why some countries grow and others don’t, and what, if anything, governments can do to help. They gather data on what makes people generous or wary, what makes a man leave home and migrate to a strange place, how social media plays on our prejudices. The most recent research often has surprising things to say about all these issues – especially to those used to the pat answers coming from old high school textbooks and TV “economists”.
It’s not that when economists and the public have different views the economists are always right. We, the economists, are often too wrapped up in our models and methods and sometimes forget where science ends and ideology begins. But good economics can be a source of hope – a way to understand what went wrong but also to explain how our world can be put back together, as long as we are honest in our diagnosis of the problems.
‘How can society help all those people whom the markets leave behind?’ A child wait for a plate of food at a soup kitchen in Salta province, Argentina. Photograph: Javier Corbalan/AP
For that to happen, we need to understand what undermines trust in economists. Part of the problem is that there is plenty of bad economics around. The self-proclaimed economists on TV and in the press – chief economist of Bank X or Firm Y – are, with important exceptions, primarily spokespeople for their firms’ economic interests, who often feel free to ignore the weight of the evidence. Moreover, they have a relatively predictable slant towards market optimism at all costs, which is what the public associates with economists in general. It does not help that there is a class of economists who make predictions about broad trends in the economy, which often turn out to be wrong.
Another part of the problem is that, especially in the UK and the US, a lot of the economics that has filtered into government thinking is the most beholden to orthodoxy, and the least able to pay attention to any fact that does not square with it. Economists are therefore naturally seen as those who keep repeating that regulations, taxes, and public spending all need to be slashed to let the market be, and that eventually everything will all “trickle down” to the poor, even as we watch inequality exploding.
But good economics is much less strident, and quite different. It is less like the hard sciences and more like engineering or plumbing: it breaks big problems into manageable chunks and tries to solve them with a pragmatic approach – a combination of intuition and theory, trial and acknowledged errors. Good economics starts with some facts that are troubling, makes some guesses based on what we already know about human behaviour and theories that have been shown to work, uses data to test those guesses, refines (or radically alters) its line of attack based on the new set of facts and, eventually, with some luck, gets to a solution.
We have spent our careers studying the poor, trying to apply this kind of experimental approach to the problems they face. Instead of relying on our intuition, or that of others, we set up large-scale, rigorous randomised controlled trials to understand what works, what does not work, and why. We are not alone: this movement has taken hold in economics. The Abdul Latif Jameel Poverty Action Lab (J-PAL), the network we co-founded in 2013, has 400 affiliated or invited researchers, and together they have finished or are working on nearly a thousand projects on topics as different as the impact of sleep on productivity and happiness, and the role of incentives for tax collectors.
‘Economists have a tendency to adopt a notion of wellbeing that is often too narrow – some version of income or material consumption.’ A homeless man outside Victoria Station in London. Photograph: Victoria Jones/PA
This work is starting to make a difference. To date, 400 million people have been touched by policies that J-PAL affiliates have shown to be effective. Just as importantly, although no single project offers a definitive answer, together they allow us to understand much better some of the mechanisms behind the persistence of poverty. While our own beat has mostly been the poor countries, there are many others doing good economics in countries like the US, which can help shed light on the big issues our societies are grappling with.
Economists have a tendency to adopt a notion of wellbeing that is often too narrow – some version of income or material consumption. Yet we know in our guts that a fulfilling life needs much more than that: the respect of the community, the comforts of family and friends, dignity, lightness, pleasure. The focus on income alone is not just a convenient shortcut – it is a distorting lens that has often led the smartest economists down the wrong path, and policymakers to the wrong decisions. This is a big part of what persuades so many of us that the whole world is waiting at the door to steal our well-paying jobs. It is what has led to a single-minded focus on restoring the western nations to some glorious past of rapid economic growth. It is also what makes the trade-off between the growth of the economy and the survival of the planet seem so stark.
A better conversation must start by acknowledging the deep human desire for dignity and human contact – and treating it not as a distraction but as a better way to understand each other, and to set ourselves free from what may appear to be unresolvable contradictions.
