Low-Skill Immigration is a Policy Disaster

A point I've made here a few times is that we can't really judge the effect of the huge migrant influx of 2015-2016 (which is still ongoing on a smaller scale) until all those migrants enter the workforce in Germany and begin competing against Germans.

Of course, they won't be competing against managers, engineers, or journalists. If they find jobs at all, they'll be dumped into the low-skill section of the German economy, to compete against the million of German workers who only have a low-level high school education or vocational training.

The results will be ugly. We know this because this has already been happening in the US for years now. Economists are generally right-wing libertarian open-borders types, and argue in favor of immigration based on what they claim are the positive overall effects on the economy. They rarely pay attention to the effects immigration has on working-class types, because, you know, who cares about those people? 

Harvard economist George Borjas, however, has studied this aspect of immigration -- mass immigration by low-skilled workers -- in the US for decades. He describes the results for American workers and the American economy: 

Over the past 30 years, a large fraction of immigrants, nearly a third, were high school dropouts, so the incumbent low-skill work force formed the core group of Americans who paid the price for the influx of millions of workers. Their wages fell as much as 6 percent. Those low-skill Americans included many native-born blacks and Hispanics, as well as earlier waves of immigrants.

But somebody’s lower wage is somebody else’s higher profit. The increase in the profitability of many employers enlarged the economic pie accruing to the entire native population by about $50 billion. So, as proponents of more immigration point out, immigration can increase the aggregate wealth of Americans. But they don’t point out the trade-off involved: Workers in jobs sought by immigrants lose out.

They also don’t point out that low-skill immigration has a side effect that reduces that $50 billion increase in wealth. The National Academy of Sciences recently estimated the impact of immigration on government budgets. On a year-to-year basis, immigrant families, mostly because of their relatively low incomes and higher frequency of participating in government programs like subsidized health care, are a fiscal burden. A comparison of taxes paid and government spending on these families showed that immigrants created an annual fiscal shortfall of $43 billion to $299 billion.

Even the most conservative estimate of the fiscal shortfall wipes out much of the $50 billion increase in native wealth. Remarkably, the size of the native economic pie did not change much after immigration increased the number of workers by more than 15 percent. But the split of the pie certainly changed, giving far less to workers and much more to employers.

The immigration debate will also have to address the long-term impact on American society, raising the freighted issue of immigrant assimilation. In recent decades, there has been a noticeable slowdown in the rate at which the economic status of immigrants improves over time. In the 1970s, the typical immigrant could expect a substantial improvement relative to natives over his or her lifetime. Today, the economic progress of the typical immigrant is much more stagnant.

Part of the slowdown is related to the growth of ethnic enclaves. New immigrants who find few ethnic compatriots get value from acquiring skills that allow more social and economic exchanges, such as becoming proficient in English. But new immigrants who find a large and welcoming community of their countrymen have less need to acquire those skills; they already have a large audience that values whatever they brought with them. Put bluntly, mass migration discourages assimilation.

The trade-offs become even more difficult when we think about the long-term integration of the children and grandchildren of today’s immigrants. Many look back at the melting pot in 20th-century America and assume that history will repeat itself. That’s probably wishful thinking. That melting pot operated in a particular economic, social and political context, and it is doubtful that those conditions can be reproduced today.

...

Europe is already confronting the difficulties produced by the presence of unassimilated populations. If nothing else, the European experience shows that there is no universal law that guarantees integration even after a few generations. We, too, will need to confront the trade-off between short-term economic gains and the long-term costs of a large, unassimilated minority.

Identifying the trade-offs is only a first step toward a more sensible immigration policy. We also need some general principles, combining common sense and compassion.

First and foremost, we must reduce illegal immigration. It has had a corrosive impact, paralyzing discussion on all aspects of immigration reform. A wall along the Mexican border may signal that we are getting serious, but many undocumented immigrants enter the country legally and then overstay their visas. A national electronic system (such as E-Verify) mandating that employers certify new hires, along with fines and criminal penalties for lawbreaking businesses, might go a long way toward stemming the flow.

But what about the 11-million-plus undocumented immigrants already here? A vast majority have led peaceful lives and established deep roots in our communities. Their sudden deportation would not represent the compassionate America that many of us envision.

Perhaps it’s time for some benign neglect. Many will eventually qualify for visas because they have married American citizens or have native-born children. Rather than fight over a politically impossible amnesty, we could accelerate the granting of family-preference visas to that population.

We will also need to decide how many immigrants to admit. Economists seldom confess their ignorance, but we truly have no clue about what that number should be. About one million legal immigrants a year entered the country in the past two decades. The political climate suggests that many Americans view that number as too high. History shows that when voters get fed up with immigration, there is no reluctance to cut off the flow altogether. Back in the 1990s, Barbara Jordan’s immigration commission recommended an annual target of about 550,000 immigrants. Such a cut would be significant, but it may be preferable to the alternative, which, in this political climate, could mean shutting off the flow.

Finally, we need to choose between highly skilled and less-skilled applicants. High-skill immigrants, who pay higher taxes and receive fewer services and can potentially expand the frontier of knowledge, are more profitable for us. But giving an opportunity to the huddled masses is part of what makes our country exceptional.

...

Many of my colleagues in the academic community — and many of the elite opinion-makers in the news media — recoil when they hear that immigration should serve the interests of Americans. Their reaction is to label such thinking as racist and xenophobic, and to marginalize anyone who agrees.

But those accusations of racism reflect their effort to avoid a serious discussion of the trade-offs. The coming debate would be far more honest and politically transparent if we demanded a simple answer from those who disagree with “America First” proposals: Who are you rooting for?

So, mass low-skilled immigration increases the welfare rolls, drives down the wages of the most vulnerable workers, increases the gap between rich and poor, and fuels social tension. Why does anyone think this is a progressive policy?


