Saturday, December 30, 2006

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.


FXH said...

I'd be interested to hear how you woudl weed out the riff-raff from the great and good.

Andrew Bartlett said...

A zero-net migration stance may not be racist, but it is certainly misanthropic and usually xenophoic as well. The notion that Australia can - in effect - put up a 'house full' sign is ludicrous and extraordinarily selfish.

I'm all for population control, and for encouraging a more diverse spread of migrants around Australia (including internal migrants), but we live in a global village. People consume resources wherever they are. Having fewer on the planet as a whole would be a good thing, but just keeping them all out of our patch is wrong.

The whole approach also ignores the simple fact that far more people now come to Australia each year as long-term temporary residents - around half a million - than come as permanent residents. (it also ignores the millions who come in each year as tourists and other visitors, most of whom it should be noted come into Sydney).

hc said...

fxh, There is a points system that reflects education, English ability and skills. The sarcastic tone to your comment suggests lack of belief in any selectivity - but the alternative is no selection whatsoever.

Andrew, It maty be neither misanthropic or xenophobic if Australia cannot come to grips witrh its resource shortages with efficient pricing. And the basis for my caution is that, like Clive Hamilton, I have environmental concerns.

I agree with your points about tourists and temporary residents - these are observations I have been making for 15 years. In terms of their reswource demands - and the economic gains we get from them - they are similar to immigrants.

FXH said...

hc - I'm not sure my tone was sarcastic, well not anymore than usual, and riff-raff was your term not mine.

I think at least one reason people like myself, and perhaps a Jason Soon, get a mite touchy about how entry criteria are framed, is that if my forebears on most sides had to pass an "education, English ability and skills" points system, I just wouldn't be here.

Our family contribution has been as useful, and on many criteria more useful, as anyone who was educated, spoke good english and had defined skills. And anyway we are here and call ourselves Australian and have fought in wars, some of us killed and some in POW, for Australia and payed taxes, served in public office voluntarily and participated in the polis enthusiastically if peripetatically. (sp?)

Anyway we are australians and want to welcome people here to live. I've no objections to a screening process but I don't think it is all that clear who we (as a nation) want should let in or keep out. I'd like bit more debate and transparency. And a bit more of the australian values of a fair go. My gut feeling is to let in more of those who want to be here rather than somewhere else and to give a leg up to those who have suffered at "home".

And what andrew and yourself said about tourists and other visitors. The zero immigration stance makes no sense at all if based on scarce resources. If we are worried about scarece resources the first thing we should do is stop tourists.

hc said...


Fitstly, have a good New Year and a celebratory New Years Eve,

Entry requirements in the past were different and rightly so - up to the end of the 19th century open door was a reality. This ended decisively in the 1920s.

I support immigration at positive levels provided immigrants do not impose external costs on us.

I also favour trying to select the best immigrants we can get given the political necessity of a quota. Skilled, accepting liberal Western political values etc. Howard has done great things in this regard.

The refugee program has not functioned well in the past because it has often been an extension of the family program. Per head Australia has one of the most generous refugee and humanitarian programs around.

All of us are migrants or the progeny of migrants. My own children are Eurasian. But wanting a selective migration program does not make you a racist and thats my beef in this debate.

I understand the sensitivities - I am subject to the same forces - but select we must and should.