European Tribune

***European Income Gap

by Richard Lyon
Fri Aug 18th, 2006 at 06:41:27 AM EST

In light of resent discussions here about the issues of labor migration between EU countries I decided to undertake a small research project. Like water flowing down hill, it is a relative difference in income and economic opportunity that provides a primary incentive for workers to relocate from one area to another. The larger the size of that gap the greater the flow of migration is likely to be. This is a situation that has occurred many times in history and has often been accompanied by significant cultural and political upheaval.

Historically and presently there is a sizable economic gap between the countries in northwestern Europe and those to the east that were under Soviet control during the cold war. When several of these countries were admitted to EU membership there was considerable concern that giving their citizens immediate full access to western labor markets would produce unmanageable economic problems. The treaties were negotiated on the basis of allowing western governments the option of delaying full integration. The theory was advanced  that as a result of having some access to other EU markets and by being the recipients of economic development funds the gap would be narrowed and unmanageable disruptive migrations avoided. Sounds nice.

I decided to take a stab at looking at what has actually happened over the course of the past two years. I collected per capita income figures from the World Bank for the years 2003, 2004, and 2005. This involved transcription from different PDF files so I don't have a single tidy link for the data. I decided to use the PCI for the UK as a basis for comparing change for the new member countries. It is one of the more prosperous western economies and it has opened its labor markets to the new members with a resulting influx greater than anything that was anticipated. There is data on 7 of the 10 countries admitted in 2004 and then data on Bulgaria and Romania which are scheduled to be admitted in 2007.

From the front page - whataboutbob


Obviously this is a single metric pulled out of a complex economic nexus. Each of these countries has different economies, cultures and histories. The results can at be suggestive of trends and not proof of what is going to happen in the future.

Country  2003PCI  %UK  2004PCI  %UK  2005PCI  %UK  Change

UK      28,320      100        33,940     100    37,600      100      ---

Ch R    7190        25,.39       9150     26.96   10,710    28.48     3.10

Est    5380      19.00 7010   20.65   9100     24.20  
 5.20

Hung    6360      22.46 8270   24.37  10,030    26.68
      4.22

Lith     4540      16.03 5740   16.91    7050    18.75   
    2.72

Pol    5280      18.64 6090   17.94    7110    18.91   
  0.27

Slo R 4970      17.55 6480   19.09    7950    21.14   
  3.59

Slov     11870      41.91 14810  43.64    17350    46.14   
  4.23

Bulg     2120       7.49  2740   8.07    3450    9.18   
  1.69

Rom     2260       7.98  2920   8.60    3830    10.19   
  2.21

This does not look like dramatic progress. Bulgaria and Romania have made more relative progress without being in the EU than Poland which has essentially made none. If you project this rate of narrowing the gap over the remaining four years in which restricted labor markets are permitted, there would still be a large gap at the end of that period.

The magic of EU membership doesn't seem to be producing much relative progress in per capita income.

Login
. Make a new account
. Reset password

Display:
Thanks for your article. Is it possible to add a link to the chart?

Half the population is under the age of 18. Tanzania's future is NOW...join the 50% campaign!
by whataboutbob on Mon Aug 14th, 2006 at 03:34:02 AM EST
Country 2003PCI %UK 2004PCI %UK 2005PCI %UK Change
UK 28,320 100.00 33,940 100.00 37,600 100.00 ---
Ch R 7,190 25.39 9,150 26.96 10,710 28.48 3.10
Est 5,380 19.00 7,010 20.65 9,100 24.20 5.20
Hung 6,360 22.46 8,270 24.37 10,030 26.68 4.22
Lith 4,540 16.03 5,740 16.91 7,050 18.75 2.72
Pol 5,280 18.64 6,090 17.94 7,110 18.91 0.27
Slo R 4,970 17.55 6,480 19.09 7,950 21.14 3.59
Slov 11,870 41.91 14,810 43.64 17,350 46.14 4.23
Bulg 2,120 7.49 2,740 8.07 3,450 9.18 1.69
Rom 2,260 7.98 2,920 8.60 3,830 10.19 2.21
by Metatone (metatone [a|t] gmail (dot) com) on Mon Aug 14th, 2006 at 03:51:31 AM EST
by whataboutbob on Mon Aug 14th, 2006 at 03:56:29 AM EST
[ Parent ]
A word to the site gnomes, allowing the <pre> tag would make plain text tables a damn sight easier to put into diaries and comments.

I used a little utility called AscToTab, which is free on windows, to generate the above table, but I still had to put some manual effort in stripping out stuff scoop didn't like.

by Metatone (metatone [a|t] gmail (dot) com) on Mon Aug 14th, 2006 at 04:15:36 AM EST
[ Parent ]
Done, I think.
by Colman (colman at eurotrib.com) on Mon Aug 14th, 2006 at 09:17:12 AM EST
[ Parent ]
Ok, testing:


Country  2003PCI    %UK    2004PCI    %UK      2005PCI       %UK       Change

UK       28,320   100.00   33,940    100.00    37,600      100.00       ---
Ch R      7,190    25.39    9,150     26.96    10,710       28.48       3.10
Est       5,380    19.00    7,010     20.65     9,100       24.20       5.20
Hung      6,360    22.46    8,270     24.37    10,030       26.68       4.22
Lith      4,540    16.03    5,740     16.91     7,050       18.75       2.72
Pol       5,280    18.64    6,090     17.94     7,110       18.91       0.27
Slo R     4,970    17.55    6,480     19.09     7,950       21.14       3.59
Slov     11,870    41.91   14,810     43.64    17,350       46.14       4.23
Bulg      2,120     7.49    2,740      8.07     3,450        9.18       1.69
Rom       2,260     7.98    2,920      8.60     3,830       10.19       2.21

The man is a genius, someone buy him a beer in London, after all, I won't be there to... oh, wait, damn... guess I owe you a pint, Colman.

by Metatone (metatone [a|t] gmail (dot) com) on Mon Aug 14th, 2006 at 10:22:08 AM EST
[ Parent ]
So, should I drop you from the attendee list?

