Auctioning Permanent Migration Rights: Friedman Agreed
My recent proposal to auction the right to permanently migrate to Australia was not new. I was treading a path already worn by Gary Becker and Julian Simon in the US, and Mark Harrison, John Logan and Wolfgang Kasper in Australia.
My proposal provoked predictable outrage from those unwilling to think about the idea for more than five seconds. The outrage is partly due to the failure to understand that an auction scheme is designed to facilitate migration, not prevent it. Wolfgang Kasper emailed me this recollection of his experience trying to sell the idea at a conference of economists in San Francisco:
It was a gathering of like-minded friends and some very prominent economists. We had been told that Milton and Rose [Freidman], who lived in their apartment nearby, would come to a morning session, when Milton (now 89) was fresh….Before long, Milton was in the midst of the debate, debunking some idea or elaborating and extending someone else’s. He was in fine form! At morning tea, we expected to say goodbye, but they said they had come for the day! “Rose and I are not a monument,” he said. “This is exciting work, it’s an elixir for Milton to mix with you people,” said Rose…
At one stage of the conference, when I spoke about the idea of selecting immigrants by worldwide auction, I was attacked by R. Rubin, a former Clinton Minister of Labor. He disagreed with me violently… “You just want to sell passports!” I had of course worked on this question in a consultancy report for New Zealand and stood my ground. Our argument became, in my opinion, a distraction to the main topic of our session. Friedman intervened: “I am sure that everyone here has understood Dr. Kasper’s rationale, and I agree with him. Robert, why don’t you think it over overnight. Give me a ring in the morning if you still disagree and I’ll buy you and Wolfgang the best breakfast in town, so we can argue it out some more!” This was vintage Friedman. Alas, Rubin never came back with his counterarguments, and I never was bought breakfast by Friedman.
posted on 27 October 2011 by skirchner in Economics, Population & Migration
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Hands, Mouths and Minds: Three Perspectives on Population Growth and Living Standards
CIS have released my Policy Monograph Hands, Mouths and Minds: Three Perspectives on Population Growth and Living Standards. It gets a write-up in The Australian today.
posted on 18 September 2011 by skirchner in Economics, Population & Migration
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How to Respond to the Terms of Trade Boom
From this week’s Ideas@theCentre:
Listening to some commentators, you could be forgiven for thinking that the terms of trade boom was the worst thing that ever happened to the Australian economy.
Relative to what we pay for our imports, Australia now gets higher prices for its exports than at any time since at least 1870. This was illustrated by Reserve Bank Governor Glenn Stevens’ observation that ‘five years ago, a ship load of iron ore was worth about the same as about 2,200 flat screen television sets. Today it is worth about 22,000 flat-screen TV sets.’
This increased international purchasing power is attributable not only to rising commodity prices, but also lower prices for imports, not least manufactured goods. The flip side of Australia’s terms of trade boom is the collapse in the terms of trade for countries like Japan.
It wasn’t supposed to be this way. In the 1950s, economists Raúl Prebisch and Hans Singer argued that manufactured goods prices would enjoy a secular rise relative to commodity prices and that developing countries should engage in activist industrial policy and import substitution to avoid a declining terms of trade. The same argument has long been made in Australia, but would have had disastrous consequences if its policy prescriptions had been followed in response to previous terms of trade slumps.
Julian Simon would certainly agree with the proposition that real commodity prices should decline in secular terms, but he also noted the broader gains in real purchasing power from increased productivity and declining real prices for manufactured goods. It is fair to say that Simon would have been agnostic on any trend in their relative prices.
The terms of trade boom came about in part because it was unexpected, not least by the mining industry itself. It underinvested in the 1990s, partly because of implicit acceptance of the Prebisch-Singer hypothesis on the part of many investors. Historical experience highlights the danger of conditioning public policy on assumptions about the future direction of relative prices for traded goods.
