Friday, 18 September 2015

Ruairi Quinn and Labour's Democracy Problem

It is a canon of modern psychology, narcology, self-help, business management and financial restructuring that the first step to solving a problem is to acknowledge that one has a problem to solve. The Labour Party has a problem and that problem goes beyond the many cyclical problems it faces (principally, the backlash against it by voters betrayed by the party's unrealistic 2011 election promises) and even the structural ones (principally, the disintegration of the economic and financial underpinnings of 20th century social democracy and an over-reliance on public sector support). Indeed, it may even be at the root of the Labour Party's entire web of problems that threatens the party of Connolly and Larkin's future viability like never before. The problem can be summarised in one word: Democracy. 

Labour, at least since the Mary Robinson era and perhaps earlier, seems to have developed a "born to rule" complex without ever having won an election. This is unusual. Most parties which have picked up this delusion have done so precisely because they got so used to winning (e.g. the Tories prior to 1997 or Fianna Fail prior to 2011) and the consequent disconnect between self image and public standing can be chalked up to the difficulties of transition. Labour has no such excuse. Its best general election result ever has been 19% (17 points behind the leading party). In every general election bar one (2011, which increasingly looks like an anomaly), the party's best position has been third place. Only in the highly aberrant presidential elections has Labour ever won a national contest - and not once has the party been able to translate that into general, local or European election success.

No. Labour's cloying sense of entitlement seems to consist of a contempt for the stated will of the electorate. Labour believes that it is entitled to exercise decisive influence over the government of the country without winning the majority or the plurality of the vote that it needs to do so. Nothing exemplifies this attitude like Ruairi Quinn's utterly bizarre valedictory speech to Labour's parliamentary party in Wicklow. Quinn shamelessly crowed about Labour "defeating" the "Fine Gaelers", the "Free-Staters", the "Fianna Failers" and the "Nationalists", referred to his party (once derided by Sean Lemass as the most "respectable" party in the country) as "a lonely tribe of adventurers, of pioneers, of visionaries, who have said we will transform this country in a way that it never was before." This preposterous stream of consciousness from one of Ireland's most insuperably arrogant politicians demonstrates two things.

First off, a man who was first elected to the Dail in 1977 and has been a TD almost continuously since boasts of policy victories for socialism during a period that has encompassed the Thatcher/Reagan revolution, the collapse of the Soviet Union, the rise of post-Maoist Red Capitalism in China, the collapse of organised labour as a force in the industrial economy, the loss of the state's monopolies in airlines, telecoms, package delivery and television and radio, the privatisation of Aer Lingus and Eircom, the dismemberment of Aer Rianta and the reduction of the ratio of government spending to national output from a peak of just under half to a trough of just over a third. One does not have to be a fan of these developments to acknowledge that all of the structural change in the consensus of ideas during Ruairi Quinn's long and illustrious career has consisted of the defeat of socialist and social democratic policy prescriptions. Indeed, the reason that Labour apparatchiks crow so endlessly over their socio-cultural victories such as divorce and gay marriage is precisely because their attempts to sell their economic philosophy have been such a failure. If Ruairi Quinn regards this 38 year record of policy reversals as "defeating" the perfidious FF and FGers, his grip on reality must be tenuous.

The second phenomenon that Quinn's love letter to himself demonstrates is that he regards Labour as having defeated an ideological bloc (the centre-right) which has never failed to win twice as many votes as the Labour Party in any general election. If this were true, it would be indicative of the biggest breakdown in democracy that any western country has ever seen and the idea that Quinn believes that Labour has the moral standing to inflict "defeats" on a philosophy of government that he and his confederates have never vanquished at the ballot box can only be indicative of a belief that Labour votes morally count for more than those of Fine Gael and Fianna Fail. 