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 10:26:36 AM EST
[ Parent ]
No, I'll overcome my stingy nature and turn up even though I owe Colman a pint. See how dedicated I am to the cause of European argumentation.
by Metatone (metatone [a|t] gmail (dot) com) on Mon Aug 14th, 2006 at 10:29:19 AM EST
[ Parent ]
So far I used the following, which always worked for me (well apparently, with Moz/Firefox at least, that is):

<div style="font-family:Courier;"></div>

by Alex in Toulouse on Mon Aug 14th, 2006 at 10:32:05 AM EST
[ Parent ]

Testing     Lalala
Testing     Lilili
by Alex in Toulouse on Mon Aug 14th, 2006 at 10:33:01 AM EST
[ Parent ]
Actually, there is a very strong convergence evidence in this table. The usual estimate of convergence rate is 2%/year, and Central Europe plus Baltics is doing better than that. It is also a common wisdom that most of the economic benefits start accruing well before the official entry date, because of law harmonization, streamlined procedures, etc. So, one explanation for Poland would be the entry effects wearing out (Poland is also one of the earliest reformers, and peak of FDI is well past it).

What's also interesting - the largest countries (Poland and Romania) growth between 2003-05 is at the bottom, and two tiny countries (Estonia Slovenia) are speeding away ... of course, this short time interval, and no other regressors means this is all just an "anecdotal evidence". Anyone for laughs?

by Sargon on Mon Aug 14th, 2006 at 10:08:20 AM EST
[ Parent ]
That's a real pretty chart. :)
by gradinski chai on Tue Aug 15th, 2006 at 06:35:08 AM EST
[ Parent ]
Wouldn't using an EU15 average have been a better measure than using one of the faster growing economies?
by Colman (colman at eurotrib.com) on Mon Aug 14th, 2006 at 09:31:26 AM EST
No, the appropriate thing is to look at the economies of the countries which did not impose meaningful restrictions on Eastern workers, that is, the UK, Ireland and Sweden [am I missing any?]. The German economy was closed to immigrant salaried workers, so its statistics don't matter for this particular game.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 09:34:08 AM EST
[ Parent ]
Then I don't understand the game. I thought the point was that we're doomed when the restrictions imposed by other countries wear out because the new entrants won't have caught up with those countries at all and there will be huge flows from the new entrants to the rest of the EU15. Which suggests that an EU15 average would be more appropriate.
by Colman (colman at eurotrib.com) on Mon Aug 14th, 2006 at 09:37:28 AM EST
[ Parent ]
I think this
Like water flowing down hill, it is a relative difference in income and economic opportunity that provides a primary incentive for workers to relocate from one area to another. The larger the size of that gap the greater the flow of migration is likely to be.
is the diary's hypothesis. Maybe we should discuss what the relevant variables (and for which countries) are in more detail.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 09:42:16 AM EST
[ Parent ]
Do you think that most of the people who have moved from Poland to the UK were primarily motivated by factors other than the chance to make more money?
by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 09:52:43 AM EST
[ Parent ]
A young polish friend of ours claims it's just friggin' scary for progressive minded people with the Twins in power and the Catholic Church in full swing.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 09:56:14 AM EST
[ Parent ]
Ha! tell 'em to try it here.

"I said, 'Wait a minute, Chester, You know I'm a peaceful man...'" Robbie Robertson
by NearlyNormal on Wed Aug 16th, 2006 at 05:15:39 PM EST
[ Parent ]
What I am saying is that you haven't quantified the effect, just posted a table. Also, Colman is concerned about what the predictable effect of the openning of other EU-15 countries will be, etc.

I mean, thanks for getting the ball rolling, but we have at least 5 more diaries to write before this is even close to done.

Nothing is 'mere'. — Richard P. Feynman

by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 09:57:48 AM EST
[ Parent ]
It appears to me that all of the EU countries are holding their relative positions to each other. Participation in the EU is not having a significant impact on the PCI of the new members. There is a large gap between their PCI and that of most countries in western Europe. The gap with the UK is larger than that with France, but the gap with France is large enough to provide incentive for migration. Reports are that illegal migration to France has in fact occurred.
by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 09:44:33 AM EST
[ Parent ]
What do you mean by PCI? CPI?

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 09:46:18 AM EST
[ Parent ]
Per capita income. CPI is consumer price index.
by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 09:50:42 AM EST
[ Parent ]
Maybe you could add that to the wikipedia list of meanings of "PCI". There are 8 others listed.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 09:55:15 AM EST
[ Parent ]
(Y/N) might be the less-confusing symbol.

Where's your motherf*%&ing flag pin?
by Drew J Jones (blahblahblah@blahblahblah.com) on Mon Aug 14th, 2006 at 10:07:43 AM EST
[ Parent ]
Participation in the EU is not having a significant impact on the PCI of the new members. There is a large gap between their PCI and that of most countries in western Europe.
In fact, not so long ago the Czech Republic surpassed Portugal in per capita income at purchasing power parity. So accession has had an effect. Also, the EU regional aid rules are perhaps perverse in that they are based on exchange-rate per capita income, not corrected for purchasing power.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 09:54:24 AM EST
[ Parent ]
I was very careful to avoid the conclusion that EU membership has no economic impact. One would need to look at a number of other variables to make that assessment. Conceivably it could benefiting people who wouldn't need to relocate.

One theory used to promote NAFTA was that it would create more jobs in Mexico and thus reduce the pressure of illegal immigration. The experience seems to be that for the low income people inclined to immigrate illegally the impact has been the opposite of what was projected.

by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 10:02:26 AM EST
[ Parent ]
I think that even though there are more jobs in Mexico now, and that this has led to a larger middle class, the difference is still that wages are so much less in Mexico than in the US. So, there is great incentive to migrate towards the higher salaries in the US.

It's nice to see Europeans having this debate about the consequences of economically motivated migration.  Not that Europe is a stranger to this type of migration, but there are striking similarities between the debate vis a vis Eastern Europe and the debate going on in the US about illegal immigration.  A decision to embrace and allow illegal immigration in the US is tantamount to the EU granting full and immediate entry to the Union of all of Eastern Europe/ minus Russia/ plus some, I would guess (haven't researched all the numbers and variables).  

