Sunday, 12 September 2010

CASE 065 - Immigration

In "The happiness of the people," Charles Murray makes the same prediction every Anglo-American journalist has been making about immigration and European welfare for decades:

The European model can’t continue to work much longer. Europe’s catastrophically low birthrates and soaring immigration from cultures with alien values will see to that. The argument seems to rest upon the notion that the welfare system in the past did work, but because immigration brought outside cultural values, the system will eventually break down. But is this really true? First, let's look at some recent history of Swedish economics:

Beginning in the 1870s, however, Sweden created the conditions for developing a high-growth, free-market economy with a slowly growing government sector. As a result, Sweden for many years had the world's fastest-growing economy, ultimately producing the third-highest per capita income, almost equaling that in the United States by the late 1960s. Sweden became a rich country before becoming a welfare state. Sweden began its movement toward a welfare state in the 1960s, when its government sector was about equal to that in the United States. By the late 1980s, government spending grew from 30 percent of gross domestic product to more than 60 percent of GDP. These policies and outcomes greatly diminished the incentives to work, save and invest. Economic growth slowed to a crawl. Other countries that avoided the excess spending, taxing and regulation of Sweden grew more rapidly, leaving Sweden in the dust. Sweden is still a prosperous country, but far from the top, and its per capita income has fallen to just about 80 percent of that in the United States. People often forget that Sweden didn't became rich because of its post-60s welfare model, but rather despite it. Naturally, such a model would never have existed unless there already were strong unions and labor movements who pushed for social democracy rather than capitalism. These are the inherent "Swedish" values behind the Scandinavian experiment. The idea of inborn cultural values that profess this welfare model is simply a myth. But the real fallacy behind Murray & Co's reasoning lies not in the myth of homogenous welfare values. The real question is whether "alien values" is a threat to the welfare model at all. Consider the welfare society as an organism. It operates bureaucratically; as long as its citizens go to work and pay their taxes, the system basically works. In a more capitalist society where deregulations eventually lead to a greater civic sector where people are dependent upon each other, cultural homogenity becomes more important. You can therefore live practically your whole life in moderate isolation from your neighbors and community, as long as you bring home cash and send off taxes. You'll survive, and if there is trouble, an agency will continue to support you. The dependence on other people is minimal. This is why Sweden is an extremely individualist society with great tolerance for subcultures, often baffling non-Europeans. In a society where you rely much more upon your own actions and those of the community, you will need to find common ground quickly. This is where cultural values come in. Immigrants to Scandinavia can therefore keep their Muslim, Jewish or Hindu identity and still make it multiculturally, because they will live much of their lives in isolation from native Scandinavians, or end up in another multicultural community just like their families and relatives. It "works," because the citizens of Scandinavia are financing a system making it possible to live as secluded as possible. The only alien values threatening the welfare model are those that break with the ethics that profess hard work, little pay and heavy taxes. Most cultures can and will adapt to that model, since they'll maintain a good material standard in return.

There does exist such a break in values, but there are reasons to suggest it will even out over time across generations. The real immigration threat to the Swedish model is rather the costs, and the model itself, which, in the words of Margaret Thatcher, thrives on "running out of other people's money to spend." Aware European conservatives therefore take the immigration issue seriously, but even more profess the greatest systematic threat is the system itself, which preferably would return to the high-growth, pre-60's model that made Sweden prosperous and economically competitive. This is where immigration becomes a business, a cash generator, its not something countries do out of love

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