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Warning: Immigration Can Seriously Damage Your Wealth

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British and American workers believe that immigration reduces their wages and their wealth. Conversely, the political elite of both countries, who benefit from cheaper labour, are in favour of having immigrant workers.

Warning: Immigration Can Seriously Damage Your Wealth

By Anthony Scholefield

 

© The Social Affairs Unit 2007
All Rights Reserved

All views in this publication are those of the author, not those of the Social Affairs Unit, its Trustees, Advisers or Director

 

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Preface

When an immigrant steps off an aeroplane in London or New York, he arrives in a country whose native inhabitants have accumulated capital and wealth over generations and centuries. From the moment of arrival, he makes use of this wealth – the airports, the roads, the water supplies. Later, he requires the ‘tools of production’, housing, health services, churches, colleges and cultural institutions, etc.

British and American politicians and commentators have typically addressed the income or GDP effects of immigration; and, in the case of Britain, all major political parties regard these as favourable. They fail to mention that free market economists contend that immigration has a depressing effect on native wages.

The issue of the impact of immigration on existing wealth is rarely mentioned, though. The essence of this is as follows – when an immigrant worker arrives without capital and earns the same as a native worker, that means the wealth of the country is being shared among more people, and therefore wealth and capital per head are reduced.

To put it another way, how can an immigrant worker finance his initial stake in society – the same amount of wealth that the native workers have been building up over centuries?

This study draws two conclusions:

1. Capital is supplied for immigrants by depressing the wages of native workers. (This is an issue that the elite ignores – or about which it is ‘in denial’.)

2. Even though native wages are depressed, this process will not fully supply an immigrant worker with his requisite share of wealth.

Natives lose out both ways:

· Their wages are reduced.
· Their wealth per head is reduced.

The process of depressing the wages of native workers also raises the question – is it socially and morally right to depress the earnings of native workers in order to provide capital and wealth for immigrants?

***

I would like to thank Michael Mosbacher of the Social Affairs Unit for his invitation to write this study and for his support during the writing. I would also thank Clive Liddiard for his excellent editing and help in clarifying both thought and language, as well as Gerald Frost, editor of Eurofacts, for allowing me to put forward some initial conclusions in articles for the magazine. Needless to say, they are not responsible for my conclusions, let alone any errors or inaccuracies.

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