Our best response to the terms of trade boom is to become even more open to inflows of foreign labour and capital and to reduce the government’s command over resources so that the mining industry can expand with less pressure on other sectors. While the non-mining sectors will contract relative to mining, they can still expand in absolute terms if we continue to remove government-imposed resource constraints to overall economic growth.
posted on 02 September 2011 by skirchner in Economics, Foreign Investment, Free Trade & Protectionism, Population & Migration
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Are People Hard-Wired for Density?
Hunter-gatherers validate Julian Simon:
Every additional person requires less land than the previous one. That’s an important statement. Not only does it say we’re hardwired for density, it also says a group becomes 15 percent more efficient at extracting resources from the land every time their population doubles. Each successive doubling in turn frees up 15 percent more resources to be directed towards something other than hunting and gathering. In other words, complex societies didn’t just evolve as a way to cope with high-density—they evolved in part because of high density.
posted on 25 August 2011 by skirchner in Economics, Population & Migration
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How to Talk to Modern Malthusians
‘You go first’.
posted on 13 January 2011 by skirchner in Economics, Population & Migration
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A ‘Small Australia’ Will Limit Our Creativity
I have an op-ed in today’s SMH arguing that a ‘small Australia’ will not only limit economic progress, but also scientific and cultural creativity:
Like the US, Australia provides an environment in which people and their ideas can flourish. But while the tyranny of distance has receded with advances in communications technology, Australia’s small scale remains an obstacle to economic and other forms of progress. How often do Australian innovators complain about a lack of local commercialisation opportunities and local markets? How often do customers complain of an apparent lack of competition in industries dominated by a small number of companies?
Entrepreneurs, scientists, writers, artists, actors and filmmakers often find Australia too small for their talents. They move to other countries, even if it is with reluctance. While their talents are not lost to the world, Australia is the poorer for them leaving.
Similarly, New Zealanders move to Australia because it provides opportunities that are either non-existent or in insufficient supply in a country with a population no greater than Sydney. Australia’s relatively large and crowded cities are beacons to New Zealanders. While New Zealand enjoys the same institutions and a similar culture to Australia, few Australians would choose to make a new life there. The reluctance is hard to explain with reference to anything other than the limiting effects of scale on life and opportunities in New Zealand.
posted on 06 September 2010 by skirchner in Economics, Population & Migration
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Sydney: Too Many People in 1912?
I have an op-ed in today’s Australian referencing an article in the Sydney Morning Herald from 1912 about how Sydney’s then transport system supposedly could not cope with a population of 700,000.
The text below the fold is a slightly longer version that went out on Friday in the Ideas@TheCentre series. You can subscribe to Ideas@TheCentre here.
continue reading
posted on 18 August 2010 by skirchner in Economics, Population & Migration
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The Making of Dick Smith’s Population Puzzle
In February this year, I was contacted by Dick Smith’s researcher Sarah Gilbert to provide some background for his anti-population growth documentary, Dick Smith’s Population Puzzle. She mentioned a column by Paul Sheehan, which had quoted me making the point that faster population growth required faster economic growth to maintain living standards. No doubt they saw this as a bad thing, but must have finally twigged that I thought it wasn’t, because I heard no more from them, even though Dick and the production crew were on campus a few weeks later and could have easily dropped in to see me. They did interview my UTS colleague Jock Collins, but they obviously didn’t like what he had to say either, because it was not included in the final cut.
Dick later wrote to me taking exception to an op-ed I had written for The Australian, in which I called some of his arguments absurd. I took the opportunity to try and steer Dick in the right direction by referring him to some books by Julian Simon, but he gave no indication he ever bothered to read them.
