Sunday, 30 October 2011

Immigration Good or Bad for Economy

IMMIGRATION is a sensitive subject at the best of times, and this is not one of them. The economic crisis has destroyed millions of jobs in rich countries, making their governments especially touchy about the impact of immigration on the demand for indigenous labour.

Such concerns are illogical, because immigration is counter-cyclical. Recession in rich countries has discouraged some would-be incomers from trying their luck. America, for instance, has seen a sharp decline in Mexicans trying to cross its southern border. Immigration to Europe has slowed. Some studies also suggest that increased inflows of migrants are a leading indicator of a pickup in growth.

Yet governments are often reluctant to leave migration flows to the labour market. In recessions, they tend to take steps to discourage new migrants and even get rid of existing ones. David Cameron, Britain’s prime minister, has imposed a “migration cap” for those from outside the EU.

Concerns about immigration are understandable, especially at a time when jobs are in such short supply. Polling in both Europe and America suggests that a majority of locals think immigrants do more harm than good and damage locals’ chances in the job market. Evidence that immigration hurts indigenous workers is, however, weak. In seasonal work and construction, cheap foreign labour can depress wages and make it harder for the low-skilled to find work, but the flexibility and willingness of new workers can also boost productivity and encourage innovation

Strains on public services can sorely test the patience of locals, especially when budget cuts are making it hard to maintain such services. In Britain, for instance, a contingency fund to help cash-strapped local authorities facing pressure on public services has been scrapped. Yet over time immigrants more than repay the extra short-term burden they impose on education, health and other budgets.

Politicians often say that they want a sensible debate about immigration; but too often they pander to voters’ fears of immigrants rather than attempting to allay them. They should be particularly wary of doing so now. There is growing competition for their skills elsewhere (read this article). Asia is fast becoming the new magnet for migrants.

China, which used to be closed to immigrant labour, is now handing out residency permits to professionals, academics and entrepreneurs. In 2009 Shanghai recorded 100,000 foreigners living there. A similar number have settled in the southern port of Guangzhou, drawn from Europe, the Middle East and Africa. South Korea has also witnessed a rise in incomers since 2007 and is particularly keen to attract American-educated graduates.

Immigration is, on the whole, good for economies; and right now, rich countries can do with all the economic help they can get. Rather than sending immigrants home, with their skills, energy, ideas and willingness to work, governments should be encouraging them to come. If they don’t, governments elsewhere will.

Monday, 24 October 2011

Protests against state of the Economy

From New York to London, protesters have taken to the streets. Whether they are inspired by the Occupy Wall Street movement in New York or by the indignados in Madrid, they burn with dissatisfaction about the state of the economy, about the unfair way that the poor are paying for the sins of rich bankers, and in some cases about capitalism itself.

In the past it was easy for Western politicians and economic liberals to dismiss such outbursts of fury as a misguided fringe. In Seattle, for instance, the last big protests (against the World Trade Organization, in 1999) looked mindless. If they had a goal, it was selfish—an attempt to impoverish the emerging world through protectionism. This time too, some things are familiar: the odd bit of violence, a lot of incoherent ranting and plenty of inconsistency (read this article). The protesters have different aims in different countries. Higher taxes for the rich and a loathing of financiers is the closest thing to a common denominator, though in America polls show that popular rage against government eclipses that against Wall Street.

Yet, even if the protests are small and muddled, it is dangerous to dismiss the broader rage that exists across the West. There are legitimate deep-seated grievances. Young people—and not just those on the streets—are likely to face higher taxes, less generous benefits and longer working lives than their parents. More recently, houses are expensive, credit hard to get and jobs scarce—not just in old manufacturing industries but in the ritzier services that attract increasingly debt-laden graduates. In America 17.1% of those below 25 are out of work. Across the European Union, youth unemployment averages 20.9%. In Spain it is a staggering 46.2%. Only in Germany, the Netherlands and Austria is the rate in single digits.

It is not just the young who feel the squeeze. The middle-aged face falling real wages and diminished pension rights. And the elderly are seeing inflation eat away the value of their savings; in Britain prices are rising by 5.2% but bank deposits yield less than 1%. In the meantime, bankers are back to huge bonuses.

Tuesday, 11 October 2011

Turning a blind eye

The secret life of the UK's biggest companies listed on the London Stock Exchange has been uncovered today revealing that 98 out of 100 are using tax havens. ActionAid's research show for the first time just how deeply embedded this practice is for nearly all of Britain's top multinationals.