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Wed Aug 16th, 2006 at 11:17:18 AM EST
[ Parent ]
It would be "similar" or "tantamount" if Mexico became part of the US and the US-50 insisted on restricting the free movement of Mexican workers.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Wed Aug 16th, 2006 at 11:24:31 AM EST
[ Parent ]
Many here are insisting that the US treat Mexican labor as if Mexico were part of the US, or vice versa. Thus my use of the word "embrace."  No misunderstanding on the legal issues here.  My Mexican father-in-law used to say "the biggest historic mistake for Mexico was when the US didn't steal the whole thing."  I'm not so sure.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears
by Gringo (stargazing camel at aoldotcom) on Wed Aug 16th, 2006 at 08:15:54 PM EST
[ Parent ]
Pobre Mexico, tan lejos de Dios y tan cerca de los Estados Unidos. — Porfirio Díaz.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Thu Aug 17th, 2006 at 06:44:47 AM EST
[ Parent ]
Indications are that many of the jobs in the Mexican melagradora pants have dried up because Asian countries are more competitive. This is where NAFTA went off the rails.
by Richard Lyon (rllyon@gmail.com) on Wed Aug 16th, 2006 at 01:21:25 PM EST
[ Parent ]
maquiladora

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Wed Aug 16th, 2006 at 01:24:43 PM EST
[ Parent ]
Thank you.
by Richard Lyon (rllyon@gmail.com) on Wed Aug 16th, 2006 at 01:25:38 PM EST
[ Parent ]
  • You haven't allowed for purchasing power adjustments.

  • PCI isn't the only determinant of emigration anyway. Hope is important, as is the ability to get a half-decent job. Most people won't emigrate unless they lose hope of a decent life at home.

  • You'd expect the effects of EU entry to lag a bit - or  a lot. Ireland didn't benefit much for what, ten or fifteen years?
by Colman (colman at eurotrib.com) on Mon Aug 14th, 2006 at 09:56:53 AM EST
[ Parent ]
You certainly are willing to clutch at the straw of hope.
by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 10:04:21 AM EST
[ Parent ]
You'd be surprised how many people believe the streets of London are paved with gold. It's wholly unreasonable. They come here with no means, and no knowledge of the language. I always wonder how bad it has to be [perceived to be] back home.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 10:08:18 AM EST
[ Parent ]
Yes, and they, then, arrive in London to discover that the streets are paved, not with gold, but with memorials for every damned thing that has ever happened in Britain.

I have to ask, since one must surely exist: Where is the Guy Fawkes memorial?

Where's your motherf*%&ing flag pin?

by Drew J Jones (blahblahblah@blahblahblah.com) on Mon Aug 14th, 2006 at 10:22:29 AM EST
[ Parent ]
Actually, I think you've caught us out with that one.

Perhaps we should set one up, I'm sure we can make some money off it!

Of course, 5th of November is quite a monument in itself.

by Metatone (metatone [a|t] gmail (dot) com) on Mon Aug 14th, 2006 at 10:28:15 AM EST
[ Parent ]
It might bring in some cash, but I think you've covered most of the tourist market with the Queen and Big Ben.  Diminishing returns kick in after those have been counted.

Where's your motherf*%&ing flag pin?
by Drew J Jones (blahblahblah@blahblahblah.com) on Mon Aug 14th, 2006 at 10:59:22 AM EST
[ Parent ]
Where is your lovely wife's diary on that? Just because she has a job to do, two kids to look after and a proper life is no excuse.
by Colman (colman at eurotrib.com) on Mon Aug 14th, 2006 at 10:26:14 AM EST
[ Parent ]
We have an ET meetup coming... You'll have prenty of opportunity to prod her then.

Two kids? Does that include me?

Nothing is 'mere'. — Richard P. Feynman

by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 11:17:32 AM EST
[ Parent ]
by Colman (colman at eurotrib.com) on Mon Aug 14th, 2006 at 11:22:21 AM EST
[ Parent ]
You'd be surprised how many people believe the streets of London are paved with gold.

I've never lived in Eastern Europe, but it may be that, compared with the towns and cities these workers are arriving from, London appears to be a city paved in gold.  The areas we walked through with you were certainly wealthier than the high-end areas of Atlanta, and Atlanta certainly doesn't qualify as poor, on the whole.

Where's your motherf*%&ing flag pin?

by Drew J Jones (blahblahblah@blahblahblah.com) on Mon Aug 14th, 2006 at 11:13:02 AM EST
[ Parent ]
Well, yes, I showed you the City, Tower Hill, Bermondsey and Southwark.

I would have to multiply my income by 3 (at least) to be able to afford a two-bedroom there.

When you're next in London I can show you Forest Gate, Whitechapel, Bow, Leyton, Hackney...

Nothing is 'mere'. — Richard P. Feynman

by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 11:16:30 AM EST
[ Parent ]
Oh, I know.  I'm not doubting that there are poor areas in London, but that high-end comparison was the only London-Atlanta comparison I could make.  How the poor areas of the two cities compare, I can't say, obviously.

Where's your motherf*%&ing flag pin?
by Drew J Jones (blahblahblah@blahblahblah.com) on Mon Aug 14th, 2006 at 12:13:36 PM EST
[ Parent ]
Not every immigrant has a positive experience. However, studies on immigration in a variety of countries have demonstrated that immigrants typically make economically informed decisions. Kinship networks of previous immigrants are an important factor. 19th C immigration to the US ebbed and flowed in correlation with economic contractions and expansions.
by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 11:20:43 AM EST
[ Parent ]
Now, why would that be? Let me think. Hmmmm.

Oh, I know. It would be that I live in a country that spent most of the last century with its economic head just as far up its economic arse as the new accession states did, that had a long, long history of emigration all over the place and infrastructure that, in the late 70s, was the envy of two small underdeveloped villages on a high mountain in Africa*.

Now, having built up a half-decent infrastructure and spent some of the money it received from the EU sensibly we're doing reasonably nicely. Nicely enough that people don't emigrate to find jobs any more. They emigrate because they want to for some reason. When I left school to go to college everyone expected to have to emigrate. When I left College no-one needed to emigrate. Not because our per-capita income was higher than anyone elses - that took a few more years - but because you could get a job and start to build a life without having to go to London or Berlin or Boston.  

* Warning: this comment may contain hyperbole.

by Colman (colman at eurotrib.com) on Mon Aug 14th, 2006 at 10:11:21 AM EST
[ Parent ]
Exactly.  Catching up requires a longer period than a handful of years.