Quinn is not alone. This week, Brendan Howlin has said that a Labour Party whose best potential performance in the coming election is in the region of 8-10% of the vote and could easily be far, far worse, will insist, as a precondition to another deal with Fine Gael, on a 2:1 ratio of spending increases to tax cuts in the next Dail. In fairness to Howlin, his younger colleagues demonstrate an even greater ideological solipsism. In 2011, Dublin Mid-West TD, Joanna Tuffy demanded that any deal with Fine Gael (which won roughly two thirds of the coalition's votes and seats) would need to be "Labour-led" and "social democratic". Meanwhile, in her failed run for deputy leadership in 2014, Ciara Conway called for the coalition to reflect "pure Labour values" (with Labour having fallen to just 7% of vote). The bottom line demonstrated by these eruptions of emotional flatulence is that if Labour believes that its votes and seats have a greater moral authority than those of its opponents, it will never be able to liberate itself from its resentment of voters who have abandoned it for a harder left alternative or stayed with the traditional centre parties. There is nothing voters hate more than a belief that a party feels that they owe it and not the other way around. The question is whether Labour can learn this lesson before the tides of history sweep it away.   

Monday, 7 September 2015

The Refugee Crisis: A Proposed Solution

The New Crisis:

Social media is a abuzz with the "refugee crisis" which has seen hundreds of thousands of migrants entering southern Europe, sometimes on foot and sometimes on leaky rafts, often getting into trouble on the way and many tragically dying. My Twitter and Facebook feeds and the eminently predictable Economist, Guardian and Irish Times Op-Ed pages seethe with outrage, condemning, in their usual "Pyromaniac in a field of straw men" style, anybody whose Manichean enthusiasm for helping these unfortunates doesn't match (or at least approximate) their own. As a man whose humanitarianism is of the practical and unromantic variety, such emotional hand-wringing leaves me cold. Preferring solutions to sanctimony, the question for me is: what can Europe practically do at a reasonable cost to itself? To my mind, the answer to that is less than clear. Should we bestow favour on those who successfully make it to Europe (whether or not they are coming from Syria) or do we try to ensure that any resources (whether publicly or privately provided) are spread more widely amongst those suffering by assisting those who are still in situ and can't get out? To what extent will allowing those currently arriving incentivise more to attempt the perilous journey and at what point will this gigantic mass migration precipitate a crisis of some humanitarian variety closer to home? Finally, to what extent are we really talking about refugees? The likes of Polly Toynbee in the Guardian would tell you that if people are risking their lives to come here, they are refugees - end of. I'm afraid such certainty eludes me. 

If these migrants are all genuinely seeking to escape war and imminent danger, why are they travelling to Europe and not to the countries bordering Syria - Turkey, Lebanon, Jordan, Iraq and Israel? And if their whole region is supposedly unsafe (Iraq certainly is and Israel is heavily fortified), why are they not setting up permanent camp in the first European country they get to? Why do so many of them seem to be migrating to more northern (and, incidentally, more prosperous) European countries? Why are Germany and Sweden the main destinations and not Greece or Bulgaria? And why are so many of these new arrivals clearly not from Syria - for instance, those coming through Libya? I have no doubt that geopolitical turmoil of an almost unprecedented variety and scale is the proximate explanation behind the sheer number of migrants arriving in Europe. However, the escape from war can only be a partial explanation. The fact that people are coming to Europe in the first place and then continuing their northerly migration to the countries with the highest wages, most buoyant labour markets and/or most generous welfare states suggests to me that there is some element of volition involved which is inconsistent with the desperation that the media is describing. Likewise, it seems to me that the current furor over this crisis has as much to do with the ongoing debate relating to immigration as it has to do with the humanitarian issue du jour itself. The conflation of the two issues is a mistake and I wish to suggest a solution.

The Immigration Debate:

First though, I should say that it seems more than coincidental that those most eager to define this crisis at its most egregious and urgent humanitarian level and admit the largest number of "refugees" in the least time all appear to be immigration enthusiasts who regard national citizenship and residency laws as stupid and antediluvian and who (if they are being honest about it) think that it would be no great tragedy if hundreds, thousands or even millions of people who don't meet any traditional legal definition of refugee gained entry on a false pretext - privately, many advocates of loose refugee and asylum law that I've met have admitted that this is precisely what they think, namely that our immigration laws are stupid and that we shouldn't bother enforcing them. It hardly takes a particularly conspiratorial mind to see that in a world of tumult, there will always be a crisis somewhere and there will always be a justification in using concepts of danger and need to effectively bend immigration laws without end. It is also clear that this desire is disproportionately well represented at elite levels of public policy. On the left, third world immigration increasingly seems to be regarded as a means by which to grow the left wing electorate by increasing the number of clients for the welfare state. Meanwhile, on the right, business lobbies are keen to increase the size of the labour pools available to them for picking employees. Thus, while voters are deeply divided over immigration, the donor class (business, unions, the professions etc.) seem to be overwhelming in favour of more. This creates a difficult balancing act for the political class, which has to mediate between the two sets of interest groups.

