Challenging the narrative that immigration is bad for our economy is at the Heart of the Corbyn Campaign. It is the stark difference between other Labour candidates and Corbyn that others employ divisive politics to blame immigration for failures in our economy.
With the rise of UKIP, the way that mainstream media promotes an anti-immigration rhetoric that fuelled the Brexit campaign and with Theresa May who wants to control immigration as our current Prime Minister, there has never been a more important time to educate one another about the benefits of immigration to our economy, to stand up for the rights of all of our workers and to shift focus onto the real solution.
Corbyn’s speech after Brexit vote providing policies to protect workers so no one gets left behind.
If we are unable to understand the real cause of low wages and continue to frame the conversation around immigration we create 2 problems where before we just had one.
Problem 1. We will not be able to solve low wages for our workers.
Problem 2. We will create economic downturns associated by lowering immigration.
Both of these problems are bad for our economy and for the duty of care we have to our communities who all participate in our economy.
Theresa May, Boris Johnson and Phillip Hammmond, all use anti-immigration rhetoric to employ divisive politics
This is the right wing viewpoint simplified:
“As there is a finite amount of wealth more people means there is less to go round, pushing wages per person down. Therefore immigration causes low wages.”
But that view is inaccurate and must be challenged. The premise that there is a finite amount of wealth is wrong and shows a lack of understanding as to how wealth is created. Here are two extra problems I will deal with shortly that we’d have to deal with based on this false analysis that are beyond immigration.
If there was a finite amount of wealth then how is it the case that we continually create more wealth each generation?
If there was a finite amount of wealth should we also be looking into limiting the number of children we can have because if we grow our populations through birth we will create constant economic downturns?
Lincoln on the superiority of Labour 1861
Wealth is created by Labour (work)
In a simple model, if I grow my own food and manage to grow more than I need to live, I can trade the excess for other things I may desire. Money has come to represent and provide a value for our excess labour produce. Money allows for societies to become more complex and for us to specialise. Accumulated excess is wealth.
In another article I’ll explore good and bad capitalism based on this model but for now, we can see that wealth is created by Labour (by workers) and is only as finite as the amount of Labour we have available. So more workers = more wealth potential.
This excellent news means we have an answer to why each generation as our population grows we have more wealth, we also no longer have to concern ourselves with the problem of limiting our offspring to protect against economic downturn and also means we should encourage immigration as more Labour = more Wealth. Simply put, the economy’s wealth is a measure of our society’s productivity and is only limited by the amount of workers we have available and conditions that affect workers ability to work.
Correlation not Causation
There is a correlation between immigration and low wages, but there is equally a correlation between the rise of mobile phone gaming and low wages. A correlation is simply the case that two true things are happening at the same time.
What we need to discover is causation. And for causation we will have to look closer to home.
Lets first understand why the correlation is not a causation.
We’ve already shown that immigration is good for wealth, but that doesn’t on its own have research that speaks to immigration causing low wages or not.
This study from Oxford, http://www.migrationobservatory.ox.ac.uk/briefings/labour-market-effects-immigration, explores the relationships between immigration, low wages and employment opportunities. It concludes that the effect on low wages is minimal but when it does occur can in the short term negatively affect low paid immigrant (non-UK) workers in specific conditions, but medium and high waged workers find an increase. In the long term, wage increases can offset losses. The effect on employment opportunities is also minimal but during periods of economic downturn, immigration from outside the EU could affect the chance of UK born workers to gain employment. Overall there is no negative effect of immigration on wages for UK workers but there is a small effect on job opportunities during economic downturns. The study also showed that there were positive effects on wages for UK and non-UK workers in the longer term.
While we can continually fight against the argument that immigration is the major cause of low wages, we should acknowledge that downturns in economy does create negative effects to those who rely on the economy. In order to provide the duty of care for our workers we need to maintain and create conditions for sustained prosperity.
So if it’s not the case that immigration causes low wages and that it only correlates to low wages. What is the cause?
For this we can turn to philosopher Henry George who wrote the book on this over 100 years ago. Called Progress and Poverty and looking at why increase of wealth causes low wages and poverty, this book outsold every book but the bible. George himself was an international superstar; well respected in USA, Ireland, UK, Australia and most of the Western world, all before the advent of the telephone. His story is itself highly inspirational, as he helped to found the first free library in America and created the international antipoverty movement, originally without the support of the Pope but it was later granted.
The Remedy, as George put it, is to tax land values. Here is why:
As wealth increases and as more Labourers arrive to participate in greater wealth, the available and desirable land that is required to live and work on becomes more valuable. Landlords who effectively have a monopoly on available and desirable land, will charge the most possible for access to that land and will be related to the strength of economic wealth, so as wealth increases, so too does land value. Land value also improves because of labour creating public services, better policing, schools, transport etc… all of which improve desirability. Through keeping land value high and charging the highest possible value in rent, wages are kept depressed and low while productivity and wealth grows. Some call this rentable value “economic rent”. Over time, landlords gain wealth that was created through the productive labour of others.
As land value is derived from the whole community, be it through tax paid public services or through public and private opportunities for employment there can be a moral case for putting that value back into the community instead of into the pockets of whoever is lucky or powerful enough to have become the owner of land. While there should be benefits to owning land, – be it Green benefits to the community or Labour benefits by putting the land to good use, – the benefit of collecting an unearned rent income from those who have earned it is not really fair, especially as it also suppresses wages.
If we were to tax land values so that community created wealth became the revenue for our public services we would be able to lower other taxes as a result. We would encourage land being put to better use. We would be able to afford higher wages for workers. We would be able to create positive prosperity cycles for our economy. Economic immigration would help to increase our productivity and also our land value which in turn would allow us to enjoy progress and prosperity instead of progress and poverty.
Land Value Tax activists believe in shifting taxes off productivity and onto land value economic rent. There is already a strong case for replacing property taxes with land value tax, largely because it is very easy to value land and, in urban situations, it doesn’t matter what has been built on the land to create that value. Council tax should be reassessed but it will be highly invasive to do it the way it was done when it first happened – picture council people inspecting homes with clipboards and tick boxes. If we could revalue all land on a daily basis, as they do in parts of America who enjoy part land value taxes, we could swiftly and easily move council and business rates to land value tax. We could also remove stamp duty, because it’s a tax on transaction and taxes our economy production.
That would be a good start.
The next elements to consider would be raising personal threshold for income tax allowance to £30,000 or £40,000 to allow those who earn middle to lower incomes not to be charged taxes on that productivity. Also lowering or removing VAT would be great as it is another tax on transaction.
Over time we would see a shift from our banks relying on mortgages and debt to our banks relying on productivity and investing in businesses. The change would be gradual and would allow potential losers to make new arrangements in good time. Overall everyone would be a winner.
Once we have prosperity cycles for our economy the possibilities are endless really.
In summary, we all want prosperity and we are aware that currently wages are low and that immigration happens. There is evidence that immigration does not cause low wages. There is evidence that economic rent and wealth increase with more Labour and that if we taxed economic rent we could afford not only to raise wages but also to lower other taxes at the same time.
The Labour Land Campaign are activists who campaign, write articles, provide speakers and educators and even make films to promote land value tax within the Labour movement.
John McDonnell had long been a member of Labour Land Campaign and the Corbyn leadership is clearly pro worker and pro freedom of movement.
It’s time for the Left to champion the cause for getting our communal land value back. “Land” can be the Left’s “Immigration” – and together we can promote the real reason behind wage suppression and provide the focus of the prosperity economics only the Left will offer.
You can read Henry George’s Progress and Poverty in full here: http://www.henrygeorge.org/pcontents.htm