Where's your motherf*%&ing flag pin?
by Drew J Jones (blahblahblah@blahblahblah.com) on Mon Aug 14th, 2006 at 10:25:46 AM EST
[ Parent ]
In the Irish experience it accelerated as time went on - the effect of infrastructure and wealth development is cumulative. The magic of compound interest I guess.
by Colman (colman at eurotrib.com) on Mon Aug 14th, 2006 at 10:27:30 AM EST
[ Parent ]
Right.  And I suspect that the same will be true of Eastern Europe.

The current immigration issue shouldn't be seen as a permanent crippling of those economies.  It's just a fact of life for the moment that countries like England are highly developed and present, at least in some cases, more opportunity to earn a better living.  That's not the EU's fault.  It seems to me that, at the very least, the EU has helped to open labor markets to those East-Europeans so that, now, some of the workers are getting a shot at something better.  And the knowledge and wealth they gain will, I'm sure, eventually become Eastern Europe's gain, as well.

It's ridiculous to compare Poland with Britain.  Britain's economy is among the top economies on the planet.  Poland's economy is not.  It's going to require years -- perhaps even a few decades -- for countries like Poland to catch up, and -- yes -- it will be painful in many instances, but they will catch up.

Where's your motherf*%&ing flag pin?

by Drew J Jones (blahblahblah@blahblahblah.com) on Mon Aug 14th, 2006 at 10:46:12 AM EST
[ Parent ]
And you are certainly willing to extrapolate whole sets of ideas off of two years worth of economic data, with no extra contextual information.
by Metatone (metatone [a|t] gmail (dot) com) on Mon Aug 14th, 2006 at 10:24:12 AM EST
[ Parent ]
If you will read the diary you will note the disclaimer that the limited data should be considered as merely suggestive. If you would care to present concrete data that offers a different perspective, I'd be most interested in looking at it.
by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 10:31:33 AM EST
[ Parent ]
Nothing you have presented had qualified you to claim that others are "clutching at straws."

You've associated this data with particular claims about "fuelling resentment towards the EU inside accession countries" and insinuations of disasterous floods of migration.

And, against the historical examples of Spain, Portugal, Ireland, you present this bit of data? And then deign to suggest that others are clutching at straws?

I suggest you look at your case a little more closely.

by Metatone (metatone [a|t] gmail (dot) com) on Mon Aug 14th, 2006 at 10:44:45 AM EST
[ Parent ]
My "case" is just fine. All I am saying is that in the period of membership that has elapsed there is little to suggest that the device of locking people out for seven years is going to accomplish anything positive. I think it's very plausible to expect that the people locked out will resent that treatment. It is possible that miracles  will happen. I don't deal in those may be you do.

The historical examples of Spain and Portugal are that it took longer than 7 years for incomes to show substantial progress and they are still below a number of other countries. The difference is that the Spanish and the Portuguese have not been denied the same rights accorded to other citizens of the EU.

by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 10:54:08 AM EST
[ Parent ]
The historical examples of Spain and Portugal are that it took longer than 7 years for incomes to show substantial progress and they are still below a number of other countries.
If you expect the income rankings to change, I have a bridge to sell you.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 10:59:07 AM EST
[ Parent ]
I don't expect them to. I have said repeatedly that the relative relationships are showing very little change. This is why there is and will continue to be motivation for worker migration within the EU.
by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 11:02:38 AM EST
[ Parent ]
The big migration from Spain (and Italy) to Germany happened in the 1950's and 1960's. At the same time, tourism (since the 1960's) from Northern Europe spurred a lot of economic activity in Spain. So, by the time 1986 rolled around, there was no migratory pressure. The biggest obstacle was the French farmers' fear of Spanish agricultural exports.

You need to get your analogies right.

Nothing is 'mere'. — Richard P. Feynman

by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 11:05:31 AM EST
[ Parent ]
They can change.  Ireland is, as I understand it, an example of a change in the rankings.  But once everyone is on basically equal footing, there should not be much change, because large gaps in per capita income suggest -- depending, obviously, on the jobs being filled -- advantages to the poorer country on costs.

Where's your motherf*%&ing flag pin?
by Drew J Jones (blahblahblah@blahblahblah.com) on Mon Aug 14th, 2006 at 11:03:53 AM EST
[ Parent ]
A weird thing happened in Ireland with direct foreign investment during the dot-com bubble. Colman keeps reminding us that the country's infrastructure (e.g., roads) is still not up to par with similar high-income countries. And in fact, once labour costs go through the roof because of a huge increse in per capita income investment in labour-intensive activities like education, health care and infrastructure building will encessarily sag.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Mon Aug 14th, 2006 at 11:09:33 AM EST
[ Parent ]
Once labor costs rise and growth slows, we'll know that Ireland has run into the diminishing returns inherent to capital and labor input.  The game is, then, one focused on innovation, and, while I hardly enjoy a wealth of knowledge about the Irish economy compared with (say) Colman, what reading I have done suggests that Ireland will be perfectly fine.  It's ranked fourth in the world on per capita income at PPP, and, as far as inequality is concerned, the Gini coefficient says, to me, that Ireland is in no worse shape than Britain, and is, in fact, in better shape than the US if a more equal distribution of wealth is considered desirable.

The workforce is well-educated.  The country seems to have strong and growing trade ties with the major players in the global economy.  It's involved in what seem to be the industries that show a lot of promise for the coming decades.  So, again, I don't have the knowledge necessary to make a great call here, but Ireland appears to be more than worthy of sitting at the big kids' table.  I don't think a slowndown from a half decade of 10% annual growth is going to cause much trouble.

Where's your motherf*%&ing flag pin?

by Drew J Jones (blahblahblah@blahblahblah.com) on Mon Aug 14th, 2006 at 12:03:45 PM EST
[ Parent ]
The English language should make it easy to link their service sector to India.
by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 12:36:08 PM EST
[ Parent ]
Probably so.  The Indians are better with English than the English, Americans and Canadians when they set to learning the language.