Restoring human dignity to its central place has the potential to set off a profound rethinking of economic priorities and the ways in which societies care for their members, particularly when they are in need. At the very least, this should help persuade some of the disaffected that economics is about them as well, and that we economists have useful contributions to make to the rebuilding that must happen.
Tuesday 30 July 2019
Is Migration Inevitable?
By Girish Menon
In Mumbai, it appears that the taxis and autorickshaws are predominantly driven by migrants from Uttar Pradesh. In Kerala, as captured in the film Njan Prakashan, most of the physical labour is provided by migrants from the Bengal region. In the UK the nursing profession is dominated by migrants from Kerala and I don’t have to mention the Gulf where it is rumoured that one can get by with speaking Malayalam. These anecdotes do not adequately capture the migration of people all over the world.
This has led to resentment among the sons of the soil living in their ancestral lands. One of them speaking about Polish migrants felt ‘The Pole should get up every morning in Krakow, take a flight to the UK, pick fruit from the farms, collect the high wage and take a late flight back to Krakow’.
This shows that some sons of the soil admit that migrants fill a void in their labour markets and are a necessary evil to be tolerated.
On the other hand: the Brexit vote, the clampdown on the Mexican border, the identification of aliens in Assam show that political authorities are responding to their protests against uncontrolled migration.
So, why does this problem arise? Why do migrants leave their familiar surroundings to go to unfamiliar places and insist on working in increasingly hostile circumstances?
For starters, it could be that despite all the hardships faced in an alien land the migrant feels that his lot is still better than by continuing in his homeland. The film Peepli Live captures the distress in Indian agriculture, where despite all the government initiatives the protagonist finds himself leaving the village to work on a dangerous construction site in a big city. It is natural to assume that such a migrant would end up living in an illegal slum in that city.
Along with this group of desperate migrants there is also a group of economic migrants, this writer included, who seem to arbitrage the global shortage of skilled labour.
In the film Thackeray, Bal Thackeray the founder of the Shiv Sena alleged that South Indians, especially Malayalees, monopolised jobs in Mumbai and with their ‘clannish mentality’ would block opportunities for the sons of the soil. This sentiment has been echoed by similar politicians all over the world.
There is definitely some merit in their arguments too.
In the UK around 2004 Tony Blair allowed free labour market access to newly joined East European citizens. At the time there were no protests; the ruling Labour Party had ‘abolished boom and bust’ and the labour market was booming with wage hikes. The migrants were doing jobs that Britons did not want to do.
The feeling of anger only began following the 2008 financial crisis. The EU imposed strict austerity on the Euro member countries creating high levels of unemployment in their member states. The UK’s high minimum wage then acted as a magnet for migrants from the EU.
At the same time, in 2010 David Cameron’s UK government was ideologically committed to austerity and ‘balancing the budget’. They introduced severe funding cuts for schools, healthcare and welfare benefits. Thus, if you were an unemployed Briton living in Stevenage you suddenly discovered that the unemployment benefits were cut forcing you to look for a job while UK employers preferred foreigners for their higher productivity. This Stevenager’s family members also had to compete with Spaniards for reduced school places and Poles for access to the highly restricted health service.
Thus the revulsion to the foreigner may not have arisen without the deliberate and untimely austerity imposed by the Conservative-Liberal Democrat government.
So, is migration inevitable? Yes and no.
From a theoretical perspective, only having free movement of capital but not permitting free movement of labour goes against free market logic and globalisation. This is also a violation of Ricardo, because labour rich countries are being prevented from benefiting from their comparative advantage. So, if there is free movement of capital, goods and services then, unlike Boris Johnson’s argument, it is incumbent on labour rich countries to demand free movement of labour.
Nonetheless, there will always be some economic migrants who will arbitrage the wage differentials in the world. Also, there will be others who are fleeing political persecution in their respective countries.
However, some of the migration can be controlled. There could be a universal basic income available to all the inhabitants of a common market. This basic income could be determined on the basis of the minimum income required to live in the most prosperous province in a common market. Such an income will enable the prospective migrant to live a luxurious life in his depressed province and act as a deterrent to migration.