It is thus not hard to see how national (and supranational) elites, frustrated at their electorates' lack of enthusiasm for open borders, have seen in the current situation an ideal political pretext to open up the floodgates without having to debate the public policy merits of changing immigration policy - far easier to simply define a never-ending humanitarian crisis which gradually turns the conventional channels for immigration into dead letters, which can always be circumvented on humanitarian grounds. One could call this the "I'm not in favour of unrestricted immigration but..." position. It does not require restrictionist or nativist views of even the mildest variety to understand why such an attitude undermines democracy and the principles of constitutional probity that underpin it. Surely, it cannot be in the interests of open borders advocates to pursue their policy goals in such a dishonest fashion, those being better served by an honest airing of their supposedly superior arguments culminating in a more certain victory, albeit perhaps over a longer time-frame. Surely this should be the appropriate position for open borders advocates to adopt if, as they keep telling us, restrictionism reflects nothing more than ignorance, prejudice and mysticism. The problem is that beneath the erudite and often statistically laden tomes produced by the multitude of academic and public policy outlets dedicated to increasing immigration is a refusal to engage with real policy pitfalls, all of which indicate that the open borders lobby is basing its own positions as much on faith and mysticism as it is on logic and data. This, I suspect, underlies the desire to use unofficial channels such as asylum and immigration to change the law by stealth.

The Awkward Questions:

Migration enthusiasts need to answer some tricky questions. First off is our system of fiscal transfers (an issue which includes but is not limited to the West's generous welfare states). Western fiscal policy is massively subsidised by the top 10-20% of taxpayers who tend to contribute massively more to the state in terms of taxation than their share of government spending. This allows the bottom 80% or so of taxpayers to pay less than their proportionate share. A good example of the scale of this disproportion is contained in a Wall Street Journal article published in April of this year, which revealed that the top 20% of earners in the United States paid a staggering 84% of the US government's federal income tax receipts. Three years ago, Mitt Romney got into the soup for pointing out that the top 53% of earners paid 100% of federal income taxes. While European tax systems are somewhat less progressive than America's, Western governments clearly have a problem which goes beyond immigrant unemployment and the receipt of benefits and social services - namely, that our societies are structured in such a way that most households and individuals are net recipients of government largesse. For citizens, who have a legal right to live in a country and who would otherwise, for the most part, find themselves stateless, the losses made by national treasuries can be compensated by opposable gains made from other citizens who pay more. Moreover, without the legal right to expel citizens, the losses and gains that accrue to national treasuries in relation to any citizen or citizens are a matter of policy and priority.

Immigration is different. It involves the extension of a right of residency by choice. As guardians of the financial welfare of the citizenry, it is surely not unreasonable for governments to be under an obligation to ensure that an immigrant who is likely to be a financial burden on the native taxpayer be denied entry. This is basic common sense and in a system in which whole swathes of the population well above median earnings are subsidised by the taxpaying percentiles above, it means that people need to reach a fairly high point in the skills distribution in order to pay for more government than they consume (and they have to earn more still if they have children or other dependents entitled to services or transfers). The pro-immigration right glibly talks about the higher workforce participation rates of immigrants relative to the native population without addressing the pressing question of how many individual immigrants are net contributors to the government and how many are net recipients of government largesse? If the majority, or even a large minority of immigrants are net recipients of government monies and services, how can the fiscal burden on native populations of subsidising them be justified? It is not an answer to say that immigrants taken as a whole contribute more than they receive. After all, immigrant populations are not inseparable population masses which can only be admitted or excluded together. Immigrants who are net contributors can be admitted while net recipients can be excluded. This is how most of the world operates, with skilled workers like engineers and doctors typically finding it easier to obtain work and residency permits than unskilled or semi-skilled workers. The pro-immigration right has not adequately addressed the question of how it can combine an open-borders immigration policy with the protection of national treasuries from fiscal burdens and until it does, I remain unconvinced of its merits.

