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Immigration and Welfare
A Hard Truth for Europe

Anemic economies and burgeoning immigrant populations are straining both the economic health of and political support for Europe’s welfare systems. The NYT reports:

At a time when some governments’ austerity policies have led to deep spending cuts, Europe’s ill-tempered debate over immigration has become intertwined with an equally thorny discussion of the costs of welfare, especially after Romanians and Bulgarians gained full access across European labor markets this year.

New immigrants are often in need of state support, but are drawing from a pool of money that they haven’t yet paid in to. Higher rates of immigration threaten the economic viability of these welfare systems, a phenomenon which is especially problematic for a continent still struggling to recover from the 2008 financial crisis.

But there’s a less obvious development at play here: when populations grow more ethnically and culturally diverse, the welfare state often becomes less popular. When a country (or, in the US, a state) is relatively homogenous, the poor are often seen as people ‘just like the rest of us’ and voters are willing to help them. But when many of the poor are from racial or ethnic groups seen as alien, that sympathy weakens. Immigration can strengthen the need for a welfare state as immigrants are often poor and struggle to make it in a new society, but simultaneously weaken public support for welfare. That seems to have happened to some degree in the US in recent years; it is happening across Europe as well.

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  • Kevin

    The other problem with low skilled immigration in a welfare state is that the welfare state allows immigrants to remain outside the economic mainstream helping foster self segregation. The taxes and regulations that come with the welfare state also tend to make the lower end of the labor market much less dynamic, regulating low wage jobs out of existence, which in turn keeps unskilled immigrants out of the labor market and dependent on welfare which in turn promotes self segregation. High levels of segregation in residence, employment and the broader culture reduces acceleration of immigrants and contributes to rising ethnic tensions between immigrants and natives.

    • Kavanna

      Exactamundo, Kevin. The US and the UK do this better than Europe. But the Anglosphere has already gone too far down the wrong road in both dependency and cronyistic corporatism. See my comment above, in which I unwittingly repeated what you said.

  • Jim__L

    As long as people paying taxes in this country (or any other for that matter) see Welfare as income
    redistribution for near-infinite masses of third-worlders, it’s not going to
    be popular… we can do the math to see how much would be our share if
    it were redistributed, and considering that we work to create that wealth, we don’t see any injustice in keeping it.

    We need a new frontier, plain and simple. Not a spot on the bleeding edge of esoteric science, but somewhere that folks willing to work can go to make a living for themselves and their families.

    Shale is a frontier, in this sense; Cyberspace, perhaps not so much.

    America used to have frontier-homestead welfare; it’s the only kind that works.

    • ljgude

      I think if the ACA disadvantages people who are creating wealth in cyberspace they will move out of the US to jurisdictions with reasonably priced healthcare and low regulation and carry on their businesses from a safe distance. Think of it as homesteading cyberspace. Such an American cyber-businessperson of my acquaintance hires good Indian programmers on ODESK for about half of what he would have to pay domestically. Really good he tells me. But that can work two ways. He can move to a more friendly jurisdiction and keep his US clients. At least until they move out. 😉

      • Jim__L

        My point is that homesteads are something within the reach of every family, not just the business class.

        If the system does not allow the majority to succeed, the system is a failure. A good figure of merit is how large a majority can succeed under the system.

  • Boritz

    When discussing Europe don’t forget Switzerland. They recently rounded up non-citizens who were not contributing to the economy In a net positive way and showed them to the border. That makes us the more advanced state now.

    • Andrew Allison

      You are Swiss, I assume.

  • Bruce

    Almost any modern society wouldn’t mind helping people that are in need. They do mind supporting them with the fruits of their own labor for generations. Especially when there isn’t enough money and the welfare payments are made with counterfeit money that governments and central bankers create. A CEO of a health care company recently remarked about the “gold standard” for healthcare that “there isn’t enough gold to go around.” Same for welfare.

    • Andrew Allison

      Bruce, it’s not that simple. Of course we should help people in need. The question is how much help is appropriate. The EU’s problem that it treats migrants from EU countries as residents of the country in which they choose to reside, entitled to the all benefits for which the natives have paid. The solution is simple: provide the benefits offered by the country of citizenship.

  • Anthony

    “It’s all fine and good for you to want to do something about poverty, but if the only mechanism you have is raising taxes on folks who are already feeling strapped, then maybe you need to widen your lens a little bit (President Barack Obama). In an increasingly diverse country (and different world) cultural values are being tested/strained/questioned. Neither conformism nor rigidity reveals guidance as we humans face trying situations at home and abroad – “You are what you do when it counts”.

    • Kavanna

      The difficulty is that after a major economic crisis and during the ensuing depression or slow growth period, fear overtakes rationality. It happened in a big way in the 1930s, including in the US, where nativism, isolationism, and destructive economic policies were the rule. Chronic fear and uncertainty make people’s minds plastic and ready for authoritarian and cult-like movements (like Obama). Conformism and self-censorship rule. It will take the next recession, and the credible threat of sovereign bankruptcy at all levels of government, to fully break this grip in the US. Twenty years of PC and brainwashing in the schools and media prepped Americans for thought-control; freeing ourselves will take time.

      The problem in Europe is that, while new immigrants are needed for economic reasons, they’re unable, unwilling, or prevented from fully participating in economic life. The pervasive welfare dependency of European life makes it very difficult. The shrinking pool of productive citizens and taxpayers resent what’s being done to them to support this parasitic mess. The appeal of nativism, right now, is more a matter of pitting native welfare clients against “alien” welfare clients. For the more stable and rational middle-class voter in Europe, this limits the appeal of such movements.

      What Europe needs is something different, something that shrinks dependency altogether, among both native and immigrant working-age populations. Romney fumbled around with this message here in 2012, without it fully sinking in: recovery, not dependency.

      • Anthony

        Insightful and well written and you certainly augur possible imponderable (wrenching declines in living standards as corollary to unsustainable programs) resulting from human flightiness. Regarding Europe (and this is certainly an unqualified speculation), sovereigns’ must confront combination of overspending, capital regulation, and economic stagnation while navigating immigrant concerns – a daunting tasks as inferred in your comments.

        • Kavanna

          Thanks, and some mutual backscratching at no charge.

          • Anthony

            My pleasure (truth comes easy).

      • Anthony

        Insightful and well written and you certainly augur possible imponderable (wrenching declines in living standards as corollary to unsustainable programs) resulting from human flightiness. Regarding Europe (and this is certainly an unqualified speculation), sovereigns must confront combination of overspending, capital regulation, and economic stagnation while navigating immigrant concerns – a daunting tasks as inferred in your comments. By the way, I wrote response much earlier and sorry you did not receive 1st edition.

  • Andrew Allison

    This commentary appears to me to miss the point, namely that human nature being what it is, a free lunch will always be eaten. A current example of the universality of this trait is the fact that over 2/3 of those enrolling in ACA were already insured but figured out that they could obtain a subsidy (paid by other enrollees) by switching to ACA. Similarly, the fact those under 27 have every incentive to remain on their parents plan explains the fact that it’s the relatively aged (and more in need of care) who are enrolling. It’s all about incentives.

    • TommyTwo

      “A free lunch will always be eaten”

      A wonderful aphorism I shall shamelessly steal.

      • Kavanna

        While there are no free lunches, clearly, there are aphorisms just lying around for the taking.

  • Fat_Man

    You can have open borders, and you can have a welfare state, but you cannot have them both together for an extended time. That is true in Europe and in the US.

    • Kavanna

      I can’t remember who said it, but: open borders, multiculturalism, democracy: choose any two.

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