In­equal­ity, im­mi­gra­tion and hypocrisy

Financial Mirror (Cyprus) - - FRONT PAGE -

Europe’s migration cri­sis ex­poses a fun­da­men­tal flaw, if not tow­er­ing hypocrisy, in the on­go­ing de­bate about eco­nomic in­equal­ity. Wouldn’t a true pro­gres­sive sup­port equal op­por­tu­nity for all peo­ple on the planet, rather than just for those of us lucky enough to have been born and raised in rich coun­tries?

Many thought lead­ers in ad­vanced economies ad­vo­cate an en­ti­tle­ment men­tal­ity. But the en­ti­tle­ment stops at the bor­der: though they re­gard greater re­dis­tri­bu­tion within in­di­vid­ual coun­tries as an ab­so­lute im­per­a­tive, peo­ple who live in emerg­ing mar­kets or de­vel­op­ing coun­tries are left out.

If cur­rent con­cerns about in­equal­ity were cast en­tirely in po­lit­i­cal terms, this in­ward-look­ing fo­cus would be un­der­stand­able; af­ter all, cit­i­zens of poor coun­tries can­not vote in rich ones. But the rhetoric of the in­equal­ity de­bate in rich coun­tries be­trays a moral cer­ti­tude that con­ve­niently ig­nores the bil­lions of peo­ple else­where who are far worse off.

One must not for­get that even af­ter a pe­riod of stag­na­tion, the mid­dle class in rich coun­tries re­mains an up­per class from a global per­spec­tive. Only about 15% of the world’s pop­u­la­tion lives in de­vel­oped economies. Yet ad­vanced coun­tries still ac­count for more than 40% of global con­sump­tion and re­source de­ple­tion. Yes, higher taxes on the wealthy make sense as a way to al­le­vi­ate in­equal­ity within a coun­try. But that will not solve the prob­lem of deep poverty in the de­vel­op­ing world.

Nor will it do to ap­peal to moral su­pe­ri­or­ity to jus­tify why some­one born in the West en­joys so many ad­van­tages. Yes, sound po­lit­i­cal and so­cial in­sti­tu­tions are the bedrock of sus­tained eco­nomic growth; in­deed, they are the

of all cases of suc­cess­ful devel­op­ment. But Europe’s long his­tory of ex­ploita­tive colo­nial­ism makes it hard to guess how Asian and African in­sti­tu­tions would have evolved in a par­al­lel uni­verse where Euro­peans came only to trade, not to con­quer.

Many broad pol­icy is­sues are dis­torted when viewed through a lens that fo­cuses only on do­mes­tic in­equal­ity and ig­nores global in­equal­ity. Thomas Piketty’s Marx­ian claim that cap­i­tal­ism is fail­ing be­cause do­mes­tic in­equal­ity is ris­ing has it ex­actly back­wards. When one weights all of the world’s cit­i­zens equally, things look very dif­fer­ent. In par­tic­u­lar, the same forces of glob­al­i­sa­tion that have con­trib­uted to stag­nant mid­dle-class wages in rich coun­tries have lifted hun­dreds of mil­lions of peo­ple out of poverty else­where.

By many mea­sures, global in­equal­ity has been re­duced sig­nif­i­cantly over the past three decades, im­ply­ing that cap­i­tal­ism has suc­ceeded spec­tac­u­larly. Cap­i­tal­ism has per­haps eroded rents that work­ers in ad­vanced coun­tries en­joy by virtue of where they were born. But it has done even more to help the world’s true mid­dle-in­come work­ers in Asia and emerg­ing mar­kets.

Al­low­ing freer flows of peo­ple across bor­ders would equalise op­por­tu­ni­ties even faster than trade, but re­sis­tance is fierce. Anti-im­mi­gra­tion po­lit­i­cal par­ties have made large in­roads in coun­tries like France and the United King­dom, and are a ma­jor force in many other coun­tries as well.

Of course, mil­lions of des­per­ate peo­ple who live in war zones and failed states have lit­tle choice but to seek asy­lum in rich coun­tries, what­ever the risk. Wars in Syria, Eritrea, Libya, and Mali have been a huge fac­tor in driv­ing the cur­rent surge of refugees seek­ing to reach Europe. Even if th­ese coun­tries were to sta­bilise, in­sta­bil­ity in other re­gions would most likely take their place.

Eco­nomic pres­sures are an­other po­tent force for migration. Work­ers from poor coun­tries wel­come the op­por­tu­nity to work in ad­vanced coun­tries, even at what seem like rock-bot­tom wages. Un­for­tu­nately, most of the de­bate in rich coun­tries to­day, on both the left and the right, cen­tres on how to keep other peo­ple out. That may be prac­ti­cal, but it cer­tainly is not morally de­fen­si­ble.

And migration pres­sure will in­crease markedly if global warm­ing un­folds ac­cord­ing to cli­ma­tol­o­gists’ base­line pre­dic­tions. As equa­to­rial re­gions be­come too hot and arid to sus­tain agri­cul­ture, ris­ing tem­per­a­tures in the north will make agri­cul­ture more pro­duc­tive. Shift­ing weather pat­terns could then fuel migration to richer coun­tries at lev­els that make to­day’s im­mi­gra­tion cri­sis seem triv­ial, par­tic­u­larly given that poor coun­tries and emerg­ing mar­kets typ­i­cally are closer to the equa­tor and in more vul­ner­a­ble cli­mates.

With most rich coun­tries’ ca­pac­ity and tol­er­ance for im­mi­gra­tion al­ready limited, it is hard to see how a new equi­lib­rium for global pop­u­la­tion dis­tri­bu­tion will be reached peace­fully. Re­sent­ment against the ad­vanced economies, which ac­count for a vastly dis­pro­por­tion­ate share of global pol­lu­tion and com­mod­ity con­sump­tion, could boil over.

As the world be­comes richer, in­equal­ity in­evitably will loom as a much larger is­sue rel­a­tive to poverty, a point I first ar­gued more than a decade ago. Re­gret­tably, how­ever, the in­equal­ity de­bate has fo­cused so in­tensely on do­mes­tic in­equal­ity that the far larger is­sue of global in­equal­ity has been over­shad­owed. That is a pity, be­cause there are many ways rich coun­tries can make a dif­fer­ence. They can pro­vide free on­line med­i­cal and ed­u­ca­tion sup­port, more devel­op­ment aid, debt write-downs, mar­ket ac­cess, and greater con­tri­bu­tions to global se­cu­rity. The ar­rival of des­per­ate boat peo­ple on Europe’s shores is a symp­tom of their fail­ure to do so.

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