The documentary screened on the ABC last night. Dick gave significant air time to only one pro-growth advocate, Bernard Salt, but could not help impugning his expertise and motivation. There may be plenty of things wrong with Bernard Salt, but being a historian and working with KPMG are not among them. If Salt is as unqualified as Dick would have us believe, why include him in the documentary? Because Dick has a completely closed-mind on the issue and is uninterested in giving the other side of the argument a fair go.
posted on 12 August 2010 by skirchner in Economics, Population & Migration
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Just Enough of Me, Way too Much of You
With both major parties offering to retard economic growth by conditioning immigration on existing policy failures in housing, transport and infrastructure, Imre Salusinszky offers politicians some handy talking points:
From one perspective, it’s a neat trick: you pander to inner-city prejudice by abandoning road construction, then use what you perceive to be outer-suburban bigotry to paper it over.
But in order to prevent further embarrassment, as politicians attempt to source our problems to the fact there are almost three citizens shoehorned into every square kilometre of Australia, here are some talking-points:
* Frustrated you can’t get tickets to the big game? Once we block the reffos, convince people to stop having sex, and move across to a sustainable Australia, everybody will be able to attend the AFL or NRL grand final.
* Sick of waiting around in the morning while other family members use the bathroom? Me too, and I blame the fact there are too many people in Australia.
* Can’t get the job you want? Can’t win the girl you desire? Can’t own the car of your dreams? Have you noticed the common link? That’s right: there’s always some other bastard who already has these things. Too many Australians!
As best as I can tell, the only political party with a pro-immigration policy platform is the libertarian Liberal Democratic Party (you can read their policy here).
posted on 28 July 2010 by skirchner in Economics, Population & Migration
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We Will Never Build it Before They Come
John Birmingham gets the relationship between population growth and infrastructure:
Our built environment, our urban infrastructure has always lagged at least a decade behind what was required to house and support our population. We don’t build empty cities and wait for them to fill up. It’s more efficient, and less wasteful, to cram our new arrivals into the streets and houses and apartment blocks and schools and offices and factories we already have. Only then do we begin to build the extra capacity we need to service the growth.
posted on 21 July 2010 by skirchner in Economics, Population & Migration
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The Bipartisan Failure on Immigration
A WSJ editorial wags its finger at Scott Morrisson:
This marks a bipartisan failure. While government and opposition duke it out over a few thousand asylum seekers, neither party seems overly concerned about expanding legal work opportunities. Mr. Rudd’s government is oddly proud that net immigration will likely fall to around 250,000 this year. Representative Scott Morrison, the opposition point man on the issue, told us his party supports skilled migration but that immigration levels “need to be sustainable”—code for sympathy to restrictionism. Both sides miss the key point: Australia doesn’t know what skills it will need in the future or who has those skills. If that “low-skilled” but bright and hardworking teenager from Malaysia can’t get into Australia to wash dishes while he goes to night school, he’ll one day start a billion-dollar company somewhere else.
posted on 04 June 2010 by skirchner in Economics, Population & Migration
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Population Growth and Capacity Constraints
I have an op-ed in today’s Australian on the issue of population growth and capacity constraints:
Much of the debate has been predicated on the mistaken view that population growth and immigration policy should be conditioned on existing capacity constraints, whether it be in the areas of housing, infrastructure, water or the environment. Taken to their logical extreme, many of these concerns would have ruled out the founding of the colony of NSW in 1788, when the infrastructure to support the first European settlers was nonexistent.
A growing population adds to demand for existing resources but also supplies the incentives and additional human capital essential to overcoming temporary resource constraints.
Yes, this is the same op-ed that ran in the Canberra Times some time ago. It got another run as a result of an error made at the Oz. Not that I’m complaining, but we don’t generally make a practice of double-dipping on op-eds.
posted on 12 May 2010 by skirchner in Economics, Population & Migration
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Don’t Blame Migrants for Home Grown Problems
I had an op-ed in yesterday’s Canberra Times (‘Migrants add to growth hopes’) arguing that politicians are using migrants as scapegoats for the many public policy problems they have been unwilling or unable to tackle themselves. No link, but full text below the fold (text may differ slightly from published version).
The highly readable Chris Berg made similar arguments in a piece for ABC The Drum Unleashed.
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posted on 27 April 2010 by skirchner in Economics, Population & Migration
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