In the UK, some Conservative party members who colluded in imposing austerity and who lauded the growth of food banks have convinced Stevenagers that their economic woes are solely due to foreigners. This fear was fortified enough to win the Brexit referendum. Now the question remains if the EU elite will accept their demands for a free movement of goods and services and end the free movement of labour.
Since the interest of the EU elite are not the same as its peripheral members I will not be surprised if they collude with Johnson’s cohorts. Will this lead to peripheral members of the EU asking for an exit as well? I will not be surprised.
Wednesday 17 April 2019
Monday 27 March 2017
Brexit deal must meet six tests, says Labour
- Fair migration system for UK business and communities
- Retaining strong, collaborative relationship with EU
- Protecting national security and tackling cross-border crime
- Delivering for all nations and regions of the UK
- Protecting workers' rights and employment protections
- Ensuring same benefits currently enjoyed within single market
Saturday 12 March 2016
The non-EU workers who’ll be deported for earning less than £35,000
Donna Ferguson in The Guardian
Alyson Frazier, a 25-year-old classical musician from Washington DC, is trying to describe how it feels when people ask her whether she wants to stay in Britain. “It’s like asking a fish: ‘How’s the water?’. London is my home. This is where I have built my adult life since the age of 19.”
Unfortunately Frazier – who has a first class MA from the Royal Academy of Music and is the co-founder of Play for Progress, a therapeutic music programme for refugee children – only earns £17,000 a year.
That’s less than half the salary she, her fellow-Americans and other non-EU migrants will soon need to stay in the country permanently, thanks to rules being introduced next month.
From 6 April all skilled workers from outside the EU who have been living here for less than 10 years will need to earn at least £35,000 a year to settle permanently in the UK. Some jobs, such as nurses, are exempt (see How the rules are changing, right) but Frazier’s is not. Unless she gets a higher-paid job, she will be deported in September.
A petition to scrap the £35,000 threshold has attracted more than 100,000 signatures from British citizens and was debated in parliament on Monday. “I started the petition because I don’t want to live in a Britain that will quietly usher thousands of people out of the country without raising a whisper of protest,” says Josh Harbord, the British citizen behind the Stop35k campaign which has attracted the support of SNP, Labour and Green MPs. “I don’t want to live in a country that values people’s incomes over people’s contributions to society.”
But the government is adamant that the policy is fair, and that individuals have had many years to prepare.
A Home Office spokesman said: “In the past it has been too easy for some businesses to bring in workers from overseas rather than to take the long-term decision to train our workforce here at home.
“We need to do more to change that, which means reducing the demand for migrant labour. That is why we commissioned the Migration Advisory Committee to provide advice on significantly reducing economic migration from outside the EU. These reforms will ensure that businesses are able to attract the skilled migrants they need, but we also want them to get far better at recruiting and training UK workers first.”
Home secretary Theresa May was criticised for failing to attend the debate in person, instead sending a junior minister with an unrelated portfolio – Richard Harrington, minister for Syrian refugees – to defend the policy.
In its own impact assessment, the Home Office estimates the new salary threshold will cost the British economy between £181m and £171m (PDF), while the other organisations have put the cost much higher, at £761m (PDF).
The word ‘bonkers’ springs to mind. If the so-called gain is a modest one, why inflict so much pain?Stuart McDonald, SNP MP
“These new rules will damage the British economy, our standing overseas, and our society as a whole,” says Ralph Buckle, co-founder of the Commonwealth Exchange. “We have already seen dramatic falls in Commonwealth migration to the UK due to existing restrictions and the salary restrictions will only make things worse.”
Latest Home Office statistics show there were just over 55,000 applications for skilled work visas in the year to March 2015. Americans were among the largest groups – 12% of applications – while Australians made up a further 4%.
The government’s own admission that the reforms will only make a “modest” contribution to its target of reducing net migration was repeatedly highlighted during the debate: “The word ‘bonkers’ springs to mind,” said Stuart McDonald, an SNP MP. “If the so-called gain is a modest one, why inflict so much pain?”