Where's your motherf*%&ing flag pin?
by Drew J Jones (blahblahblah@blahblahblah.com) on Tue Aug 15th, 2006 at 09:30:26 AM EST
[ Parent ]
Ireland success is 100% due to tax evasion.
by Laurent GUERBY on Wed Aug 16th, 2006 at 04:35:00 PM EST
[ Parent ]
Please explain?

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Wed Aug 16th, 2006 at 04:51:16 PM EST
[ Parent ]
He's probably referring to the huge tax-breaks Ireland granted to prospective investors. In short, they built infrastructure at very low cost thanks to EU subsidies, then more or less "re-sold the package" to foreign companies "at dumping prices", facilitated also by the natives' usage of English -- albeit with weird vowels ;)

I personally can't find anything to object to, honestly, it's probably the wisest use of EU money ever done. Obviously this will not go on forever...

by toyg (g.lacava@gmail.com) on Thu Aug 17th, 2006 at 05:57:51 AM EST
[ Parent ]
If you look at Dell, HP, Microsoft, ... subsidiaries in all EU countries, they all do zero benefit EXCEPT in Ireland.

Also check taxation of intellectual property revenues (check famous artists).

by Laurent GUERBY on Thu Aug 17th, 2006 at 12:35:31 PM EST
[ Parent ]
Calling other people's positions "believing in miracles" doesn't really strengthen your arguments you know. It's funny watching you try to be patronising and goad others into doing the research you claimed to have done

How about you justify your belief that income differentials (rather than absolute income levels) motivate migration to the exclusion of other factors like culture, language, internal stability and heritage.

Then begin to justify your theories of "second class citizenship" relative to the alternative of "non-accession." No-one has suggested that the world is all sweetness and light, but the reality is that the choices are made between different options than the one you propose. Believe it or not, real people are aware of that. They won't all be happy about it, but your presumption of large scale resentment is predicated on a rights model conjured in your head it seems.

by Metatone (metatone [a|t] gmail (dot) com) on Mon Aug 14th, 2006 at 02:30:09 PM EST
[ Parent ]

It's funny watching you try to be patronising and goad others into doing the research you claimed to have done

I think that sophistry would be a polite way to describe this statement. You are the one that is make the allegation that my research is invalid. It's your problem to come up with some documentation to substantiate that allegation, not mine. Until you do I will simply regard your allegation as hollow rhetoric.

by Richard Lyon (rllyon@gmail.com) on Mon Aug 14th, 2006 at 02:55:28 PM EST
[ Parent ]
I do have to agree that income differentials are likely playing the larger role, but their effects probably diminish as absolute income in the poorer country rises to a more acceptable level.  In general, I think most people are going to want to stay in their homeland, but if the differentials are large enough -- and they're enormous in some cases, according to the BBC story I watched in Notts -- it will be almost impossible to resist, again, leaving Poland for Britain.

So I wholly agree that there is a lot more to this issue than income differentials, and even more when we dig into the political questions, but Richard's not wrong, in my opinion, to focus a lot of his energy on them.  We've all certainly listened to worse hypotheses (plenty from my, alone).

Where's your motherf*%&ing flag pin?

by Drew J Jones (blahblahblah@blahblahblah.com) on Tue Aug 15th, 2006 at 09:19:41 AM EST
[ Parent ]
"(plenty from me, alone."

Where's your motherf*%&ing flag pin?
by Drew J Jones (blahblahblah@blahblahblah.com) on Tue Aug 15th, 2006 at 09:29:04 AM EST
[ Parent ]
So, in the US, has anyone studied income differentials and migratory flows among the 50 states, and is "convergence of per capita income" observed, or even expected?

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Tue Aug 15th, 2006 at 09:30:46 AM EST
[ Parent ]
I can't say with certainty, but I'll almost guarantee that no less than fifty papers have been written on the subject.  We can see it happening all the time.  The growth in the Southwest and parts the Deep South are, I'm guessing, decent examples.  It's cheaper to set up shop in Reno than in LA, just as it's cheaper to set up in Atlanta or West Palm Beach as opposed to New York or Philly.

Now if we're only talking about GDP per capita, the answer may well be "No."  But, adjusting for PPP, I think convergence probably holds.  A dollar goes a long way in Reno when the other option is LA.

Where's your motherf*%&ing flag pin?

by Drew J Jones (blahblahblah@blahblahblah.com) on Tue Aug 15th, 2006 at 09:42:53 AM EST
[ Parent ]
Yes, quite extensively. The south remained economically disconnected from the rest of the country in terms of wage levels from the civil war until WWII. WWI and WWII boosted wage level in the north and west industrial plants and triggered mass migrations from the south. In the 1980's wage levels began to drop in the northern rust belt and fueled migrations to the sunbelt.

In the EU situation we don't have to speculate about what might happen if labor markets were opened up. We have the actual experience of the UK during the past 2 1/2 years. There has been a migration from the east far larger than anything predicted. It has been reported on extensively and I have seen nothing to indicate that anything other than the prospect of higher wages was a significant factor.

by Richard Lyon (rllyon@gmail.com) on Tue Aug 15th, 2006 at 09:51:11 AM EST
[ Parent ]
How about per-capita income "convergence"?

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Tue Aug 15th, 2006 at 10:40:53 AM EST
[ Parent ]
The American south is a classic example of this. During WWII defence plants were opened there which began the development of  modern industrial base. Prior to that agriculture and textiles had predominated. Wages began to equalize with the rest of the country and out migration tapered off.

In the late 70's the offshore migration of northern factory jobs to Asia began. The resulting unemployment stimulated migration to the newer factories in the south.

by Richard Lyon (rllyon@gmail.com) on Tue Aug 15th, 2006 at 10:56:40 AM EST
[ Parent ]
I fail to see how "convergence" happens as a result of migration from the poorer to the wealthier areas.

Oh, and those "WWII defence plans" were government programs, not private enterprise.

Nothing is 'mere'. — Richard P. Feynman

by Migeru (migeru at eurotrib dot com) on Tue Aug 15th, 2006 at 11:10:41 AM EST
[ Parent ]
Migration alone doesn't bring about convergence, unless everybody moves. It is only when some sort of convergence occurs that migration stops.