The second argument that is routinely trotted out is that immigrants can shake up the labour market and reduce costs. So they can. It is also pointed out that jobs are not a finite commodity which will readily be exhausted by new population influxes "taking our jobs". That's also true, but... The reality isn't quite so simple. Western labour markets are highly regulated, which raises the costs and risks associated with hiring workers. This sets a practical limit on the demand for labour and thus the supply of jobs. If all government regulation of the labour market were eliminated (no minimum wage, no unfair dismissals laws, no regulation of redundancies etc.), there would be no distortive government cap on the number of jobs and we would thus have an experimental test-bed for the assimilation of immigrants into the labour market. The problem is that nobody in the political mainstream is advocating any such deregulation of the labour market and it thus remains a fantasy. There is also the issue of government-imposed non-wage labour costs (like employers' PRSI). Again, if none of these existed, we would have an undistorted labour market, but given the current fiscal state of Western governments, there's even less chance of these being abolished than there is of the aforementioned deregulation taking place. Finally, we have social welfare payments, which set a de facto cap on the demand for jobs - why work for less than you can get on the scratch? All of this adds up to a labour market which cannot produce more than a certain (admittedly indefinite but still finite) number of jobs. This means that more immigration will inevitably drive up unemployment, adding a further fiscal burden to the native population. Again, until immigration enthusiasts present a credible plan to address this problem, I remain unconvinced of the case for open borders.

The third issue, namely labour costs, is a vexed one. First off, the aforementioned restrictions on the labour market and the impact of welfare set a floor on how much wages can fall across an economy, which inevitably means that the benefit of cross-border labour arbitrage is correspondingly limited. However, to the extent that wages do respond to immigration by falling, there are further problems. In an open borders polity, subsidies provided by higher-income earners make immigration less attractive to the highly skilled (who are less likely to suffer from unemployment in their home countries) and more attractive to low-skilled immigrants (who can enjoy more government than their taxes pay for). If immigration lowered wages across the board, the native population would enjoy the benefit of lower costs of living and higher competitiveness, meaning that nominal wages would be held down while their purchasing power would rise - meaning higher de facto wages. However, welfare states will disproportionately increase the attraction of immigration to the lower skilled, meaning that immigration into welfare state countries disproportionately impacts the wages of the lower skilled and lower paid. Therefore, to the extent that immigration does lower costs, it will do so at the expense of raising inequality, which has major political implications. Again, until leftist advocates of mass immigration address this problem, I remain an open borders sceptic.

Of course, this opens another can of worms. Remember that in addition to regulating labour markets and paying the economically inactive, Western governments have a whole host of systems of entitlements and transfers (from free medical care to social housing to tax credits) which require national treasuries to subsidise incomes below certain thresholds. Another impact of falling wages is that more and more people fall into this means-tested subsidy net. Even if immigrants themselves are denied access to it, their downward pressure on wages will cause more of the native born to qualify for public subsidy. The pro-immigration left hasn't explained how they would pay for this. The pro-immigration right has not explained how to prevent this increase in public subsidy from happening in the first place. Once again, these questions leave me still to be convinced of the case for open borders.

Beyond the issue of labour markets lies the area of housing and infrastructure. More immigration means higher populations on the same land surface. If we had a housing market unburdened by supply-choking government restrictions on the construction of homes, we could at least mitigate against the inevitable pressure on land prices. Sadly, we have labyrinthine systems of building regulations, planning and land use laws, zoning laws and landlord and tenant laws which perpetually ensure a mismatch between the housing we need and what we can deliver. On the right, the response tends to be that these laws can be repealed or reformed. Fine then, repeal them and then we can talk about admitting thousands of new housing occupants into densely populated Western countries. However, without these distortions being removed from the housing market, we are putting the cart before the horse in seeking to invite more immigrants. On the left, the response tends to be that these restrictions on the construction and real estate industries are a sine qua non of a civilised society. Fair enough: but be honest about the costs of these restrictions and about the fact that there has to be some limit to the population which is designated as the beneficiary of your Utopian vision. One way or the other, we simply cannot allow unrestricted migration into a society which deliberately restricts the number of houses that can be built in which to house the migrants who come.