Gillian Brown, 26, is one of the Australians at the receiving end of that pain. Her entire family decided to emigrate to the UK when she was 18 but, due to her age, she could only enter the country on a student visa (while her younger brothers were classed as dependents and are now full British citizens). She graduated with a first class BA and an MA from The University of Sheffield, and currently earns £20,300 as an online marketing assistant after moving into a skilled workers’ Tier 2 visa in 2014.
“Previously, I’d have been able to apply for permanent residence in the UK after five years, earning my current salary. Not any more,” says Brown. “It’s a constant worry. If I can’t convince a company to sponsor me again next year, I’ll be deported back to Australia after eight years in the UK, and separated from my parents and brothers. But the British government doesn’t care about separating families – they’ve made that very clear. ”
Australian migration specialists True Blue say the new rules have caused a spike in the number of British-based Aussies looking to head back home. In the last week of January, it saw a 50% increase in calls seeking advice on how to secure their British partners a visa in Australia.
Walkabout, the Australian bar chain, has already begun stepping up its recruitment strategies to try to deal with any fallout from the visa restrictions. “We have been losing Australian staff for some time,” says Nina Marshall, HR director. “Recruiting Australians is essential to the authenticity of our brand and this challenge is only going to become significantly more difficult.”
Jeffries Briginshaw, CEO of BritishAmerican Business, is also concerned: “American companies are deeply entrenched in the UK economy and American citizens are part of UK society, whether this is in business, schools or families. Any restriction to the Tier 2 visa scheme will have a negative impact on the way American businesses operate in the UK and how American citizens can be part of the UK.”
It’s not only business leaders who are against the change. “Migrant teachers make a significant contribution to the UK,” says Kevin Courtney of the National Union of Teachers. “It seems absurdly counterproductive to force schools to dismiss migrant teachers they’ve trained and invested in, and who are still very much needed, at a time when highly skilled, qualified teachers are in great demand. The policy urgently needs to be reconsidered.”
Jon Excell, editor of trade publication The Engineer, is equally worried about the impact on the UK’s engineering sectors, which he says are also facing an acute and worrying skills shortage. “If the UK wants to maintain its position as a world leader in key areas of engineering, international skills are essential. Not just to fill roles, but to help UK-based firms retain an international perspective and reap the economic rewards of a diverse workforce. Yet the average salary of a junior engineer is just £32,000.”
The Home Office insists that the £35,000 threshold is a fair reflection of skilled salaries in the UK. It adds: “We do not believe there should be an automatic link between coming to work in the UK temporarily and staying permanently. The £35,000 threshold was set following advice from the Migration Advisory Committee, an independent advisory body consisting of expert labour market economists, and was equivalent to the median pay of the UK population in skilled jobs.”
It points out that anyone entering the UK on a Tier 2 basis has been aware of the changes since 2011. “Those individuals were aware when they entered that new settlement rules would apply to them. Employers have had since 2011 to prepare for the possibility that their non-European Economic Area workers may not meet the required salary threshold to remain permanently.”
Following the debate in Parliament the Stop35k campaign is urging the government to reconsider the implementation of the new rules, and to give the Migration Advisory Committee an opportunity to complete an assessment of suitable pay thresholds across different jobs and regions in the UK.
It says it will continue to lobby MPs, regardless of whether or not the policy is implemented as planned.
How the rules are changing
To enter or stay in the UK as a skilled worker, non-EU migrants must have a Tier 2 visa. To qualify, you must have been offered a job in the UK and have held at least £945 in your bank account for 90 days.
The job you’re offered must pay at least £20,800, although the government is currently considering a recommendation to raise this to £30,000. Certain occupations do not have to meet this threshold.
You must also get a certificate of sponsorship from your employer (which involves a fee of between £536 and £1,476), pay £200 per year as a healthcare surcharge and be able to prove your knowledge of the English language.
Non-EU migrants are only permitted to remain in the UK on Tier 2 visas for a maximum of six years.
However, at the moment, skilled workers who have been living here on these visas for five years are able to apply for “indefinite leave to remain” in the UK.
It’s this that is about to change (PDF).
From 6 April, only those who earn £35,000 a year will be eligible to apply for “indefinite leave to remain” once they have lived here for five years.