Kevin Drum Sees a Glimmer of Light on Sweden, Crime, and Immigrants

Donald Trump seemed to suggest that some terrorist incident happened in Sweden a few days ago. For this he was justly mocked. Then it turned out he was merely commenting on a news report he had seen on Fox about crime in Sweden in general. This is the report he was referring to: 

As with most Fox reporting, this is a mixture of exaggeration, anecdote, and legitimate information. Like many reports you'll see anywhere, for that matter. American liberals have jumped quickly to Sweden's defense. But as Kevin Drum points out, some of the defenses are bogus:

Donald Trump at his pep rally yesterday on immigration:

You look at what's happening in Germany, you look at what's happening last night in Sweden. Sweden, who would believe this. Sweden. They took in large numbers. They're having problems like they never thought possible.

Nothing happened in Sweden last night, which has prompted lots of IKEA and ABBA joke memes. However, Zack Beauchamp thinks Trump was probably referring not to something that happened recently, but to the alleged "rape epidemic" in Sweden ever since they started taking in lots of Middle Eastern immigrants. This is apparently a staple of the Breitbart-o-sphere. Unfortunately, Beauchamp then says this:

The problem, though, is that this “rape epidemic” is as fake as the Bowling Green Massacre.

Canadian reporter Doug Saunders rigorously investigated the narrative, and concluded that it “falls apart as soon as you speak to anyone knowledgeable in Sweden.” Official Swedish statistics do indeed show a high rate of rape, but that’s because Swedish law has an extremely expansive definition of what qualifies as rape under the law.

....These panics about immigration, instead, reflect a long history of sexual panics in the West about non-white immigrants. Etc.

Whenever I see writing that carefully avoids providing comparative statistics, my BS detector goes off. Sure enough, Saunders didn't "rigorously" do anything. He linked to an old report that tallies crime rates for the years 1997-2001—which is all but useless in 20171—and then glided quickly past his eventual acknowledgment that the foreign-born have "a higher rate of criminal charges than the native-born." If you're interested, here's the actual data from the report (tables 3 and 6 in the appendix):

These are very big differences. Now, Saunders also links to a study which suggests that "half to three-quarters" of the difference can be accounted for by socioeconomic status. Maybe so. But crime is crime. If you're the victim of assault from a Syrian refugee, you don't really care if it happened because he's Syrian or because he's poorer than average.

There's plenty more to legitimately say about this. If poverty really is a causal factor, maybe it means Sweden needs to be more generous. Other statistics suggest that the children of the foreign-born have much lower crime rates than their parents. And as Beauchamp says, "rape" in Sweden is defined pretty broadly.

Still, if we bring up this subject at all, we have to present the statistics fairly. In the US, immigrants seem to commit crimes at lower rates than native-born Americans. But Sweden is a different country, and the statistics suggest that foreign-born immigrants do indeed commit crimes there in much larger numbers than native Swedes.

UPDATE: I don't know just how interested everyone is in the minutiae of Swedish crime, but here's the crime rate over the past decade:

Some are up, some are down, but the overall trend appears fairly flat despite the large rise in immigrants over this period. On the other hand, preliminary figuresshow that crime against persons was up 7 percent in 2016, including a 13 percent increase in reported rapes and a 14 percent increase in child abuse.

1Apparently this is the most recent report that examines crime rates by area of origin. I don't know why Sweden hasn't done anything more recent.

A few observations:

  1. "These are very big differences."
  2. "If poverty really is a causal factor, maybe it means Sweden needs to be more generous." Sweden already provides some of the most generous social welfare benefits in the entire world, including to asylum-seekers.
  3. "And as Beauchamp says, 'rape' in Sweden is defined pretty broadly." No, it's not
    "I think it is a bit of a myth that the Sexual Crimes Act is so much tougher than in most other countries. The truth is that it is not that different,” Mårten Schultz tells IPS.
    In 2005, the definition of rape in the Swedish Sexual Crimes Act was broadened to include, for instance, having sex with someone who is asleep, or someone who could be considered to be in a “helpless state”. This applies to situations when someone would not be capable of saying “no”. A typical situation where the law could be applied is if someone who is drunk at a party falls asleep only to wake up and realize that someone is having sex with them.
    That would constitute rape according to the 2005 law, and not “sexual abuse”, which was the case before the law was amended. In this respect the new law did not criminalize behaviour that previously had been legal, but rather broadened the definition of what constitutes rape to include a larger number of sexual crimes." 

     

  4. The second graph in Drum's post shows steady crime rates. As I've pointed out before, this is what you would expect in a country with an aging native population committing fewer crimes, mixed in with a burgeoning immigrant population committing far more crimes per capita than native residents. If Sweden's immigration policies were different, crime rates would be on a steady downward trajectory.
  5. "Apparently this is the most recent report that examines crime rates by area of origin. I don't know why Sweden hasn't done anything more recent." I do.

And now, the tiresome but necessary caveats.

1. Does this mean all immigrants are criminals? No, the majority of immigrants in Sweden have never and will never commit a violent crime. The statistics show there is a higher crime rate among immigrants. That is all. If the rate of sexual assaults per year is 2 per 100,000 for native Swedes, but 20 per 100,000 for immigrants, this means it is indeed 100% accurate to say that the rate of sexual assault by immigrants is 10 times as high as that of Swedes. However, it is still extremely rare even among immigrants.

2. Does all of this mean that Sweden is collapsing? No, Sweden has imported a raft of complex social problems, but is not going to drown in a sea of flames.

3. Do I think Sweden should stop allowing immigration? No, I think Sweden should stop allowing immigration of too many of the wrong kind of people. Many fewer semi-literate unaccompanied young males with no job skills. Many more women and children refugees (for humanitarian reasons) and well-educated people (for reasons of enlightened self-interest. It's really not that hard, it's how most countries manage things.


Where Trump and Europeans Agree

You wouldn't know it from watching Tagesschau or reading the German mainstream press, but there's at least one thing Europeans and Trump agree on:

A majority of Europeans want a ban on immigration from Muslim-majority countries, a poll has revealed.