 Corporate tax avoidance, which is one of the main reasons companies use tax havens, is having a massive impact on rich and poor countries alike. Developing countries currently lose three times more to tax havens than they receive in aid each year.

ActionAid's report Addicted to tax havens shows banks are doing a brisk business via tax havens, despite the ongoing repercussions of a global financial crisis they helped to create. The banking and financial sector are by far the heaviest users with the ‘big four' High Street names HSBC, Barclays, Lloyds Group and RBS notching up 1,649 tax haven companies.

Chris Jordan, ActionAid's tax justice expert said: "ActionAid's research showing the use of tax havens by Britain's biggest companies raises serious questions they need to answer.

"Tax havens have a damaging impact on the UK exchequer, the stability of the international financial system, and vitally on the ability of developing countries to raise tax revenues which would lift them out of poverty and make them less dependent on aid."

ActionAid's key findings:

•98 multinationals declared tax haven companies. The banking sector makes heaviest use of tax havens, with a total of 1,649 tax haven companies between the ‘big four' banks. They are by far the biggest users of the Cayman Islands, where Barclays alone has 174 companies.

•The biggest tax haven user overall is the advertising company WPP, which has 611 tax haven companies.

•A quarter of the 34,216 companies set up by FTSE 100 multinationals are located in tax havens.There are over 600 FTSE 100 companies in Jersey (more than in the whole of China), 400 in the Cayman Islands and 300 in Luxembourg - all tiny tax havens.

•Only two little-known companies Fresnillo and Hargreaves Landsdown, don't use tax havens

 The use of tax havens facilitates tax avoidance and evasion, which undermines the revenue bases of both developing and developed countries. Additional revenues are urgently needed both to invest in the fight against poverty and to tackle the deficits incurred during the financial crisis in rich countries.

 Chris Jordan continued: "When multinationals use tax havens to avoid paying their fair share, ordinary people in both poor and rich countries are left to pick up the bill. Spending on doctors, nurses and other essential services gets cut for those who need it most.

 "Tax havens might provide the lure of financial secrecy and low tax rates for big companies, but at a time when all countries are desperate for revenues, the UK government can't afford to turn a blind eye."
 
ActionAid is calling on the government to urgently rethink its current proposals to relax UK anti tax haven rules. The Treasury itself estimates these changes will result in an £840 million tax break for multinational companies that use tax havens.

 With both developing and developed countries bearing the brunt of debilitating losses, ActionAid says the UK must ensure that G20 takes the decisive action it promised on tax havens at the London summit in 2009.

Friday, 7 October 2011

The World vs Wall Street‏

Thousands of Americans have non-violently occupied Wall St -- an epicentre of global financial power and corruption. They are the latest ray of light in a new movement for social justice that is spreading like wildfire from Madrid to Jerusalem to 146 other cities and counting, but they need our help to succeed.

As working families pay the bill for a financial crisis caused by corrupt elites, the protesters are calling for real democracy, social justice and anti-corruption. But they are under severe pressure from authorities, and some media are dismissing them as fringe groups. If millions of us from across the world stand with them, we'll boost their resolve and show the media and leaders that the protests are part of a massive mainstream movement for change.

This year could be our century's 1968, but to succeed it must be a movement of all citizens, from every walk of life. Click to join the call for real democracy -- a giant live counter of every one of us who signs the petition will be erected in the centre of the occupation in New York, and live webcasted on the petition page:

The worldwide wave of protest is the latest chapter in this year's story of global people power. In Egypt, people took over Tahrir Square and toppled their dictator. In India, one man's fast brought millions onto the streets and the government to its knees -- winning real action to end corruption. For months, Greek citizens relentlessly protested unfair cuts to public spending. In Spain, thousands of "indignados" defied a ban on pre-election demonstrations and mounted a protest camp in Sol square to speak out against political corruption and the government's handling of the economic crisis. And this summer across Israel, people have built "tent cities" to protest against the rising costs of housing and for social justice.

These national threads are connected by a global narrative of determination to end the collusion of corrupt elites and politicians -- who have in many countries helped cause a damaging financial crisis and now want working families to pay the bill. The mass movement that is responding can not only ensure that the burden of recession doesn't fall on the most vulnerable, it can also help right the balance of power between democracy and corruption. Click to stand with the movement:

http://www.avaaz.org/en/the_world_vs_wall_st/?vl

In every uprising, from Cairo to New York, the call for an accountable government that serves the people is clear, and our global community has backed that people power across the world wherever it has broken out. The time of politicians in the pocket of the corrupt few is ending, and in its place we are building real democracies, of, by, and for people.