Nurses are temporarily exempt from this threshold, along with PhD level jobs and anyone whose occupation has ever been on the official “shortage occupation list” at any point while they have been living here. The new rules also do not apply to anyone who entered the country on a Tier 2 visa on or before 5 April 2011.
In January the Migration Advisory Committee also recommended the government set a £1,000-a-year levy on companies employing skilled migrants from outside the EU, and raise the salary threshold for Tier 2 visas from £20,800 to £30,000. The Home Office has not yet outlined its response.
There is still one route to permanent UK residence for low-earning migrants, however. You can apply for “indefinite leave to remain” if you’ve been living in the UK legally for 10 continuous years. There is no salary threshold for this.
For example, if you entered the UK 10 years ago on a student visa and moved directly onto a skilled workers’ visa – without ever leaving for more than 180 days at a time or for 540 days in total – you would be eligible to apply to settle in the UK, no matter how little you earned at that point.
Applying for “indefinite leave to remain” costs up to £1,900 and applications can take six months to process.
The Home Office says anyone who is unsure whether they may be affected by the changes can call the general inquiries for immigration matters on 0300 123 2241.
Thursday 8 October 2015
Money isn’t restricted by borders, so why are people?
Giles Fraser in The Guardian
Theresa May won’t be around in the early 22nd century when, according to Star Trek at least, Dr Emory Erickson will have invented the transporter – a device that will be able to dematerialise a person into an energy pattern, beam them to another place or planet, and then rematerialise them back again. In such a world people will be able to move as quickly and freely as an email.
The philosopher Derek Parfit has rightly questioned whether such a thing is even philosophically possible: will the rematerialised person be the same person as the dematerialised one, or just a perfect copy. (What would happen if two copies of me were rematerialised? Would they both be me?) Parfit thus raises a fascinating philosophical question about what we mean by personal identity – or what makes me me.
But, just for the sake of argument, imagine what such a device would do to Mrs May’s keep-them-all-out immigration policy. With the transporter, there could be no border controls and no restrictions on the free movement of individuals. Economic migrants would love it. People will be able to live and work where they like, beaming instantly from Syria to Sussex or indeed to Saturn. And because of this, the whole concept of the nation state will eventually wither away. People will have become more powerful than the state.
Fanciful? Of course. Forget about the technical problems. The fundamental problem is that human beings are not fungible. A copy is not the same as its original. A person cannot be dematerialised into a series of digital zeros and ones, get beamed over space and be rematerialised as the same person.
But – and here is the really big thing – money can be. For the whole point about money is that it is fungible. It can be converted into zeros and ones and it can be digitally shot across space. And since the late 1970s, when capital controls were relaxed all around the world, and then even more so since the digital revolution, money has been able to go where it pleases, unimpeded, without any need for a passport or reference to border control. Every day, trillions of dollars are economic migrants, crossing boundaries as if they didn’t exist, pouring in and out of countries looking for the most economically advantageous place to be. And, just as with the fanciful people-transporter example, this free movement of capital is how the nation state is dissolving.
This week the OECD published a report on international companies and tax avoidance. Big companies like AstraZeneca are able to pay next to no tax in the UK because they just transport their profits to a low-tax regime in another country. Indeed, some countries, pathetically prostrating themselves before the gods of finance, exist for little other than this purpose. And so the situation we find ourselves in is that money is free to travel as it pleases but people are not. We have got used to this as the new normal, and it largely goes unremarked. Yes, there are a few on the libertarian fringe who recognise this as a contradiction and argue that people should be as free as capital. But the majority on the right do everything they can to protect the free movement of capital and restrict the free movement of people.
Which is why the neoliberal right in Britain has utterly contradictory instincts over Europe – they want the free trade bit but they don’t want the free people bit. And they scare us with how the free movement of people threatens our national identity but refuse to face the fact that the free movement of capital can be seen as doing exactly the same. They talk a good game about the importance of freedom: but it’s one rule for capital and another for people.
Of course the transporter won’t happen. But with the internet, the imagination can travel where it will. And that means poor people will always see and want what rich people have. And not even Mrs May will be able to stop them crossing dangerous seas and borders to find it.