An average of 55 per cent of people across the 10 European countries surveyed wanted to stop all future immigration from mainly Muslim countries.

The Chatham House study, conducted before US President Donald Trump signed an executive order banning immigration to the US from seven predominantly Muslim countries, found majorities in all but two of the ten states opposed immigration from mainly Muslim countries.

Only 20 per cent disagreed, while 25 per cent said they did not know.

A ban was supported by 71 per cent of people in Poland, 65 per cent in Austria, 53 per cent in Germany and 51 per cent in Italy.

In the UK, 47 per cent supported a ban.

In no country did more than 32 per cent disagree with a ban.

I wonder how much coverage this poll will get in Germany. My prediction: almost none, except in "certain" press outlets (you know who you are).


"Mainly Criminals, Psychopaths, and Petty Thieves"

While we’re on the subject of contrasting grateful, peace-loving refugees who are mostly women and children with the motley crew of young males Germany imported, let’s look at conditions in one Düsseldorf migrant shelter. Well, a former migrant shelter -- it no longer exists.

After the migrant influx of 2015, one of the huge halls of the Düsseldorf convention center was converted into a massive migrant shelter for hundreds of unaccompanied male migrants. On June 7, 2016, the entire hall was burned to the ground in an act of intentional arson: 

The massive fire created a cloud of smoke which could be seen from everywhere in the city. The estimated damages are €10 million. Dozens of people were treated for smoke inhalation.

The trial was intentionally set by one of the migrants in the shelter. Now he and an accomplice are on trial in Düsseldorf for aggravated arson. According to testimony, the fire was set by a 27-year-old Algerian named Adel Z. Adel was enraged that food was being served to people in the shelter during the day, even though it was Ramadan. He wanted all shelter residents to be forced to observe Ramadan, no matter what their religious views. A 27-year-old Moroccan named Mohamed B. allegedly spurred Adel Z. to follow through on his anger by burning the place down.

A reporter from a website named nrw-direkt is observing the trial (g)*. His account of the testimony is worth quoting at length (my translation):

The testimony of the second witness was faster, less ambiguous, but more shocking [than the first]: The 57-year-old social worker stated that the shelter housed mainly "criminals, psychopaths, and petty thieves" (Verbrecher, Psychopathen und Kleinkriminelle). The police were called out there "every other day". He learned from a colleague that the day before the fire, there had been "extreme rioting" between shelter residents who were fasting and those who were not. He himself remember that after "loud complaints", shelter operator the German Red Cross had promised a warm lunch. However, this did not happen. Instead, snacks such as bread with sausage or cheese were provided.

During the meal on the day of the fire, two residents of the shelter insulted and threatened shelter workers. These were "the usual" threats and insults, like "fucking Germans" and "assholes", which were the customary insults used by shelter residents against German Red Cross workers. The witness also recalled threats such as "we're going to burn this place to the ground", "we'll set you on fire", "we'll kill you all", which were also everyday occurrences at the shelter. "When you're constantly insulted, you eventually get really sick of it", the employee said with a quiet voice.

"They found everything funny and awesome"

...After the fire broke out, he noticed many residents who were sitting on packed suitcases and "found everything funny and awesome". One of them filmed the fire with his phone. When the judge inquired whether he concluded that this meant the shelter residents knew about the plan to set the fire beforehand, he said "of course".

I know some German social workers, and it takes a lot to get them to describe their charges as "criminals". To say nothing of "psychopaths".

After the shelter was destroyed, these "criminals, psychopaths, and petty thieves" were distributed to other shelters all across the city.

Continue reading ""Mainly Criminals, Psychopaths, and Petty Thieves"" »


Responsible Refugees Defuse Xenophobia, Shiftless Migrants Reinforce It

The Washington Post has a charming story of how Trump supporters in a highly conservative part of Nebraska are warming to refugees after meeting some in person:

John Dutcher, a 61-year-old house cleaner, lives in a complex of low-rise apartments in a neighborhood where American flags flapped on porches. After the Sept. 11, 2001, terrorist attacks, Dutcher said he was “one of those guys who would want to put a pig’s head on a mosque. I never acted on it, but I played it in my head.”

For years, Dutcher’s neighbors were meth addicts and rowdy alcoholics. Slobs. In June, a Syrian family who spoke no English moved in. Another family moved in after that, then another. Now there are six.

Soon enough, Dutcher said, empty bottles in the hallway were replaced with children’s bicycles. The loud arguments of a ­drug-addicted couple were replaced by the sounds of children’s laughter.

“The Muslims here were all about family and they just loved everyone,” Dutcher said. “I remember the people who lived here before; they took for granted everything this country gave them. These people, they really changed my heart.”

Through interpreters, he learned about the families’ stories of loss and fleeing war. It softened his stance on Islam and led him to question some of what Trump was saying. Around refugees, he never felt safer.

“I used to be afraid when the meth addicts were here,” he said. “Now I don’t even look to see who’s knocking on my door. I know it will be someone with a plate of food or a kid asking me to fix his bike.”

Dutcher said he continues to support Trump’s views on strong borders and curbing illegal immigration, but said his experience taught him that “refugees were a different thing entirely.”

This is what happens when you let in (1) genuine refugees who are (2) carefully pre-screened and (3) mostly women and children. You end up with decent, grateful, likable people who make a good impression.

Of course, Germany (1) letting in some genuine refugees mixed in with a large, diffuse mass of others, after (2) no pre-screening at all, and (3) getting mostly young males.

And as a result, what's happening in Germany is the reverse of what's happening in Nebraska. In a development that's being repeated all over Germany in various forms, Uwe the truck driver, who lives in a rent-subsidized low-income housing development, sees a third of his dingy but safe neighborhood park taken over by container dwellings for young unaccompanied male refugees:

Container

[source]

Suddenly there are clusters of sullen, bored-looking young males -- almost none of whom are actual Syrian war refugees -- hanging around all day with nothing to do but ogle his daughters, guzzle cheap booze, and deal and use drugs.

