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The CGD Podcast
What to Do about Migrants and Refugees? – Michael Clemens
00:19:53
As we mark the fifth anniversary of the Syrian civil war, Michael Clemens visits the CGD Podcast to delve beneath anti-migration rhetoric and examine the facts about migrants and refugees.
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- [00:06]
A
Hello, I'm Rajesh Merchandani and thanks for joining me for this edition of the CGD podcast. Today, what to do about migrants and refugees. Politicians in Europe are trying a number of things. In Denmark, authorities will be able to seize cash and valuables from refugees in order to help pay for their care in the country. The UK Will wants to limit benefits paid to workers from other EU countries who have jobs in the uk. Even Germany, which opened its arms to Syrian refugees, now says there may need to be a limit to the numbers coming into the country. Meanwhile, here in the US the election rhetoric over migrants has been getting louder with Donald Trump calling for a ban on Muslims and saying some Mexican workers in the US are rapists. Michael Clements is CGD's migration expert and he joins me today to discuss all these issues. Michael, great to see you.
- [00:59]
B
Thanks a lot.
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A
A lot of the arguments against migration sort of fall into three categories. Migrants come over here, they take our jobs is one. Migrants come over here, they take our benefits is another one. Migrants come over here and they bring crime and social unrest with them is a third. Let's unpick those a little bit. Let's start off with this idea of migrant workers coming over and taking our jobs. What does the research, what do the numbers tell us?
- [01:30]
B
So if I advertise a job today and somebody from Bolivia takes that job, then by definition nobody else is going to be in that job. If there's a US worker that wanted it, they don't get it. They were displaced by the Bolivian. But the big picture looks very, very different than that. And that's something that I think is very hard to see because it's something you can't experience directly in your day to day life. Certainly if you apply for a job and a foreigner fills it, then you've been displaced. What social scientists have done is look at the big picture. A fascinating recent study by Meta Fouched of University of Copenhagen and Giovanni Perry of UC Davis here in the US got data on every single person in Denmark over the course of 20 years. Not some survey sample, but all of Denmark, individual by individual, tracking them from job to job with tax records and asked when huge waves of refugees came into Denmark from Iraq, Afghanistan, Bosnia in the 90s and the 2000s, what happened to US workers in the places where they were resettled? And the answer is some of them were displaced in the short term. Some of them had trouble getting jobs locally and ended up moving to other parts of Denmark. Some of them stopped doing the kinds of lower Skill work that they were doing that started to be done, say janitorial work by Iraqis coming in who didn't speak Danish very well. But what happened to them later is that they got better jobs. And that doesn't mean it was easy. That transition, that displacement can be quite difficult. It can be a scary thing, like every social change. But the big picture result over 20 years in Denmark is that in the places where those refugees were sent, people who were living there at the time ended up with better jobs and higher wages. In the end, after this transition, I think it's better to think of these inflows as kind of like an investment. And it's foolish to pretend that investments don't have costs. But it's also foolish to say, well, it's just a burden because they do have payoffs.
- [03:34]
A
Put yourself in the kind of politician's boots for one moment. I mean, I'll give you an example, a story, if you like, to illustrate this. I was up in Massachusetts in the summer at a wedding, north of Boston, lovely little coastal town. And I met a couple and I was talking to the guy who's asking what I was doing. And I was talking about, you know, CGD and some of the things we do, including migration work. And he was saying, okay, I work as a carpenter and I've got buddies and they can't get jobs because illegal immigrants, and they were illegal immigrants, are undercutting them in the workplace. And so they're directly losing out from migration. It's the small picture versus the big picture. But as a politician, how would you address that? What do you say to those people?
- [04:24]
B
I think that migration is a big social change. It's a long term social change. And I think that it is. It is certainly possible for individuals to be harmed in real ways by big social changes, structural changes in the economy, openness to international trade, openness to migration. It would be dishonest to pretend that those kind of displacements don't ever happen. They certainly do happen. And for the person who is unemployed, it's extremely difficult. I think that politicians owe people support, social safety nets when those things happen. So in the US we have something called trade adjustment Assistance for several decades. You can apply to the Department of Labor if you're working in a place or an industry that had a lot of plant closures due to a trade agreement. And you can get subsidized job training, you can get extended unemployment benefits. And I think those things are appropriate because the benefits to these things in the aggregate outweigh the costs. And we need mechanisms like that for the winners to compensate the losers. I would talk about the transition out of agriculture in the U.S. in 1790, 90% of the labor force of the U.S. was in agriculture. And by the 1880 it was about half. By 1930, it was about 20%. And today it's two and a half percent. And we can look romantically at the past and say, well, the transition out of agriculture was just that. People were perfectly happy with all these great farm jobs and then they just had this other stuff that they could do, so they moved to the city. It wasn't like that at all. It was brutal. Farms would mechanize and suddenly there just weren't jobs in the local area for people who used to do hand harvest and they had to find something else to do. And when you're 45 and you've been doing that all your life, that's extremely difficult. And at an individual level, that's hard. But I also don't think anybody would look back and say, well, because that was hard for a lot of people, we should still have 90% of the labor force in agriculture and not have Google and not have any of the changes that could only happen because of that big structural shift. What we need are institutions to smooth that transition. And I think those are missing in the kind and degree that we need to have them to allow the benefits of immigration to be reaped.
