Remittances

April 22nd, 2007

The New York Times magazine has a great piece on OFWs (Overseas Filipino Workers) who take jobs overseas to send money (remittances in the econ jargon) back home to their families. My UQ colleague Richard Brown has been working on the topic of remittances for years, but its only very recently that the topic has attracted any attention. An obvious implication of Richard’s work on the role of remittances in Pacific Island economies is that Australia should consider opening its labour market to workers from the region, a topic we’ve discussed previously.

Surprisingly, the strongest opposition to this idea has come, not from unions, but from the Centre for Independent Studies. While there are some plausible arguments here, I don’t think they would convince anyone starting from the presumption that unless there are good reasons to stop them, people should be free to move where they want. The CIS view seems to start from the presumption “we will decide who comes here and under what circumstances” (with the implicit assertion that we should feel free to make such decisions for any reason, good or bad, or for no reason at all) a popular view but scarcely one consistent with classical liberalism

  1. jstrocch
    April 23rd, 2007 at 01:03 | #1

    Pr Q says:

    An obvious implication of Richard’s work on the role of remittances in Pacific Island economies is that Australia should consider opening its labour market to workers from the region, a topic we’ve discussed previously.

    I think Australia should concentrate on highly skilled immigrants and developing high technology capital. There is little percentage for the nation in going the other way.

    I wish Pacific Islanders all the best. And I think we should give them as much foreign aid as we can afford. But immigration policy should be about citizenship, not a covert form of foreign aid or a top-up for some corporation’s human resources. Immigrants should be selected on the basis of the national interest – how much they can contribute to the nation’s existing citizens. If Pacific Islanders are fit, smart and nice enough to make the cut then bring em on. But the issue of their remittances is irrelevant.

    Some empirical analysis of the guest worker phenomenon in the USE would come in handy before we plunge into another experiment in immigration reform. This program started off well enough for Germany and France, as a way of providing cheap unskilled labour after the war decimated native manpower. Now of course there is not such a need for unskilled labour. And the children of these migrants are now, what is delicately term in counsellor-speak as, “troubled”. What is the record of Pacific Islanders so far as social pathology is concerned? Just askin’…

    Also, spare a thought for Aborigines who would be the most likely competitors for lower-skilled jobs sought after by Pacific Island immigrant-workers. Maybe some distributional analysis would be appreciated by those on the bottom of the economic food chain before they were lumped with yet another challenge to their economic niche.

    Pr Q says:

    While there are some plausible arguments here, I don’t think they would convince anyone starting from the presumption that unless there are good reasons to stop them, people should be free to move where they want.

    Anyone who started with the assuption that “people should be free to move where they want” is certainly operating with a premise “consistent with classical liberalism”. They would also be, of course, be regarded as barking mad by the vast majority of their fellow citizens.

    Libertarianism, with its shallow and silly homo economicus model of man, is blissfully free of any kind of psycho-social foundation. The CIS is to be commended for having some kind of grasp on the cultural foundations of liberalism.

    The “we will decide who comes here and under what circumstances� assumption is the rule for the Australian populus, and most other ones in developed nation states. The notable exception to nationalistic border control seems to be the cultural and financial elites of the USA, led by GW Bush. His push seem quite happy to let in as many unskilled immigrants as possible, irrespective of popular wishes. I wonder if Pr Q finds support from this quarter in this matter as alarming as he would in others?

    It is ironic that the libertarians of the Cultural Left and Financial Right agree on so many things. The seventies certainly created some strange ideological bedfellows. Must have been something in the air.

  2. mugwump
    April 23rd, 2007 at 05:58 | #2

    “It is ironic that the libertarians of the Cultural Left and Financial Right agree on so many things. The seventies certainly created some strange ideological bedfellows. Must have been something in the air.”

    There certainly was. A massive expansion in government justified with the promise of making our lives better, but in reality leading to a bloated, inefficient and over-powered nanny-state, who’s primary purpose is to ensure a steady flow of jobs and cushy retirement for the idiot sons and daughters of the middle-class.

    Simplicity is a virtue in the case of homo-econmicus; he reserves for himself decisions on matters governments have no right interfering in.

  3. conrad
    April 23rd, 2007 at 07:41 | #3

    “This program started off well enough for Germany and France..”

    Hong Kong has the opposite experience here. The main difference is that you make sure you make sure you send them back home.

  4. jstrocch
    April 23rd, 2007 at 09:11 | #4

    Australian citizens not spell bound by libertarian ideology would be happy enough for Pacific Islanders to come to this country as guest workers for seasonal work subject to usual background checks and health testing. If restrictions on over-staying and citizenship restrictions were in place then I can’t see much downside. Peter Mares and Nic Maclellan have some useful suggestions:

    Another crucial element of any such scheme is that overseas workers should go home at the end of the season with the expectation of returning to Australia the following year. Canada’s long-running seasonal agricultural workers program shows that the promise of future employment dramatically reduces the risk of overstaying: foreign workers have little incentive to disappear into the community if they know a job awaits them next season.

    Facilitating the annual rotation of workers to and from Australia in this way has other advantages. It enables growers to retain the skills acquired by their offshore labour force. It encourages workers to repatriate money and skills gained in Australia and to invest them in enterprises at home. And it ameliorates the social costs of labour migration by limiting the separation of workers from their families and communities.

    Now for some unsolicited spin doctoring advice from a sympathetic critic to advocates of such schemes. Warning: Culture Wars diatribe ahead.

    One thing that annoys a fair share of the nation’s population is the constant presumption of moral superiority by anyone pushing an internationalist agenda. Statements of the kind made by Pr Q (“the implicit assertion that we should feel free to make such decisions for any reason, good or bad, or for no reason at all”) are having a not to subtle dig at defenders of a populist conception of national sovereignty. The implication is that some votes are not worthy because they are responding to sinister appeals made by unscrupulous politicians.

    This wont wash in a democracy where the populus is fed up to the back teeth with elites lording it over them. And then stuffing cultural and citizenship policy up big time, as occurred from late-seventies through mid-nineties. The cultural elites have blown their credibility on this issue. A majority vote is reason enough for a policy in a sovereign national democracy.

    Personally I would trust the populus rather than elites on cultural policy. “I would rather be governed by the first 2000 names in the Boston phone book than by the 2000 members of the faculty of Harvard.” W F Buckley

    Political elites at least have to regularly answer to the populus. The design of guest workers scheme should be overseen by flinty-hearted nationalists of the Howard ilk. In cultural policy one should have nationalists (eg Howard) running the show. Just as in financial policy it should be socialists (eg Keynes) calling the shots. Having an unsympathetic judge avoids the problem of “industry capture”.

    Of course the guest worker scheme would have to be stringently enforced by professional bureaucrats, not political apparatchiks. I would not trust the ethnic lobbyists, who made a mockery of immigration selection and settlement for a generation, as far as I could throw them.

    Another thing that would re-assure civic nationalists about such a scheme would be the renunciation by its advocates of any multicultural wankery. The scheme should be considered on its economic, rather than ethnic, criteria. Without any dubious “cultural diversity” agendas.

  5. KYC
    April 27th, 2007 at 09:45 | #5

    The Economist says that the prospect of EU membership has been instrumental in fostering institutional change in neighbouring countries. Perhaps Australia and NZ could offer conditional membership to an economic union to Pacific Island nations.

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