Of course, the code of implicit moral imperatives in Germany means that Uwe the truck driver is not permitted to draw any conclusions based on the behavior of his new neighbors. One of the many groups the Nazis persecuted were drifters, petty criminals and people who displayed persistent "antisocial behavior". And they persecuted foreigners.

Therefore, by the Law of Reaction, expressing direct disapproval of (1) foreigners who (2) engage in antisocial behavior is, well, verboten. Instead, citizens are encouraged to believe that any person, no matter how obviously lacking in intellectual gifts, discipline, or common decency, must be regarded as equal to an intelligent and industrious human not just before the law, but by all other humans. This is the sort of thinking behind the Green Party leader Katrin Göring-Eckhardt's now-infamous ejaculation that Germany was receiving the "sudden gift" (g) of migrants.

Of course this won't stop Uwe from applying his own experience of the world, and coming to his own conclusions. Just as John Dutcher did. The only difference is that John Dutcher is looking at the results of a successful, responsible refugee policy, and Uwe is looking at the opposite.


Canada to Unaccompanied Male Migrants: Stay Out

The Canadian government has decided it will

accept only whole families, lone women or children in its mass resettlement of Syrian refugees while unaccompanied men – considered a security risk – will be turned away....

Quebec premier Philippe Couillard seemed to corroborate that report ahead of a meeting with Trudeau and Canada’s provincial leaders where the refugee plan was high on the agenda.

“All these refugees are vulnerable but some are more vulnerable than others – for example, women, families and also members of religious minorities who are oppressed,” he said, although he rejected the notion of “exclusion” of single men.

Faisal Alazem, of the Syrian Canadian Council, a non-profit group in talks with the government to sponsor refugees, told Radio-Canada of the plans: “It’s a compromise.

“This is not the ideal scenario to protect vulnerable people – women and children and men too. But I think what happened in Paris has really changed the dynamic and public opinion,” he said.

Paris, you will recall, refers to the attack in which a "majority" of the attackers were young male terrorists whom Germany welcomed into the heart of Europe from Syria. Germany issued invitations and messages of welcome, swelling refugee flows to Europe. Germany then disobeyed its own law and EU law and allowed thousands of young males to enter the country with no background checks. ISIS saw its chance, and even bragged about exploiting the migrant flows to smuggle terrorists into Europe.

Germany did nothing to control the migrant flows, and its security officials misled the public, claiming there was no reason to believe terrorists were among the migrants -- despite many reports from migrants themselves that this was the case. We now know that those German security officials knew even then about the problem, and are now scrambling to identify and control around 400 jihadists whom they let into Europe before another attack takes place. (I should say 400 more jihadists, since a fair number have already died after attempting or committing terrorist attacks.)

Because accountability is a concept foreign to German politics, these security officials still have a job.

Am I criticizing Canada? Of course not, this is the only sensible decision if you're going to allow resettlement. If only Merkel had been this prudent.


Merkel and Trump are Both Wrong

In light of the chaos and protests at American airports, people ask me whether, as a mass-immigration skeptic, I support Trump's immigration ban.

The answer is a loud, emphatic 'no.' 

Let me make this short.

I oppose Merkel's immigration policy from Muslim countries because she has let in hundreds of thousands of random, unknown people, largely young males, from the most unstable parts of the world. She has let them in without doing any background checks, a reckless policy fueled by sentimental delusions. As a result, she has let in hundreds of terrorists and tens of thousands of criminals. When all is said and done, we will learn that the majority of the people she let into Germany had no legal right to be here. And even the ones who do stay and don't commit serious crimes will, to an unacceptable extent, lack the ability to successfully integrate into German society.

The US is vastly different. American Arabs and Muslim immigrants actually do quite well compared to Americans. Both due to policy and due to America's attractiveness to immigrants, the US gets a much better quality of Muslim immigrant, in terms of education and ability and skill. Plus, as I have pointed out again and again, the US screens immigrants and refugees with extreme care. It's not perfect, no policy ever is, but it does represent a sensible, responsible balance between humanitarian and national security interests. It also means that women and children are a much greater component of US refugee resettlement, as they should be.

Trump's improvised blanket ban on immigrants from only the 7 Muslim countries in which Trump has no business interests is idiotic, inhumane, and counterproductive.

There is a middle way between Trump and Merkel. The vast majority of Western countries already follow it. So should Germany, so should the USA.


Mark Blyth on The Origins of Neo-Nationalism

It's not often you stumble across some professor who says he's going to explain the world, and then watch him actually do it.

I stumbled across Mark Blyth via MetaFilter. Mark Blyth is political science professor at Brown University -- Wait! I know, you're thinking Brown University, the tiny, ultra-expensive US liberal arts college which is a hotbed of the most demented form of political correctness? Can any professor there be capable more than soft-focus P.C. pieties?

Well, Mark Blyth can. Perhaps because he's Scottish. Very Scottish, if you listen to him. In 2016, Blyth accomplished a pretty impressive trifecta in 2016: he accurately predicted Brexit, the Italian constitutional referendum, and Trump. His big idea is Global Trumpism, which involves defections both to the right and the left from the globalist neoliberal consensus. Whether it's Podemos in Spain or Trump in the U.S., middle-class voters in the West are reacting to 30 years of tectonic changes in the global political and economic landscape which have seen their quality of life being gradually eroded.

The end result is a sense of seething frustration in the middle and lower classes of Western countries. Unions have been crushed, more and more risk shifted onto the shoulders of individuals, job security is a thing of the past, international competition and automation are destroying millions of jobs which will never come back, the small luxuries of middle-class life are drifting out of reach, and each generation is seeing a decline in its standard of living compared to the last one.

All the while, the rich are getting almost exponentially richer, and mainstream politicians -- whether center-right or center-left, there is no meaningful difference -- seem at best helpless or disinterested at worst actively corrupt.

