The British government

It is now worth briefly turning to the argument put forward by those who say that immigration has no depressing effects on native wages.

Then Prime Minister Tony Blair said in his speech to the TUC in 2006: ‘If migrant workers are treated fairly and paid a decent wage, they represent no threat to the livelihood of people who are already living and working in the UK.’

Of course, if we take Mr Blair’s view that immigration has no depressing effect on native wages, then, as Borjas indicates, we are in for a shock:

… there is no immigration surplus, if the native wage is not reduced by immigration.

In other words, if some workers are not harmed by immigration, many of the benefits that are typically attributed to immigration – higher profits for firms, lower prices for consumers – cease to exist. As I pointed out earlier, no pain, no gain.[31]

The pro-immigration argument based on the ‘immigration surplus’ – a GDP effect that ignores wealth and capital, and that is anyway very small – is completely irrelevant if native wages are not reduced.

One can extend this argument further because of its implications for wealth. If the Mr Blair is right, and there is no fall in wages for native workers, then there is no 85-year-long march to the £424 billion or £250 billion of capital (or £150 billion) that is required to equip immigrants with the same wealth as natives and that free market economists think may be supplied by the extra returns to capital following immigration-induced falls in native wages. There is no extra return for capitalists and no capital adjustment. The whole argument for immigration disintegrates. The British people will find themselves financing immigrants’ stake capital of £141,000 per worker, and this can only be achieved by depressing the wealth of British natives. Indeed, there is simply massive crowding-in on the existing capital of natives, with no capital being provided by immigrants, except for their £2,235 annual contribution (or £988 allowing for foreign remittances; which, of course, means that the average immigrant’s annual contribution to capital additions must be topped back up to £2,235 by appropriation from natives).

Conclusion

Whether you believe Mr Blair or the careful studies of US economists, in a free economy it is unlikely that immigration will ever pay for the wealth required to put immigrants on a par with natives – unless the immigrants bring skills and capital that are superior to those of the natives. Failing this, there must inevitably be wealth dilution for the natives.

The native workers in the USA and Britain have come to the correct conclusion. Immigration decreases their wages and their wealth. The major parties and the political classes have it wrong.

Free market economists who advocate the free movement of labour must include the effects of migration on wealth in their calculations.