I never said anything about government vs private enterprise so you comment seems irrelevant to me. If you want to have a debate about that issue you'll have to find somebody else. I am not an advocate for the neo-liberal position, nor am I an advocate for protectionism. I am simple interested in trying to understand the world as it exist.

by Richard Lyon (rllyon@gmail.com) on Tue Aug 15th, 2006 at 11:24:00 AM EST
[ Parent ]
Let me see if I cn figure out exactly what you're saying, because we're clearly talking past each other.
Like water flowing down hill, it is a relative difference in income and economic opportunity that provides a primary incentive for workers to relocate from one area to another. The larger the size of that gap the greater the flow of migration is likely to be.
there is a contribution to migration rates directly correlated with income differentials
The theory was advanced  that as a result of having some access to other EU markets and by being the recipients of economic development funds the gap would be narrowed and unmanageable disruptive migrations avoided.
Because of the common market and "cohesion funds" the income differential would be reduced after accession.

You then calculate the increase in per-capita income as a fraction of UK per-capita income between 2003 and 2005.

You conclude

The magic of EU membership doesn't seem to be producing much relative progress in per capita income.
We don't have migration figures so the first claim is untested. We don't have figures on the amount of "cohesion funds" disbursed, on exports from these 9 countries to the EU15 ("access to markets") or on direct investment from the EU15 to these 9 countries. We also have no comparison between pre-accession and post-accession trends even though the data is there. For instance, Poland lost per capita income relative to the UK in 2003-4 (-0.70%) and gained in 2004-5 (+0.97%), and instead of concluding that as a result of accession the rate of income growth improved by 1.67% (and it more than reversed sign), you say that the total rate was 0.27% and conclude "Poland has essentially made no progress as a result of accession".

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Tue Aug 15th, 2006 at 11:55:34 AM EST
[ Parent ]
Do you disagree that if people think they have an oportunity to generate a substancially larger income by moving to a new location, this will increase their motivation for such a move?

There have been numerous published reports of figures for migration into the UK following the EU expansion, with Poland being the largest source of those migrants. Are you questioning the validity of those reports?

by Richard Lyon (rllyon@gmail.com) on Tue Aug 15th, 2006 at 12:09:15 PM EST
[ Parent ]
I don't disagree, and I an not questioning the validity of those reports which you do not quote. I am questioning whether the numbers you posted warrant your conclusions.

Now, I am trying to take this step by step: did I paraphrase you correctly? I can see three claims made in the diary: am I right on what your claims are?

Nothing is 'mere'. — Richard P. Feynman

by Migeru (migeru at eurotrib dot com) on Tue Aug 15th, 2006 at 12:16:24 PM EST
[ Parent ]
I agree that an effort to untangle communication is desirable.

After numerous interchanges I'm not entirely sure about where your paraphrase stands. I think it would be simpler for me to restate my view and ask you to react to that statement.

  1. Large income disparities tend to promote labor migration when political barriers to entry are removed.

  2. There was a difference in the maintenance of those barriers with the expansion of the EU. One of the political justifications for allowing this was the notion that the benefits of EU membership would reduce the income disparities and thus avoid disruptive migrations.

  3. Those countries that did not avail themselves of the option to keep labor markets closed have experienced disruptive migrations.

  4. The question that I attempted to address was whether there was any indication that an equalization in income was occurring. Based on a SINGLE metric it appears to me  that any progress toward equalization is small and slow and in the case of Poland essentially non-existent.

  5. It is my view that this SUGGEST, not proves, that the delay in opening labor markets is not likely to substantially reduce the risk of disruptive labor migrations when those markets are opened.
by Richard Lyon (rllyon@gmail.com) on Tue Aug 15th, 2006 at 12:35:38 PM EST
[ Parent ]
  1. testable and quantifiable, we're missing the migration flow data
  2. ok
  3. I disagree that migration into the UK has been "disruptive", and I think that is thinly veiled xenophobia. We should see who claims that and on what basis. I haven't heard the Irish or the Swedish complain as loudly, and they opened their borders too. A few other countries opened their borders this year (Spain among them), and the European Commission informed favourably (as was to be expected) on further opening. Germany stayed shut, as did other EU15 countries.
  4. I claim the data support a change of trend in Poland from decreassing to incresing income. Also, to what extent have the benefits of EU membership (from 2.) accrued to the vaious new member states? For instance, Poland and CZ have been criticised by the EU for not taking advantage of the EU regional funds available to them. If foreign investment, agricultural subsidies and/or cohesion funds have not been deployed there is no reason to expect "EU magic".
  5. ok, but I challenge several of the premises [at least they are not obvious to me]


Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Tue Aug 15th, 2006 at 12:47:33 PM EST
[ Parent ]
1.
There was migration data in this article from The Guardian that I did a diary about.

http://politics.guardian.co.uk/homeaffairs/story/0,,1842992,00.html

  1. My meaning was politically disruptive in that enough people are upset about it that it is having an influence on the deliberations of the cabinet. I am inclined to agree with you that it is more about xenophobia than economics. I'm not in the UK at present and able to make direct personal observations. However, that is my observation about the debate in the US over Latin American immigrants. I think there are likely similarities in the situations.

  2. I would agree that the potential benefits of EU membership impact many areas and one would need to undertake a much more in-depth assessment to calculate them.

It sounds to me as though you are not in really fundamental disagreement about major issues on this matter. I do think it is likely that Poles will continue to take the bus going west. I am not convinced that represents one of the world's larger problems.
by Richard Lyon (rllyon@gmail.com) on Tue Aug 15th, 2006 at 01:12:24 PM EST
[ Parent ]
There was migration data in this article from The Guardian that I did a diary about.
Mr Hutton is understood to believe that there is no clear sign that the influx of migrant workers from the previous eight EU accession countries such as Poland contributed to a 100,000 rise in UK jobseeker's allowance claimants.
And this is from the Department of Work and Pensions. I can;t find mush by way of actual "statistics":
Britain was one of the first EU countries to open its doors to workers from accession states. The government had estimated that 13,000 workers would arrive from the eight countries that joined in 2004. But hundreds of thousands of Poles and other eastern Europeans came, many for short periods, at a rate 20 times higher than Home Office predictions.
[my emphasis]

I have seen no complaints about the hundreds of thousands of Australians, New Zealanders and South Africans that come the to UK either. It's all anti-slav racism and anti-EU propaganda, IMHO.