Theresa May won’t be around in the early 22nd century when, according to Star Trek at least, Dr Emory Erickson will have invented the transporter – a device that will be able to dematerialise a person into an energy pattern, beam them to another place or planet, and then rematerialise them back again. In such a world people will be able to move as quickly and freely as an email.
The philosopher Derek Parfit has rightly questioned whether such a thing is even philosophically possible: will the rematerialised person be the same person as the dematerialised one, or just a perfect copy. (What would happen if two copies of me were rematerialised? Would they both be me?) Parfit thus raises a fascinating philosophical question about what we mean by personal identity – or what makes me me.
But, just for the sake of argument, imagine what such a device would do to Mrs May’s keep-them-all-out immigration policy. With the transporter, there could be no border controls and no restrictions on the free movement of individuals. Economic migrants would love it. People will be able to live and work where they like, beaming instantly from Syria to Sussex or indeed to Saturn. And because of this, the whole concept of the nation state will eventually wither away. People will have become more powerful than the state.
Fanciful? Of course. Forget about the technical problems. The fundamental problem is that human beings are not fungible. A copy is not the same as its original. A person cannot be dematerialised into a series of digital zeros and ones, get beamed over space and be rematerialised as the same person.
But – and here is the really big thing – money can be. For the whole point about money is that it is fungible. It can be converted into zeros and ones and it can be digitally shot across space. And since the late 1970s, when capital controls were relaxed all around the world, and then even more so since the digital revolution, money has been able to go where it pleases, unimpeded, without any need for a passport or reference to border control. Every day, trillions of dollars are economic migrants, crossing boundaries as if they didn’t exist, pouring in and out of countries looking for the most economically advantageous place to be. And, just as with the fanciful people-transporter example, this free movement of capital is how the nation state is dissolving.
This week the OECD published a report on international companies and tax avoidance. Big companies like AstraZeneca are able to pay next to no tax in the UK because they just transport their profits to a low-tax regime in another country. Indeed, some countries, pathetically prostrating themselves before the gods of finance, exist for little other than this purpose. And so the situation we find ourselves in is that money is free to travel as it pleases but people are not. We have got used to this as the new normal, and it largely goes unremarked. Yes, there are a few on the libertarian fringe who recognise this as a contradiction and argue that people should be as free as capital. But the majority on the right do everything they can to protect the free movement of capital and restrict the free movement of people.
Which is why the neoliberal right in Britain has utterly contradictory instincts over Europe – they want the free trade bit but they don’t want the free people bit. And they scare us with how the free movement of people threatens our national identity but refuse to face the fact that the free movement of capital can be seen as doing exactly the same. They talk a good game about the importance of freedom: but it’s one rule for capital and another for people.
Of course the transporter won’t happen. But with the internet, the imagination can travel where it will. And that means poor people will always see and want what rich people have. And not even Mrs May will be able to stop them crossing dangerous seas and borders to find it.
Thursday 5 June 2014
Where is the cheapest place to buy citizenship?
By Kim Gittleson
It is a cliche used from Bond to Bourne: the classic spy image of a suitcase filled with cash and multiple passports for a quick getaway. But increasingly it is not spies that are looking for a second passport, but a growing number of "economic citizens".
Henley and Partners citizenship expert Christian Kalin, who helps to advise clients on the best place to spend their money, estimates that every year, several thousand people spend a collective $2bn (£1.2bn; 1.5bn euros) to add a second, or even third, passport to their collection.
"Just like you diversify an investment portfolio, you want to diversify your passport portfolio," he says. The option has proven popular with Chinese and Russian citizens, as well as those from the Middle East.
Cash-strapped countries have taken notice. In the past year alone, new programmes have been introduced in Antigua and Barbuda, Grenada, Malta, the Netherlands and Spain that either allow direct citizenship by investment or offer routes to citizenship for wealthy investors.
However, concerns have been raised about transparency and accountability.
In January, Viviane Reding, vice-president of the European Commission, said in a speech: "Citizenship must not be up for sale."