For the left, of course, immigration restriction is thorny. The left's principles purport to be universalist in nature, leading to an extreme distaste for denying the benefit of Western welfare states to anyone on earth. Of course, to take this line is a morally self-indulgent cop-out. If it is unacceptable to deny someone access to a welfare state based on their nationality, why should it be acceptable to deny it on the basis of residency? Surely, inviting a minority of the third world to live in the West and part-take of its benefit systems arbitrarily privileges those wealthy enough to afford to travel to the West and arbitrarily discriminates against those so poor they are left behind. While we're at it, why should the Western world provide a welfare state solely to its own citizens? Surely, if its principles are universalist, national tax collections should be forwarded onto the United Nations which could distribute fiscal transfers globally and not across nations? If the left is not prepared to contemplate this logical consequence of its universalism, it needs to be honest and accept that social democracy follows nation as much as need and if it wishes to discharge a moral obligation to the rest of the world, it must do as Norway has done - namely, restrict immigration and massively increase the third world aid budget. If the left still feels that all restrictions on migration are racist, xenophobic and prejudiced, then it must accept that its century-old experiment in welfare-stating must come to an end.

Finally, of course, there is a profound naivete abroad amongst the West's elites when it comes to the cultural and political impacts of immigration. The pro-immigration right insists that third world migrants will breathe free market life into our political system. However, the evidence for this proposition is scant. The experience of Mexicans in the United States, Asians and Afro-Caribbeans in the UK, Turks in Germany and Africans and Arabs in France shows that low-income immigrants vote like their social peers in the native population - namely for more statist and welfarist policies. Nobody has explained how the next wave of immigrants is going to be different. If, as Milton Friedman advocated, immigrants and their descendants were to be denied citizenship (as is the case in the United Arab Emirates, for example), the political system could perhaps be protected from changes in population demographics. However, even leaving aside whether ethnic minorities would put up with having no say in the government of the land of their birth for generation after generation, there remains the problem that current Western citizenship laws would have to be massively changed to achieve this and I doubt whether our egalitarian political culture - which has served us well for the best part of two centuries - would allow this kind of citizenship apartheid to be maintained.

The left, of course, sniggers at this problem, which it considers a feature and not a bug of the changing demography of the West. After all, more unskilled immigration will drive Western electorates leftward, won't it? Think again. Quite apart from the question of whether mass immigration could cause the Western welfare state to financially implode (which swift demographic change might well do), what will be the impact of mass immigration from countries and cultures where opinions on, for instance, the status of women or the treatment of gays are, to put it mildly, rather less progressive than in the West? It is a bizarre irony that people who have spent the last decade orchestrating (often quite hysterical) campaigns in relation to perceived sexism and homophobia amongst native-born Westerners, seem bizarrely and paradoxically keen on increasing immigration from parts of the world where predominant opinions on social issues are like a caricature of those considered ignorant or unacceptable in the West. What this tells me is that nobody has thought through the implications for the continued survival of Western liberalism and I'm afraid this only strengthens my underlying scepticism of the wisdom of unrestricted mass immigration.

Refugees v. Immigration - Decoupling the Debates:

However, (due, in no small part to the amplifying effects of social media, I suspect) the debate on immigration has become sloganised. Immigration proponents pointedly refuse to address any of the real issues, instead focussing on incessant metropolitan sneering and witch-hunting and wearing their pro-immigration views as tokens of their social status and moral virtue. This has naturally excited an angry (and not always temperate and rational) response from restrictionists, which has simply fed into the cultural elites' view that their opinions should be ignored. Meanwhile, the anti-immigration side has not lacked in its own culpability, often failing to address or even acknowledge the civil liberties issues relating to its proposed solutions such as national identity cards and biometric verification systems. It also needs to address special interest issues of its own. While the pro-immigration lobby is dominated by business and public sector lobbies who have their own sectional vested interests in immigration policy, the same is also true of many of the lobby groups opposed to mass immigration (such as taxi-drivers) who are trying to protect their own systems of restrictive practices (look at the behaviour of taxi drivers over Uber). All of this leaves the issue of immigration depressingly far from any kind of resolution. And therein lies to problem with conflating the immigration issue and that of what to do about Syrian refugees. If we wait to deal with this refugee problem until the immigration issue is solved, then thousands (perhaps tens of thousands) will die waiting for the solution. This is rather like executing a person and saying that a posthumous pardon can be used to rectify a mistake if one is found to have been made. To put it mildly, this isn't going to be good enough.