Nothing is 'mere'. — Richard P. Feynman

by Migeru (migeru at eurotrib dot com) on Tue Aug 15th, 2006 at 01:28:44 PM EST
[ Parent ]
Here's a new article from today's Guardian that I just saw.

http://politics.guardian.co.uk/homeaffairs/story/0,,1845187,00.html


However, Home Office predictions that around 13,000 would do so proved to be wild underestimates; instead, nearly 300,000 have already registered to work here. Mr Denham estimated that the true figure was between 600,000 and 800,000.

From your post:


I have seen no complaints about the hundreds of thousands of Australians, New Zealanders and South Africans that come the to UK either. It's all anti-slav racism and anti-EU propaganda, IMHO.

I wouldn't argue with most of that. There was considerable rigging of the British immigration system in the 50's to slant it toward certain countries in the Commonwealth and away from others.

Since there is considerable antipathy toward Polish workers in Germany and France, I'm not sure how much of this is anti-EU per se. However, there is always an element of that in British right wing politics.

by Richard Lyon (rllyon@gmail.com) on Tue Aug 15th, 2006 at 01:45:37 PM EST
[ Parent ]
(1) I think this is probably a reasonable statement on your part, but it shouldn't be too difficult to track down some data and run a regression.

(2) What Miguel said.

(3) This is your opinion, not a fact.  Define disruptive migration.  Remember that, while Britain might (say) have to spend more on infrastructure, it is also receiving the benefit of people who, for the moment, apparently do jobs for a lower price than British-born workers, so purchasing power has risen (again, for the moment) -- that is, subject to, for example, rising housing costs due to a larger number of people needing homes and things of that nature.  (Or housing costs, in another scenario, might not rise, if the country in question already enjoys a surplus.  But, judging by price movements, I think it's safe to say that Britain does not.)

(4) The single metric is misleading.  Are these figures at PPP, or are they simply taken at market exchange rates?  What's the story?  The fact that incomes have risen doesn't mean anything.  But, working with the assumption that this metric is useful, there is, regardless of pace, convergence in the above data, based on a quick viewing.  As Colman pointed out yesterday, it took a while for Ireland to make the transition from 20% unemployment to The Celtic Tiger

(5) Maybe not.  I suppose we'll find out.

Where's your motherf*%&ing flag pin?

by Drew J Jones (blahblahblah@blahblahblah.com) on Tue Aug 15th, 2006 at 03:24:47 PM EST
[ Parent ]
  1. I've done a good bit of reading about the economic history of immigration and internal migration. Much of it is based on fairly sophisticated statistical analysis. I have yet to come across an economic historian who appears to fundamentally disagree with this view. It seems to have rather broad acceptance. Of course when you attempt to analyse the details of specific historical events there is no end to academic debate.

  2. In my mind there is a difference between political disruption and economic disruption. Political disruption is what I'm talking about in the UK. As I said I see definite parallels with the current immigration issue in the US. What we have here is political disruption. It is my opinion that the Latin American immigrants legal and illegal are not creating a significant economic disruption. They make a useful political smoke screen for the far more significant issue of the shifts from the US economy to Asian economies. I am making the assumption that the reality in Britain is similar. All I am really saying is that the notion of keeping the Poles or the Bulgarians in a cage for seven years to fatten them up is mostly political snake oil.

  3. This was not meant to be a definitive academic study, but something simple to focus a discussion that was getting lost in unsubstantiated abstractions. PPP is certainly important. I passed over that data deliberately. It appears to follow a similar pattern. At some point when there is a large enough disparity in cost of living PPP can definitely tell a different story. India offers a specific example. Indians working in the US and the UK can return to India taking a big cut in salary and still live better.

Countries that joined the EU earlier definitely appear to have experienced economic progress, but everybody seems to agree that took much longer than seven years.
by Richard Lyon (rllyon@gmail.com) on Tue Aug 15th, 2006 at 04:53:27 PM EST
[ Parent ]
(1) I didn't say I disagreed.  I don't know any economist who disagrees.  I simply said that it would be a good idea to run a regression on it.

(3) You didn't distinguish between political and economic disruption to my knowledge, but the two -- or, at least, the perception of the latter and the reality of the former -- go hand-in-hand.  The political disruption results from voters seeing an economic disruption, real or imagined, because of waves of immigration.

The anti-immigration lobby in the US is very loud, and certainly present, but not incredibly powerful.  The Democrats, for all practical purposes, want to let immigrants in.  The Republicans have a problem with their base, but the party leaders, too, seem to want to let them in.  Both are in a race to pander to the rapidly-growing Latin-American voter base.  Voters don't seem to be moving, asses-and-elbows, to send a message to the parties either, so it seems reasonable to state that it's not as important an issue as (say) Lou Dobbs would have you believe.

But as far as I was able to tell at the time, were it not for immigration, the Tories would not have gained nearly as many seats as they did.  So I don't see the parallels you apparently see.

Don't buy into the media hype.  I've got a pint of beer saying American voters never force Congress and the president to shut down Mexican immigration.  The political disruption barely qualifies as a whisper of protest at the end of the day.

I'm not necessarily disagreeing about the East-European migrant question being a smokescreen, nor am I agreeing.  (Honestly, I just don't know.)  I am saying that there are perhaps perfectly reasonable arguments against allowing another wave immediately.  I know that, when I was in England, there seemed to be a shortage of construction in residential areas.  And, given Britain's over-the-fucking-rainbow housing market of recent years, that suggests to me that either the market has peaked and is expected to come down strongly, or that some regulation is holding back construction which many people did suggest to me, or that businesses were just too stupid to capitalize prior to the peak.  Rising prices almost always lead to increased supply, so something doesn't seem quite right, even taking into account the fact that building houses takes time.  One way or another, there seems to be a struggle to keep up with construction.

The roads were also severely congested -- and I was in Nottingham, which hardly qualifies as an enormous, compact city, even by American standards -- and often under construction.  (There were always barricades and orange tape, as well as the obligatory large holes in the street, but nobody seemed to be actually working on filling the damned holes, and already they needed to work on more.)  Infrastructure was not being maintained in many areas.  What building sites existed were not being worked on, save for one day, and the job was being done half-assed.  These are problems that are made more difficult by large inflows of immigrants.  And Nottingham, as I understand it, isn't even a major city for immigration -- surely not on par with London, Leeds, Birmingham, or Manchester.