Here's some remarks he published in Foreign Policy (previous link), which are a bit heavy on the economics but still get the point across:

Back in 1943, [Michal Kalecki] he argued that once you target and sustain full employment over time, it basically becomes costless for labor to move from job to job. Wages in such a world will have to continually rise to hold onto labor, and the only way business can accommodate that is to push up prices. This mechanism, cost-push inflation, where wages and prices chase each other up, emerged in the 1970s and coincided with the end of the Bretton Woods regime and the subsequent oil shocks to produce high inflation in the rich countries of the West in the 1970s. In short, the system undermined itself, as both Goodhart and Kalecki predicted. As countries tried harder and harder to target full employment, the more inflation shot up while profits fell. The 1970s became a kind of “debtor’s paradise.” As inflation rose, debts fell in real terms, and labor’s share of national income rose to an all-time high, while corporate profits remained low and were pummeled by inflation. Unions were powerful and inequality plummeted....

But if it was a great time to be a debtor, it was a lousy time to be a creditor. Inflation acts as a tax on the returns on investment and lending. Unsurprisingly in response, employers and creditors mobilized and funded a market-friendly revolution where the goal of full employment was jettisoned for a new target—price stability, aka inflation—to restore the value of debt and discipline labor through unemployment. And it worked. The new order was called neoliberalism.

Over the next thirty years the world was transformed from a debtor’s paradise into a creditor’s paradise where capital’s share of national income rose to an all-time high as labor’s share fell as wages stagnated. Productivity rose, but the returns all went to capital. Unions were crushed while labor’s ability to push up wages collapsed due to the twin shocks of restrictive legislation and the globalization of production. Parliaments in turn were reduced to tweet-generating talking shops as central banks and policy technocrats wrested control of the economy away from those elected to govern.

Seen this way, what we see is a reversal of power between creditors and debtors as the anti-inflationary regime of the past 30 years undermines itself—what we might call “Goodhart’s revenge.” In this world, yields compress and creditors fret about their earnings, demanding repayment of debt at all costs. Macro-economically, this makes the situation worse: the debtors can’t pay—but politically, and this is crucial—it empowers debtors since they can’t pay, won’t pay, and still have the right to vote....

The traditional parties of the center-left and center-right, the builders of this anti-inflationary order, get clobbered in such a world, since they are correctly identified by these debtors as the political backers of those demanding repayment in an already unequal system, and all from those with the least assets. This produces anti-creditor, pro-debtor coalitions-in-waiting that are ripe for the picking by insurgents of the left and the right, which is exactly what has happened.

In short, to understand the election of Donald Trump we need to listen to the trumpets blowing everywhere in the highly indebted developed countries and the people who vote for them. 

The global revolt against elites is not just driven by revulsion and loss and racism. It’s also driven by the global economy itself. This is a global phenomenon that marks one thing above all. The era of neoliberalism is over. The era of neonationalism has just begun.

Blyth actually shines in videos; he's an outstanding and engaging speaker. I switched this video on to run in the background while I did some housework, but found myself repeatedly rushing to the computer to replay something I didn't quite get. This video is the best exposition of his theory as a whole. You'll have to get used to his Scottish burr:



Although his main critique is aimed at the technocratic managers of national and international economic policy, he also directs withering critiques at center-left politicians, who hurl accusations of politically-incorrect thoughtcrime to appear "left" while simultaneously suckling at the teat of the financial and technological elite and doing nothing to improve the lot of the middle class.

Blyth thinks the U.S. will stumble through, but Blyth believes that the outlook for Europe is much bleaker (this discussion starts at about 41:00). The Euro is a disaster which cannot be fixed, but European technocrats still refused to understand this, and continue to inflict crippling austerity on the European South in a doomed attempt to save it.


I'm Big in Israel!

A few weeks ago I was contacted by a journalist from the Israeli business daily TheMarker, who wanted to know my views about German immigration policy. I thought that might be a reasonable way to sum up my thoughts all in one place, since the questions were quite wide-ranging. The article was just published. It's in Hebrew, but it seems to contain quite a bit of my interview, if Google Translate can be trusted.

Just to ensure nothing gets lost in translation, here are my original answers. I've edited a few parts for clarity, but no major changes.

There's not much happening on the immigration front right now, so I've largely moved on to other subjects. I'll let this stand here as my (quasi) last word on the subject.

You are an immigrant yourself, born in Brussels and grew up in the US. what differentiates you from Muslim immigrants? 

I’d say there’s not much difference between myself and a “culturally” but not especially religious Muslim immigrant who has an advanced degree, speaks fluent German, participates in community life, and is employed and pays taxes. In fact, I know quite a number of people like that here in Germany. Immigrants such as myself and my Muslim friends contribute positively to German society. We have never needed welfare or committed a serious crime, and have consistently been employed and paid our taxes.

The two question when it comes to immigration is: How many? Which ones? A manageable number of people like us is a benefit to any country.

But that’s not what Germany’s getting. Hundreds of thousands of young males (about 65-70% of the 2015 arrivals were males under 35) with little education and no job skills were allowed to enter Germany in 2015. Those people chose Germany not because of any affinity for the country or knowledge of its culture, but simply because they thought they might be able to find a place here, and had been told by smugglers that Germany ‘needed’ and ‘invited’ them.

The German borders should be open for all, shouldn't they?

Definitely not. There is a fraction of left-wing extremists who do not believe countries should be allowed to have borders, but they’re no more than 5% of the population of Germany, at most. A 2009 Pew poll found that 25 million people worldwide would like to permanently relocate to Germany. If that happened, Germany as we know it would vanish.

This is why no country in the world has ever voluntarily had unregulated open borders since the formation of the modern nation-state. Germany’s existing laws – including Article 16a of the Basic Law (Germany’s modern Constitution) and its Asylum Law set out a reasonable legal framework for who gets to enter the country. The problem was that Angela Merkel decided to order that these laws be ignored.