But for now, at least, it seems that those with money to spare are in luck, with half a dozen countries offering a direct citizenship-by-investment route with no residency requirements.
Essentially, citizenship that is very much for sale.
Dominica
By far the cheapest deal for citizenship is on the tiny Caribbean island of Dominica.
For an investment of $100,000 plus various fees, as well as an in-person interview on the island, citizenship can be bought.
However, experts caution that because the interview committee meets only once a month, actually getting a Dominican passport can take anywhere from five to 14 months.
Since Dominica is a Commonwealth nation, citizens get special privileges in the UK, and citizens can also travel to 50 countries, including Switzerland, without a visa.
St Kitts and Nevis
The Caribbean islands of St Kitts and Nevis have the longest running citizenship-by-investment programme (CIP) in the world, which was founded in 1984.
There are two methods to obtain citizenship, with the cheapest option being a $250,000 non-refundable donation to the St Kitts and Nevis Sugar Industry Diversification Foundation, a public charity. A second option involves a minimum $400,000 investment in real estate in the country.
The programme has recently been singled out by the US Treasury, which cautioned that Iranian nationals could be obtaining passports and then use them to travel to the US or make investments, which could violate US sanctions. (St Kitts closed its programme to Iranians in December 2011.)
However, Mr Kalin of Henley and Partners, which helped to set up the programme, says that while the programme has its issues, "St Kitts is relatively well run - it's in a way a model."
He adds that Caribbean locations are good for interim passports for "global citizens" who are looking to eventually establish themselves via investments in other "economic citizenship" programmes like those in Portugal or Singapore.
Antigua and Barbuda
Antigua and Barbuda introduced its CIP in late 2013, with similar parameters to the St Kitts model: a $400,000 real estate investment or a $200,000 donation to a charity.
In a speech announcing the programme, Prime Minister Baldwin Spencer cited a common reason that countries have increasingly introduced CIPs: an economic slowdown and "the virtual disappearance of traditional funding sources".
He cited both the St Kitts example as well as the United States, which allows foreigners to obtain a green card under the EB-5 visa if they invest $500,000 in a "targeted employment area" and create 10 jobs. (Since 1990, foreigners have invested more than $6.8bn and the US has given out 29,000 visas through the EB-5 programme, although there is a yearly cap of 10,000.)
However, Mr Spencer also said: "The Antigua and Barbuda Citizenship by Investment Programme is not an open-sesame for all and sundry."
Malta
"Citizenship-by-investment programmes are certainly on the rise, especially in Europe," says University of Toronto law professor Ayelet Shachar.
The tiny nation of Malta recently came under fire when it announced plans to allow wealthy foreigners to obtain a passport for a 650,000 euro investment with no residency requirement, which would have made it the cheapest European Union (EU) nation in which to purchase citizenship.
Prime Minister Joseph Muscat estimated about 45 people would apply in the first year, resulting in 30m euros (£24m; $41m) in revenues.
After pressure from EU officials, officials changed the rule to require potential passport holders to reside in Malta for a year and raised the investment to 1.15m euros.
The uproar exposed rising tensions over the definition of citizenship, according to Prof Shacher.
"At stake is the most important and sensitive decision that any political community faces: how to define who belongs, or ought to belong, within its circle of members," she says.
"The heft of the applicant's wallet is the new answer, according to citizenship by investment programmes. This is in breach of our standard naturalisation and citizenship requirements that focus on establishing a genuine link between the individual and the new home country."
Cyprus
Cyprus is the other EU nation to offer a direct citizenship-by-investment route.
The cost of the programme was slashed to 2m euros in March, partially in an effort to placate mostly Russian investors who lost money when Cyprus was forced to accept a strict European Union bailout.
(The 2m euro figure applies when one invests as part of a larger group whose collective investments total more than 12.5m euros; an investment of 5m euros in real estate or banks is still required for an individual.)
But Mr Kalin cautions against a Cypriot investment, noting that the programme initially cost 28m euros, then 10m euros, then 5m euros.
"It's a good example of how not to do it - you bring a product to market and totally misprice it and it gets cheaper every six months. It is ridiculous," he says.
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