However, the crisis cannot be used as a means of circumventing any debate on immigration and so long as the issue remains unresolved, restrictionists will continue to have valid and rational reasons to regard the current debate over the appropriate response with suspicion. In the meantime, there are several stubborn facts which suggest the shape that the solution must take:

  1. Approximately four million people are currently displaced due to the Syrian war and living in refugee camps. This number massively dwarfs the number of people coming to Europe. This suggests that there are safe (if hardly pleasant) locations in the region in which those displaced by the conflict can survive, which in turn, only strengthens the case that those who are making it into Europe are economic migrants and not refugees - at least, in the sense that their needs for safety as refugees can be met without them needing to travel to Europe.
  2. Those who are travelling to Europe are clearly comparatively well off, insofar as they can afford the cost of travelling northwards, meaning that those left behind are clearly much needier than those arriving on our shores.
  3. Those in a true state of desperation making their way to refugee camps in Turkey, Lebanon and Jordan are not being accompanied by vast numbers of economic migrants who have no connection to Syria, whereas a substantial number coming to Europe (especially of those going from Libya by boat) are not refugees from conflict but are taking advantage of the chaos eventuated by the mass movement of populations to migrate to Europe.
  4. The humanitarian risks associated with getting on leaky boats and the financial costs of paying people smugglers etc. are much higher than those of reaching the Turkish, Jordanian or Lebanese borders.
  5. By spending finite resources on admitting migrants to Europe, taxpayers are conferring an arbitrary privilege on a few tens of thousands with the resources to get out of the region relative to the millions without. Morally, this cannot be justified. Finite resources used to provide assistance should be applied to as many people as possible and this means that money being spent on assisting migrants in Europe would be more economically and humanely spent on helping people in refugee camps in the region.
  6. The more European governments incentivise migration to Europe, the more people die in transit and the more people are convinced to spend their life savings on enriching people smugglers.           

The above suggests that the most humane solution to the current crisis is to follow the lead of the Australian and Israeli governments. Faced with a multiplicity of Asian asylum claims, the Labor government of Kevin Rudd in Australia announced that refugees into Australia would (by financial arrangement with that country's government) be housed in Papua New Guinea. The Israelis recently concluded a similar deal with the government of Ethiopia. This policy is humane - those genuinely in danger will not be turned away. It is also suitably strict - those in danger are entitled to safety, while those seeking wealth must do so through the (restrictive) legal channels.

In essence, the most sensible and humane manner in which the EU can deal with the current crisis is by concluding bilateral agreements whereby those who seek asylum or Convention Refugee status in Europe will be housed at the cost of the EU nations in neighbouring countries in the Middle East. The EU should provide financial incentives to friendly governments in the region to (i) assist European authorities in preventing illegal migrant flows; and (ii) assist those governments in footing the bill for housing refugees locally. By signalling to potential migrants that if they risk their lives and spend their savings on getting to Europe, they will have acquired a return ticket to the Middle East and not a one-way ticket to the West, European governments can save countless lives - both directly, by stopping the flow of migrants into Europe and indirectly, by being able to devote finite resources to helping the four million refugees who can't get out.

This will, in turn, allow European governments and electorates to cool down the rhetorical war that has broken out over the immigration issue and to conduct this debate with appropriate time and democratic safeguards which are completely impossible to provide for during a period of public emergency such as the present moment. The question, for those currently speaking of moral obligation, is whether they wish to be practical or to demonstrate their moral superiority. If they choose the latter course, there may be no telling how many deaths they will have on their consciences.