You have to recognize the possibility that there is severe economic disrupton happening, and that it is reasonable to ask for a break.

(4) That's perfectly reasonable, and I salute you for it.

Where's your motherf*%&ing flag pin?

by Drew J Jones (blahblahblah@blahblahblah.com) on Tue Aug 15th, 2006 at 07:13:12 PM EST
[ Parent ]
There's really nothing I would disagree with in what you say about the politics or economics of US immigration. I have lived in California since 1969. This is all old hat to me. I am presently entertained by listening to my relatives in the deep south freaking out like it's the end of the world.

I've spent a lot of time trying to follow British politics, both historical and current. It is usually a mistake to try to completely equate it with US politics. However, there are usually enough convoluted similarities to make a comparrison interesting.

To my mind the important difference between the eastern Europeans and the Mexicans is one of political comittment. The EU is supposed to be a proposition of political equality. The political compromise of admitting new nations while delaying their full rights strikes me as sawing babies in half. The pseudo-economic arguments that have been used to justify it strike me as political snake oil. There's never any shortage of that product anywhere on the globe. It's when people try to give you a fashion comentary on the emperor's new clothes that I get my dander up.

by Richard Lyon (rllyon@gmail.com) on Tue Aug 15th, 2006 at 07:44:09 PM EST
[ Parent ]
God, another friggin' Californian? ;)

In fairness, the developments in US immigration are a bit new to the Deep South compared with California.  But I wholly agree that it is entertaining to watch Deep-Southerners freak out.  My relatives in North Georgia were going nuts, but, upon explaining what was going on, and what would happen, they relaxed a bit.  (They've been raised in one of the most racist, xenophobic areas of the country, but they do come around when you demonstrate to them why what they see on television is bullshit, and why immigrants are generally good people who work hard and (largely) play by te rules.  Reality proves their fears incorrect in most cases.)  Much of it is, I think, simply a fear of the unknown, which I can understand, especially with all of the propaganda being thrown around among certain news outlets.

It's the same story on same-sex marriage.  People who have gay/lesbian friends are not afraid of them.  The propaganda goes in one ear and out the other.  And that's why, knowing that time and expansion of the American society are on our side, I'm not terribly worried about the question of whether or not we'll secure equal rights to marriage.

To me, it all comes down to experience showing that people are people.  In general, they want the same things -- better lives for their kids, enough money to enjoy a decent retirement and time with family, a championship for their favorite football (American or "Furrener") team, and so on.  They have similar core beliefs -- don't kill, don't steal, etc.  But it's often simply a matter of experience finally beating the hell out of the fearmongering talkingheads.

I think the UK and the US do seem to share similar trends in their politics at times.  Reagan and Thatcher are a good example: the sort of "conservative counterinsurgency" types.  Blair (prior to Bush) and Clinton: the "run to the middle" liberals.  Bush-era Blair and Bush: the loony-toon Neocons seeking the onset of the Apocalypse.  Brits also seem to, politically, sit somewhere in between America and Continental Europe.

In general, I agree that new member states should be granted all rights and privileges associated with EU membership, but, again (just to beat a dead horse), I also think it's reasonable to suspect that there may be real economic issue at play here.

Where's your motherf*%&ing flag pin?

by Drew J Jones (blahblahblah@blahblahblah.com) on Wed Aug 16th, 2006 at 10:26:26 AM EST
[ Parent ]
Clearly one economic problem is that only a few countries opened their markets to the new members. It is certainly reasonable to assume that if all of the older EU members had done so, the migration wave would have been somewhat more disbursed and there would not have been as heavy an impact. Once you've done something you are likely to get more heat if you then decide to back off from it, than if you had simply gone along with the crowd to begin with.
by Richard Lyon (rllyon@gmail.com) on Wed Aug 16th, 2006 at 10:35:11 AM EST
[ Parent ]
Probably so.  I do, however, think that Britain and Ireland have offered at least the perception of economic advantage in recent years, due to their relatively strong growth.  Ireland, obviously has the stronger rate compared with Britain, but I don't think Britain has endured a recession for at least ten years.  It may be headed for one in the not-too-distant future, but I'd bet on America hitting the wall first.  Although, with my luck, America will plunge into recession while Britain's growth jumps, sending sterling's dollar value through the roof.

Where's your motherf*%&ing flag pin?
by Drew J Jones (blahblahblah@blahblahblah.com) on Wed Aug 16th, 2006 at 11:40:15 AM EST
[ Parent ]
I suspect that the decision of Her Majesty's Government to open the labor market to eastern Europe was motivated by more than a simple passion for justice. It seems likely that British employers were optimistic about their ability to absorb a new supply of low wage workers. I think it is the size of the influx that has surprised them.
by Richard Lyon (rllyon@gmail.com) on Wed Aug 16th, 2006 at 01:25:07 PM EST
[ Parent ]
I don't think it's the employers. Notice that the push for a limit on the munber of immigrants and for barring Romanians and Bulgarians is coming from the Home Office, not from the Department of Work and Pensions, or from British business.

Also, Drew has mentioned the skyrocketing prices of housing as an indication of excessive demand due to the new immigration. The housing bubble is an asset bubble, and is fuelled not by increase demand for housing but by people buying homes as investments, especially "buy to let".

Nothing is 'mere'. — Richard P. Feynman

by Migeru (migeru at eurotrib dot com) on Wed Aug 16th, 2006 at 01:30:19 PM EST
[ Parent ]
I don't think it is employers that want to cut off the immigrants. I meant that they were probably pushing for the origional decision to open the market as opposed to the course followed on the continent.

It looks like the housing bubble is starting to pop in the US. The results could be dramatic.

by Richard Lyon (rllyon@gmail.com) on Wed Aug 16th, 2006 at 01:36:20 PM EST
[ Parent ]
"Buy-to-Let" is certainly part of the problem -- perhaps even a large part of the problem -- but not the only part.  Demand has, I suspect, been driven by (1) low interest rates; (2) the "Buy-to-Let" market; and (3) probably demand growth due to an increase in population above the incr