What is your main criticism against the German immigration policy, especially in the past couple of years?

The fundamental flaw in German immigration policy is that there is no overall German law for permitting the orderly migration of people with education, job skills, and motivation to adapt to German society. This means that much German immigration is regulated by asylum law: someone shows up in the country illegally, and then claims asylum. These are not people Germany has invited or whom whom Germany needs. Rather, they are people who happened to want to relocate to Germany and could afford the smugglers’ fees. Some have valid asylum claims, many do not.

That is the long-term background problem. The more recent problem is the government’s total failure to prepare for the migrant influx in 2015. Chancellor Merkel and other leading politicians sent out inviting signals of ‘welcome’ which induced over a million people – 65-70% of whom were young and male – to start on the path to Germany. The majority of the 2015 arrivals were not Syrians. They came from Albania, Afghanistan, Serbia, Georgia, Kosovo, Tunisia, Algeria, Iraq, Pakistan, India, and dozens of other countries which are not at war, although they are poor and some have regional insurgencies. The proportion of Syrians went up in 2016, but the overall numbers (around 200,000) are much lower, since Germany has re-introduced some border controls.

This huge influx of people all at once in 2015 completely swamped the German immigration system. Hundreds of thousands of young males from the most unstable parts of the world flooded into Germany. There were no backgrounds checks, no fingerprint records, no attempt at verification of their identity or background. A majority of them claimed they had no identity papers or presented fake ones. Germany still has no reliable information about who thousands of these people are.

Can’t Germany just send them back? No. The slow, cumbersome German deportation laws have broken down completely: there are now about 500,000 people whose asylum claims have been rejected but who are still in the country. There are literally dozens of ways to avoid deportation: get a certificate of illness from a sympathetic doctor, argue your homeland is too unsafe, physically resist when you get on the deportation plane, claim asylum in a Christian church, or simply go underground. Some Afghans have even avoided deportation by claiming to be Taliban, absurdly enough. This claim automatically starts a complex legal process, during which the migrant is permitted to stay in Germany and move freely.

Another problem is that the countries from which these men come don’t want many of them back. Migrants from North Africa are committing crimes at such a high rate that it’s become clear that a large portion of the criminal underclass of Algeria, Tunisia, and Morocco came to Germany. Those countries can keep their undesirables in Germany by simply failing to issue the necessary deportation paperwork. Thousands of deportations are stalled for this reason alone. The Tunisian truck attacker, Anis Amri, was already known to be a criminal and dangerous radical Islamist, and was supposed to be deported, but Tunisia refused to issue the paperwork confirming his nationality -- until two days after the terror attack. Germany, by the way, provided € 215 million in development aid to Tunisia (g) in 2015.

Less spectacular crimes have also been committed by migrants. This is understandable: they are mostly young men, the group most likely to commit crime in any society. They have nothing to do all day, do not speak German or English, the majority do not have even the equivalent of a high-school education. They are now living in a culture where alcohol is cheap and available everywhere, women dress in a ‘revealing’ fashion, and the cultural controls of their community and family are gone. The predictable result has been an increase in crime near migrant shelters. Most of the crime has been nonviolent property offenses, but there have also been dozens of killings, thousands of assaults and sex crimes, three completed terrorist attacks, and one serious attempt (Jaber al Bakr, a radicalized Syrian who committed suicide in prison after being arrested for creating 1.5 kg of high explosive and planning to bomb a Berlin airport).

The federal government does not keep accurate statistics on the number of crimes committed by recent migrants, but claims that migrants do not commit crimes at a higher rate than Germans of a similar demographic background – i.e. disproportionately young and male. Backers of the political consensus see this as reassuring, critics of German policy point out that even if this assertion is true, it still means thousands of crimes are now happening in Germany because of the migrant influx. Further, migrants tend to commit different kinds of crimes than Germans. In particular, they have committed hundreds of sexual assaults in public against random strangers (including many against children), a type of crime that was much more uncommon before the migrants arrived, and which has a particularly strong impact on quality of life.

Since migrant shelters are located in poor and working-class neighborhoods (which lack the political power to oppose them), it is poorer Germans – including many established immigrants – who are bearing the brunt of migrant crime.

Do you think Islam the worst threat on Europe? If so, why?

I would distinguish between Islam and Islamism. I don’t see Islam itself as a threat to Europe. The vast majority of European Muslims are in fact peaceful and law-abiding, and don’t pose a ‘threat’.

However, if we talk about adapting successfully to European societies, there is a problem. Once again, it’s a question of how many? And which ones? Most Muslims in Germany were imported from Eastern Anatolia as factory labor in the 1960s, or as refugees during the Lebanese civil war. Their numbers then steadily expanded by chain migration and family reunification. These persons were originally intended to be temporary manual labor, and were not chosen because they were likely to adapt successfully to Europe. Muslims have come to shape the character many neighborhoods in Germany and France, and continue to gain both in numbers and political power. Some immigrant communities now effectively work according to their own rules.

This doesn’t mean they are a threat – the mere fact that someone may have conservative religious beliefs and wear a hijab is not a ‘threat’ to anyone. But the stubborn reality ias that Muslims in Germany and France do worse on most measures of social integration and flourishing than native populations. The existence of many individual success stories cannot hide the fact that Germans of Turkish descent are only half as likely to attend university as native Germans, or that France’s prisons are up to 70% Muslim. (We have only estimates, since France refuses to record the religion or ethnicity of prisoners). And although there is a taboo against mentioning it, statistics show that foreigners and those with a foreign background commit crimes at a much higher rate than ethnic Germans. Two things are true: the majority of Muslims in Germany are law-abiding, but the rate of crime among Muslims is higher than among ethnic Germans.

Muslims also face discrimination. European countries are not nations of immigrants. Each has its own unique cultural identity and heritage. They are not new, young nations such as Israel or the United States. Neither their people nor their culture is accustomed to embracing large numbers of culturally-foreign outsiders. Yet that is what many of these countries have tried to do. The result is social tension, discrimination, exclusion, and distrust.

