Hamilton on immigration

Clive Hamilton has a piece on congestion in Sydney and its implications for immigration policy. Responses came from Jason Soon at Catallaxy and Phil at LP.

I agree with Hamilton that Australia should be seeking quality immigrants with good moral character and not riff-raff who don’t share our values. I also agree that congestion is a serious cost to our society – although it is a cost that tends to be exaggerated – figures for Melbourne of up to $3 billion annually are bandied around by groups, such as the Productivity Commission, when the correct figure is closer to $700 million. But I disagree with Hamilton’s conclusion that we necessarily cannot have more migrants without reducing our living standards because of congestion effects – we can if we price the congestion away. This is a simple proposition that I propounded with Kwang Ng from Monash University more than 10 years ago (Harry Clarke & Yew-Kwang Ng, "Population Growth and the Benefits From Optimally Priced Externalities", Australian Economic Papers, June 1995, pp. 113-119).

We are better off with efficient pricing of un-priced resources such as roads (with or without immigration) provided transaction costs of pricing are not excessive - and with some qualifications they probably are not. We also get welfare gains from immigration provided all resources subject to external costs are priced. Indeed efficient pricing amplifies the benefits we get from migration.

But immigration which increases congestion costs enough because the congestion is un-priced will not make preexisting people better-off – they will necessarily be worse-off. In this case Hamilton is correct. Moreover he is correct more generally that we will lose with immigration if natural resources (such as water) are under-priced enough.

The inferences by Jason Soon and moral guardian Skepticlawyer in their comments that Hamilton’s observations are borderline racist are offensive and I tire of this type of attempt to muzzle the immigration debate. The argument suggests that if, as an Australian, one seeks any limitation on migration to Australia – the country comprising the citizens of Australia – you are a 'racist' who should be excluded from any civilized debate. That piece of dodgy logic has seen better days - particularly here when Hamilton made no reference to ethnicity.

To be clear. Hamilton’s views are correct if road pricing is ruled out and this is not a bizarre position. No city in the world, other than Singapore, has ever introduced comprehensive road pricing and many countries under-price water and other natural resources. Moreover, it is not racist to say that we prefer immigrants with good moral character who share our values – most Australians do.

Phil gets the main point about pricing correct (to be fair Jason recognizes this) and it is certainly true that cities much larger than Sydney have much appeal. But some commentators to Phil’s post are effectively asserting that Australia has no right to determine who we admit as migrants at all. As I say this seems to me such a ridiculous claim that I would not bother responding to it except that it gets raised so frequently in immigration debates. As Australians we have every right to decide who comes here – open door immigration policies, no way – most Australians want active policies to guide our immigration program and ideologues on the left or libertarian right of politics won’t change this.