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11 December 2006

Romania and Bulgaria are just about to become members of the European Union, which has triggered again the arguments about immigration. In fact, there is no such argument. When analysed from the economics point of view, everything is very clear, even how surprising politicians are.

Let’s supose I have a company in London. I make nice fashionable clothes. The first thing I need is machinery, which I buy in England. Then I need cotton. There are no crops in London. Nor in England. But that is not going to stop me. I will bring cotton from India.

Now I have english machinery and indian cotton. I need people to work and turn the cotton into clothes I will sell in High Street shops. Suppose nobody wants to work for me because everyone is happy with their present situation. I know there are people out there willing to buy clothes. There is therefore demand. I am certain I would make money if I could produce clothes. I will import my workers. The same way I import cotton, I will import the worker.

Let’s now move a bit forward. My workers are already at work and the first supply of clothes is selling very well in the shops. The shops are now selling my products instead of importing stuff from overseas, which means that I am increasing the production of the country and hence, it’s wealth.

So as you see, we need to import people in order to increase the wealth of a country when there are places that are not covered.

Hey, hold on! People are not cotton! And we are not asking them to come, they are coming “en masse” without any request. And they are using the services that we are paying with our taxes.

True that they are not cotton, but it is not that true that we have not asked them to come. They have heard that there is a lot of work here. Check it  youself in any restaurant. And in the fields. There is a demand of people, but we can not expect that companies just ask for 37 workers to be sent over. That’s why they have to come and find the vacancies themselves. After all, they are not cotton.

So immigrants are good for the economy. But, as many will say, they make our salaries drop, they take our jobs, they enjoy services that we pay with our taxes.

Hmmmm… I think this should be treated in another post.

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