Muslims will not ‘destroy’ or ‘take over’ Europe, that sort of rhetoric is irresponsible and not supported by the facts. But the results of past mistaken immigration policies will burden Europe for decades.

What type of immigration policy should Germany adopt?

As I’ve written before, I advocate a two-tier system inviting skilled workers and asylum-seekers. First, Germany should welcome a certain number skilled, educated workers a year by using a Canada-style point system, where you get credit for being educated, having a job offer, knowing some German, and being ready and willing to integrate. Because of past mistakes in immigration policy, many Germans associate immigrants with social dysfunction, crime, and menial labor. Only a plan to import skilled immigrants who will immediately contribute from day one can overcome this negative impression.

I would also certainly keep Germany’s asylum policy. Because of its notorious history, German has included a right to political asylum in its very constitution, and has one of the world’s most generous asylum policies, if not the most. This is appropriate. However, the current system is open to massive abuse: people sneak into the country illegally, file an asylum claim using a made-up story, and often disappear underground before the claim is even judged. As I pointed out above, the system for deporting failed asylum-seekers is broken.

Asylum claims should be processed outside German territory. Asylum seekers should be subjected to a thorough medical check and background investigation, and their identity determined through fingerprints and DNA. Their stories should be verified as thoroughly as possible. Destroying documents of lying about your identity will automatically result in exclusion. Asylum seekers should be chosen on the basis of greatest need and danger, not on current basis, which favors those healthy enough to travel and rich enough to bribe smugglers. There should be an annual upper limit decided by the legislature.

Most countries already manage asylum this way; Germany should follow suit.

What do you say to left-wingers who claim that almost an absolute majority of Muslims immigrant are good hard working people who want to assimilate in the German society, and that they are very important to the German economy as well, as cheap labour for jobs that local Germans are not willing to do?

As I’ve said, most Muslims who have lived in Germany for some time are indeed hard-working and law abiding, although their overall net economic contribution (minus social welfare benefits, which they collect at a higher rate) to German society is modest.

The 1.2 million (the numbers are still imprecise, because the sheer number of arrivals has swamped recordkeeping systems) who have arrived since the beginning of 2015 are another matter entirely. Almost none of them has the preconditions for integrating successfully into German society. They don’t speak the language, don’t understand the culture or customs, have very little education, and don’t have the kind of job skills Germany wants or needs. One recent study showed that only 34,000 have managed to find jobs so far, and most of those jobs are temporary menial labor.

If they are allowed to stay, these hundreds of thousands of new arrivals will compete directly with low-skilled German workers – cashiers, delivery drivers, nursing aides, warehouse workers, store clerks, gardeners, janitors and the like. This sector of the German economy has seen no growth in its real wages since decades, while prices and rents consistently rise. When financially-strapped Germans see a flood of cheap immigrant labor coming to compete for their jobs, they will be extremely angry. And they will vote accordingly. Already, studies show thousands of working-class Germans switching from the Social Democratic Party to the AfD. And this is happening during boom times with low unemployment in Germany. When the next business downturn hits, the resentment will only escalate.

Germany needs skilled workers, not menial workers. Yet even if Germany wanted to import menial workers, the question arises: why from Muslim countries? There are millions of EU citizens from Eastern Europe who are eager for low-skilled jobs in Germany, and who come from nations which are culturally much closer to Germany than, say, Afghanistan.

Do you support Merkel? Where do you position yourself on the political map?

I support a strong social welfare state, so I would probably be a left-wing Social Democrat on this issue. I’d probably vote SPD if I voted in Germany. I am convinced, based on my review of the literature, that mass immigration poses a grave threat to the social welfare state: historically, support for welfare goes down the more diverse a society is -- or becomes.

Merkel has been a competent Chancellor overall, a sort of technical caretaker who governs by consensus. This no-drama approach is very popular among Germans. Merkel is a reasonable choice for times where everything is going well. However, I think she has made several critical mistakes, the most recent being the reckless migrant influx, and should step down. There will be little change in any case, since the German political landscape is so fractured that only a center consensus coalition has a chance of winning.

Do you fear that the terror attacks by Muslims and the hostility towards them in Germany would lead to the rise of the extreme right, represented particularly by the party ‘Alternative for Germany’?

This is already happening, all over Europe. In the Netherlands, France, the UK, Hungary, and Sweden, right-wing parties (or movements, such as Brexit) are gaining unprecedented support. Germany has long had a strong suspicion of nationalist conservative parties (for obvious reasons) which has kept the AfD’s support to under 15%, for now. But that is a very large number in Germany’s fracture political landscape, and represents a tripling in support from 2013.

The AfD currently easily outpolls the Green and Left parties. For years, the AfD profited by being the only party which clearly, openly opposed Chancellor Merkel’s open-borders policy. Many of its other positions are extreme by German standards, and unpopular among German voters. Now that many other politicians in Germany have basically copied many AfD positions on immigration, its support may drop. But right now, it is still climbing slowly in the polls, and may even soon pull equal to the collapsing Social Democratic Party, which would be a true milestone in German politics.

What are the changes you sense in the public discussion regarding Muslims in the past year? Do Germans feel more free to criticise Islam freely, or is it still considered a non P.C subject to talk about?

There has been a huge change. In mid-2015, an almost euphoric attitude of Willkommenskultur existed in the German media and public life. The entire mainstream press, including tabloids, referred to all the migrants as ‘refugees’. Volunteers arranged train convoys to carry them into Germany, often more than 10,000 refugees in one day. German volunteers distributed teddy bears to the children, food and clothes to the adults, and helped overburdened government agencies find a place for all the new arrivals to sleep. A prominent Green politician, Katrin Göring-Eckhardt, famously exclaimed: “We’ve suddenly been given the gift of people!” (Wir bekommen plötzlich Menschen geschenkt!). The press was full of ecstatic stories about Germany becoming a new kind of ‘moral’ superpower. Mainstream magazines and newspapers published dozens of profiles of ‘poster child’ refugees. There were so many profiles of Syrian doctors that the very phrase ‘Syrian doctor’ became a meme. Germany basked in praise from Obama, EU officials, the UN, refugee rights groups, and other liberal internationalists the world over. People who raised doubts about the policy were often denounced and attacked as xenophobes, racists, or worse.