- [06:51]
A
Where you'd get my vote if you were a politician.
- [06:53]
B
After that explanation, the country is glad that I'm not a politician.
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A
Okay, so let's move on to the other two categories then, of complaints, usually about migration. They come and take our benefits and they lead to more crime and social unrest. The numbers don't back up those assertions, do they?
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B
So for migration as a whole, there is a rock solid comprehensive study by the OECD led by Jean Christophe Dumont, who's their leading researcher on migration, that was published, I believe, three years ago, in which they did the full accounting exercise for immigrant families as a whole. Over, I believe it's 21 countries, basically all of the richest countries in the world. What is the net fiscal position, net contribution to public coffers? How much do they pay in? How much do they take out for immigrant families? And the bottom line is that it's tremendously positive. And this isn't a surprise when you note that immigrants tend to be a little younger and for many countries, higher skilled than natives. They are people who are often in the prime of their lives. When you're 75. You don't get up and move to New York from Mali. But when you're 21 and energetic and young and healthy, you might think about that. And that's the time of your life when you're paying in and not taking out in terms of Social Security and medical benefits.
- [08:21]
A
This raises an interesting point about Syrian refugees. Real world point. We've seen some critics of allowing Syrian refugees into European countries, say the ones that are coming, all young men. How do we know that there aren't terrorists amongst them or ISIS fighters amongst them? But the point is that those are the ones who are able, who have the wherewithal, the mental and physical capacity to actually make that perilous, arduous journey.
- [08:46]
B
So that is very important is the kind of person who's coming. Their likelihood of paying in versus taking out. Refugees are a somewhat different story because they have a lot of entitlements when they arrive. I think the estimate for the US is something like $30,000 of cost to resettle a refugee. Give them job training that they're entitled to, etc. What I wish more people understood was that that's a long term investment. So Kalina Cortes is a professor at Texas A and M who tracked refugees to the US and the labor market and compared them to non refugees. So she's looking at refugees versus non refugees who came in the 70s. By the 1990s, what was happening to them in the labor market? And they were earning. The refugees were earning much more. They started out earning less. If you imagine you're a refugee, you probably don't have family to help you adjust, learn the language, get a job. It takes you a while to get on your feet. But after I believe it was seven years, the refugees are making more. And it's not really clear why. But these are people who are often extremely committed to the place that they are going and have to pull themselves up by their own bootstraps. And over the long term, they contribute to the economy. They're earning more than other migrants because they're adding more value to the economy than other migrants and that means they're paying taxes. Over the long term. They're also doing things that are not captured in studies like that. Jan Koom co founded what's up? Something an app I use all the time. Spectacularly successful, successful Silicon Valley firm. And he came as a refugee from Ukraine as a kid and he and his mom were living on food stamps. So anybody looking at Jan Kum as a boy would say, well, you know, look at the burden look at the public entitlements flowing to these freeloading people from Ukraine. It takes a little bit of vision to step back from that and say, well, what's the potential of this child to gigantically add value to the US economy, create all kinds of jobs, arguably make the world better off because people everywhere use WhatsApp. And that kind of long term vision is missing from these discussions.
- [11:03]
A
So let's talk about what you would like to see happen. Your view is not let them come, just let them come, is it?
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B
I don't believe in unregulated migration and I think some people talk about open borders. I don't believe in open borders if it means anybody can just come in and do whatever they want, want and go wherever they want. The idea that less restriction on movement is somehow equivalent to all the Syrians are going to come camp in your living room is an idea that I think only has currency in the hyperventilating discussions of people who would like to keep migrants out for all kinds of reasons.
- [11:46]
A
From an economic point of view, your view is migration is good for development for both the sending country and the receiving country. It's better for global prosperity.
- [11:57]
B
Absolutely. And what we really need are tools and institutions to capture that benefit.
- [12:02]
A
So what would you like to see? What are the kind of policies or the principles that you would like to see politicians act upon? It's not just open the borders and let anybody come, is it?
- [12:18]
B
So I think here are some regulations that I think could make that process easier. I don't have a five point plan for world migration. I actually think that that's impossible. I think different regional situations are going to be quite different and that forced migrants need to be handled differently from labor migrants. So here are some things that we don't have now that I think could facilitate that transition and help capture the benefits of migrants. Gary Becker, a Nobel laureate economist, many years ago proposed charging a fee for every immigrant. He pulled out a number and said, how about $50,000 to the U.S. you pay a fee to cover all kinds of things. Among the kind of things you could imagine it covering would be an analog to the trade adjustment assistance that we talked about earlier. If it's politically important that a lot of people believe that their jobs have been taken away by migrants and they require assistance in extended unemployment benefits, job training, subsidies, and I believe that that could be needed sometimes that would provide a source of finance for that. And essentially it would be a mechanism for sharing the benefits of migration, a large fraction of which are captured by migrants with the places that they go. So kind of a political compromise, you.
