The Great U.K. Immigration Scare

Douglas Carswell, a back‐​bench Conservative MP reputed for his strong libertarian leanings, explained in December that “migrants who contribute should be welcomed. But opening the doors to Bulgarians and Romanians could create real issues.” According to Nigel Farage, a European parliamentarian and leader of the U.K. Independence Party, the single most important criterion for letting immigrants into the U.K., from Europe or anywhere else, is whether they are going to be net contributors to the U.K. economy. That means, per Mr. Farage, that they be able to earn at least £27,500 a year.

There is nothing wrong with having a debate about the generosity of the British welfare state towards immigrants. The Conservative‐​led coalition government’s proposal—to restrict EU migrants’ access to benefits—is not by itself unreasonable. But self‐​described libertarians are making a grave mistake when they suggest that immigration itself ought to be subjected to stricter controls or quotas.

Most economists would agree that there are enormous economic gains from freeing the movement of people—much larger than from further liberalization of trade or capital movements. Removing all barriers to immigration could easily double world GDP, according to sober estimates. No one is advocating open borders for the U.K., but making immigration freer than it is would almost certainly make Britain and the world better off.

There is remarkably little evidence to support the idea that the inflow of workers into the U.K. since the first wave of EU enlargement in 2004 has exercised any significant downward pressure on wages or increased unemployment among the British. Even economist Paul Collier of Oxford University, who has called for tighter immigration restrictions, acknowledged in his book “Exodus” last year that “the effects of migration on the wages of indigenous workers are trivial relative to the fuss that has been made about them.” Immigrants do not simply compete against the natives for a fixed number of jobs; they make it possible for jobs to be created that would not exist at all without the influx of migrants.

Nor is it convincing when EU immigrants are depicted as a strain on the British public purse. If anything, recent research indicates that East European immigrants have made a significant positive fiscal impact on Britain. In November, the Centre for Research and Analysis of Migration at University College London published a paper finding that since 2000, immigrants to Britain from Eastern Europe have “helped to reduce the fiscal burden for native workers.”

True, large inflows of migrants may exercise pressure on the U.K.‘s housing market. One recent estimate puts the immigrant‐​driven markup in British housing at 10%, with much of that effect concentrated in the southeast and in London. Still, the real culprit here is not immigration but strict urban planning controls, which make Britain’s housing stock the smallest, most expensive and most densely populated in all of Europe.

By advocating stricter immigration controls, British free marketeers risk defending a deeply illiberal set of policies. Sam Bowman of the Adam Smith Institute last month likened migration restrictions to the U.K.‘s 19th‐​century Corn Laws, noting that they prohibit “businesses from hiring people and property owners renting or selling to people who were unlucky enough to have been born in the wrong place.”

Speaking to factory workers last month, Prime Minister David Cameron suggested that the U.K. tell the rest of the world that it will maintain migration restrictions “until your wealth is similar to our wealth.” Anyone who claims to understand how free trade generates wealth ought to know better.