Now, of course, we know that the majority of the 2015 arrivals were neither Syrians nor doctors. Costs are running somewhere around €2 billion per month, since virtually all the migrants are on welfare for asylum seekers, which includes rent, food, housing, medical care, education, and a monthly allowance of between €150 and €400, depending on circumstances. Shelters housing young male refugees are notoriously chaotic, spectacular crimes by immigrants have horrified observers, local governments are facing huge financial strain, the statistics on migrant participation in integration and language classes are disappointing.

Even migrants who wanted to learn German – and that certainly was not all of them – are finding it extremely difficult, and many have given up. German is a difficult language to learn, especially if you have never used the Latin alphabet and are illiterate in your own mother tongue, which is true of at least 30-40% of migrants. Most Germans who volunteered to teach German of help manage shelters have long since gone back to their normal jobs and lives. In February of 2016, two-thirds of Germans believed the refugees could be successfully integrated. Recent polls show only a minority – as low as 15% in some polls -- believes this. Politicians now routinely call for stepped-up deportations, a position that only the AfD held until recently.

The euphoria has worn off. Immigration and integration now top the list of concerns of German voters. The mood is hesitant and uncertain. Local communities continue to request billions from the federal government to provide for migrants, almost all of whom are still dependent on government welfare and charity. Nobody knows how the situation will turn out, but you don’t have to be a pessimist to see the potential for dark days ahead.


Götterdämmerung for Europe's Meritocratic Elites

Ivan Krastev in the New York Times:

When you can’t understand why people behave in a certain way, the easiest thing to do is to convince yourself that people do not know what they are doing. This is what European political, business and news media leaders have done in response to the populist wave that is sweeping the old Continent. They are shocked that many of their compatriots are voting for irresponsible demagogues. They find it difficult to understand the sources of the rage against the meritocratic elites best symbolized by the well-trained, competent civil servants in Brussels.

Why are the “exams-passing classes” so resented at a time when the complexity of the world suggests that people need them most? Why do people who work hard so that their kids can graduate from the world’s best universities refuse to trust people who have already graduated from these universities? How is it possible that anybody can agree with Michael Gove, the pro-Brexit politician, who said people “have had enough of experts”?

It should seem obvious that meritocracy — a system in which the most talented and capable, the best educated, those who score highest on the tests, are put in leading positions — is better than plutocracy, gerontocracy, aristocracy and, perhaps, even the rule of the majority, democracy.

But Europe’s meritocratic elites aren’t hated simply because of populists’ bigoted stupidity or the confusion of ordinary people....

What makes meritocrats so unbearable to their critics is not so much their success but their insistence that they have succeeded because they worked harder than others, because they happened to be more qualified than others and because they passed the tests that others failed....

In the eyes of the meritocratic elites, their success outside of their country is a proof of their talents, but in the eyes of many people, this very mobility is a reason not to trust them.

People trust their leaders not only because of their competence but also because of their courage and commitment, and because they believe that their leaders will remain with their own in times of crisis rather than being helicoptered to the emergency exit. Paradoxically, it is the convertible competencies of the present elites, the fact that they are equally fit to run a bank in Bulgaria or in Bangladesh or to teach in Athens or Tokyo, that make people so suspicious of them. People fear that in times of trouble, the meritocrats will opt to leave instead of sharing the cost of staying.

Unsurprisingly then, it is loyalty — namely the unconditional loyalty to ethnic, religious or social groups — that is at the heart of the appeal of Europe’s new populism. Populists promise people not to judge them based solely on their merits. They promise solidarity but not necessarily justice....

The American philosopher John Rawls spoke for many liberals when he argued that being a loser in a meritocratic society was not as painful as being a loser in an openly unjust society. In his conception, the fairness of the game would reconcile people with failure. Today it looks as if the great philosopher may have been wrong.

He was wrong, because losers in a meritocracy get the message that they are losers because they are less hard-working, disciplined, and intelligent than the winners. Regardless of whether this message is true (it often is), it will be unpopular. In fact, the truer it is, the more unpopular. For endless examples, see Chris Anrade's twitter feed.

I remember debates with friends in the mid-2000s about the so-called European Constitution. I observed that the public-relations campaign for this thing was moronic. The document itself was ridiculously long and complex, the opposite of what a constitution should be. The public relations campaign mostly involved ancient stuffed shirts like Giscard d'Estaing writing pompous op-eds in respectable broadsheets -- i.e., the kind of newspapers read by people who were already going to vote for the constitution in referendums.

My friends would respond by pointing to all the progressive, thoughtful, ingenious elements of the constitution. People should vote for it, because it's a good idea. I had to chuckle at how naive their idea of politics was. Now, my friends are highly intelligent people, winners under the meritocratic European system, many have passed the notoriously difficult Concours! But what European elites never learn about is marketing. Or mass psychology. Or practical leadership.

As we all know, the European Constitution project fizzled out after it was rejected by voters in France and the Netherlands. So it was eventually turned into the Treaty of Lisbon, which avoided the danger of asking people in EU countries whether they wanted it. In retrospect, the disaster of the European Constitution project seems like a harbinger of the deeper rot within the EU. Now the EU itself is teetering on the brink of collapse. If you ask me, one of the many reasons why is the inability of EU meritocrats to effectively communicate with the 70% of Europeans who've never graduated from college.

In fact, not only are they unable to communicate, they're unable to imagine why they should try. Still. The fact that the arguments in this post and in Krastev's op-ed will be dismissed by these folks as "irresponsible" and "populist" just proves the point.