Is the War for Immigrants over already?

In today’s issue:

• Why immigration had to soar
• Is the trend about to reverse?
• The only thing worse than too much immigration is too little

In January 2019, I made the wackiest prediction of my career. Second only to the imminent reunification of Korea, which I cleverly foresaw back in 2012…

Anyway, in 2019 I argued that the Western world is about to have a “War for Immigrants”:

The biggest political reversal you face in coming years has nothing to do with Brexit, the EU or China. It’s all about immigration.

But in precisely the opposite way you assume.

The world is about to vie for labour. For productive people.

Countries are going to provide immigrants with cash handouts, tax incentives, free citizenship and homes for next to nothing. All in a bid to attract young skilled migrants.

It sounds absurd. Especially in the current climate of Brexit and populism. So why do I expect the world to fight over immigrants in coming years?

All this has since come to pass. Although the immigrants were a lot less skilled than anticipated…

Immigration rates soared right across the Western world. Illegal immigrants were given free passage, luxury accommodation, free rent and all sorts of other preferential treatment locals could only dream of.

All this right in the face of a massive shift in the electorate against immigration. An odd combination, you might think.

How can democratic will diverge so radically from political policy?

That’s what I explained to paid-up subscribers back in 2019. You can find some of the analysis here.

It boils down to a simple idea. Western governments need to import people dumb enough to pay the national debt. Without them, politicians would have to default on political promises instead. And the only thing worse for a political career than immigration is austerity.

Today, we ponder…

Has the War for Immigrants run its course?

Right on cue for the think-tanks, which is after it’s too late, economists are concluding that mass immigration is actually a bad idea for the economy.

One report from the Centre for Policy Studies which came to this conclusion was co-authored by former immigration minister Robert Jenrick…

The economic statistics are now hammering home the consequences. This from the Telegraph:

Britons have suffered a slump in living standards, official data shows, as a surge in net migration wiped out any gains from economic growth.

So-called real GDP per head shrank by 0.3pc between April and June compared with a year earlier, the Office for National Statistics (ONS) said, suggesting living standards have slid backwards as the population grew.

It comes after net migration hit a near-record 685,000 last year.

Experts said the figures meant the population was growing faster than the economy,

This might sound bad. But spare a thought for the Australians. They are experiencing an unprecedented implosion of living standards and GDP on the same per person measure. This despite steady economic growth, meaning that immigration rates are trouncing GDP growth.

The exceptional MacroBusiness blog collated the lowlights package from Down Under:

Australians are already enduring the longest per capita recession on record following six consecutive quarterly declines and seven declines over the past eight quarters.

Real per capita household disposable incomes in Australia suffered an 8.2% decline in the two years to June 2024, which was easily the sharpest fall on record.

Australia’s decline in household income has also been one of the largest in the world.

The OECD’s forecast implies that Australia’s per capita recession will extend well into 2025, meaning the recession could run for 10 consecutive quarters or more—a truly unprecedented run.

Yikes.

Blowback immigration?

Does this new view of immigration mean governments are on the cusp of change? Will they prioritise GDP per capita instead of GDP overall? Will they return migrants, fire tear gas across the Channel into Calais, or put up border walls?

Voters certainly seem to want it. Here in Japan, I find myself ranting “Bloody foreigners!” at the Brazilian age-care workers who ignore sidewalks and walk in the middle of the road.

And I suppose the Democrats’ US presidential candidate is already proposing to bolster the border she opened.

The Germans did the impossible and just sent Afghan criminal migrants back home.

So perhaps the tide has turned on immigration already.

But I’m not convinced. Because the same pressures I described back in 2019 persist.

The only thing worse than too much immigration is too little

Immigration of the wrong sort may well harm GDP per capita. Which is a bad thing.

But do you know what harms GDP per capita even more? The sort of sovereign debt crisis that is triggered by a lack of taxpayers.

If demographic change is allowed to run its course, there simply won’t be enough people to pay for our government’s obligations. Not the existing debt, let alone future spending.

Immigration aside, the list of possible policy responses to this is downright terrifying. It would mean real austerity. Or we could default on our debt, wiping out pension funds. We could try to inflate away the debt, as central banks tried to in 2021.

The final option features in this month’s issue of The Fleet Street Letter. It was inspired by the South Sea Bubble of 300 years ago. But most subscribers probably think we’re mad to suggest it’s on the drawing board at Number 10.

So, the War for Immigrants is only going to accelerate. The desperate need to find future taxpayers will continue to trump all other concerns.

And English-speaking countries around the world have an extraordinary advantage in their ability to attract migrants.

The real question we need to answer is why they’re attracting low-wage and low-productivity workers. People who can’t afford to pay their way into the UK, are uniquely unlikely to assimilate much and are disproportionately likely to show up in crime statistics… if we collected them.

The idea that the UK constrains immigration from places like Japan, Taiwan and South Korea is patently absurd, for example. The fact that my British citizenship is not transferred to my children is deluded.

I wonder how a high-skill mass immigration policy from the Conservative Party would reshape politics.

But that’s not what I’m preparing for.

Until next time,

Nick Hubble
Editor, Fortune & Freedom