- [13:40]
A
Would charge the migrants?
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B
Absolutely right. Maybe not upfront, it could be financed over time, but it's an interesting compromise.
- [13:48]
A
That's what Denmark's just doing though, by seizing their cash and valuables.
- [13:52]
B
So immediately seizing the possessions of desperate people who are fleeing conflict is something very different than what I'm talking about. I'm talking about an orderly way to share the benefits over the long term that accrue to people more than just.
- [14:07]
A
The migrant workers paying taxes over time.
- [14:11]
B
Perhaps being taxed at a higher rate. And that's a very controversial idea, but I think of it as analogous to something fascinating that they do in Australia. The way that public higher education is financed in Australia is very innovative. It was designed in part by an economist named Bruce Chapman. It's called hecs, the HECS system. And essentially everybody has access to free higher education up front, but then they look in your tax records later and if you're an investment banker making hundreds of millions a year, you pay. And if you're an artist making $20,000 a year, you don't pay. And there's a sliding scale in between.
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A
Okay, so that was one point. What else?
- [14:54]
B
Very often higher education is paid for by taxes. It's paid for by public subsidies in the places that people come from and they take those subsidies with them when they move. That's been used in the political discussion worldwide as a reason to block the movement of skilled people. Many people have proposed recruitment bans. It should be unethical for a European firm to recruit a high skilled person from sub Saharan Africa, in part because taxpayers in Sub Saharan Africa might have paid for that person's education. There's another approach to that same problem, and it gets back to the spirit of what Australia does with higher education. And it's to share the cost. If countries of destination are going to benefit from higher education, rather than blocking the person's movement or banning countries from telling them about job opportunities that are available to them, how about sharing in the cost of their education up front? Not as a sort of punitive ex post compensation payment, but a bilateral arrangement between sending and receiving countries. Perhaps employer to school, or perhaps government to school or some other arrangement allowing people to, for example, train up as nurses in Malawi expressly for service in London hospitals where they're needed, so that up front everybody knows that the cost of their education is going to be at least shared by the employer who is paying for it in exchange for a service commitment to that employer. That could be bought out so that they're not tied in bad situations that can sometimes arise.
- [16:40]
A
And it's cheaper to train that person in the developing country or be in the rich country. And the developing country benefits from getting the revenue.
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B
We call this plan a global skill partnership. And it's really built on the arbitrage opportunity that you just outlined.
- [16:55]
A
You said that you didn't have the five point plan for politicians, but these are pretty detailed ideas. So just in the last couple of minutes, we don't have a lot of time left. What are the other kind of key principles that you hope politicians and policies going forward will bear in mind when designing migration policy?
- [17:17]
B
That development complements migration. Development is not a substitute for migration. There's no way, certainly in acute crises like the Syrian crisis, helping the crisis abate. If there's a way that the civil war can end, that will certainly reduce migration. But if we're talking about the broad forces of global migration, as sub Saharan Africa develops more, there will be more migrants. And that's something that I think most people in the policy sphere just don't grasp. And that has an implication, which is that there is an opportunity to invest in these people. Right now we see these acute flows into Europe falling on a small handful of countries. Greece, Austria, especially Germany, and a lot of other countries in Europe. And also outside of Europe, certainly the US Pretty much throwing up their hands and saying, well, you know, good luck with that.
- [18:12]
A
How easy or how small or how big a step is it going to be for politicians and then voters to make that shift to see people from other countries as an investable commodity and investable resource as opposed to a threat?
- [18:26]
B
It really is a mental shift. I mean, when you have people marching in the streets of Poland saying Islam will be the death of Europe, they're not talking about something that's actually happening. Islam is not threatening Poland in any real meaningful sense. It's something that politicians benefit directly from whipping up when they. When it serves them to do it. And you see it happening in the US as well. But there's a reality which is that we have handled refugee crises very well in the past. The Hungarians and the Vietnamese have been a tremendous benefit, and they were handled very well. This one can be handled too. And I think ultimately those realities can trump that kind of extraordinarily toxic rhetoric.
- [19:11]
A
Interesting use of the word Trump there. Michael Clements, great to talk with you always. Thanks for joining me on the podcast.
- [19:17]
B
Thank you.
- [19:18]
A
You can check out Michael's writing on migration and development, including work. He's done with another CGD senior fellow, Lant Pritchett, on our website, cgdev.org the two of them also have a new paper just published by New York University's Development Research Institute that's also on our website. If you enjoyed this podcast, please subscribe. Get them delivered to your inbox every week. You haven't even got to press a couple of buttons. We're also available on iTunes. That's the CGD podcast with me, Rajesh Merchandani.