An economics lesson for the population ponzitiers

When foreign supermarket chains ALDI and Costco entered Australia, did Coles and Woolworths welcome them with open arms?

What a silly question. Of course not. The entry of foreign competitors undermined their pricing power. So much so, that recent RBA research credited the entry of ALDI with a 13% reduction in grocery prices.

Good for customers, bad for business. It’s simple economics.

When foreign competitors enter the labour market, should local workers welcome them with open arms?

Of course not. More competition reduces the pricing power of workers, depressing their wages.

Good for business, bad for workers. It’s simple economics.

Depressing wages is a terrific thing for the owners of capital – landowners, miners, banks, and other businesses – who love to promote the story that immigration is an overall economic win. Yet they conveniently ignore that this overall outcome only occurs because their profit gains outweigh the losses to wage earners.

For the past decade, Australia’s big business lobbyists have provided the “skills shortage” and “ageing” myths as cover stories for their calculated raid on wages through record high immigration levels.

Even pro-immigration Canada is not even in the ball park of Australia’s population growth.

So it puzzles me how so many journalists, politicians, and other media commentators, can buy into lobbyist’s story. Can they not seperate the humanitarian logic of supporting refugees, who make up a tiny fraction if immigrants, from the economic logic of mass immigration?

Take Bernard Keane. He writes for Crikey. His latest article carries the tag line:

Businessman Dick Smith attacking immigration as a threat to our economy is both wrong-headed and encourages anti-immigrant sentiment in the community.

I sort of see his point. Keane reckons that talking about immigration could stoke racial tensions, and that is a bad thing. But that logic leaves no opening to have any discussion about important policy questions surrounding our immigration system.

Not only this, he employs the same false rebuttals to Dick Smith’s economic arguments that Waleed Aly tried on The Project a couple of months back.

Here’s Aly.

And here’s Keane.

Immigration can’t halt the ageing of the population, but it can slow the decline in participation, which — far from impoverishing us — will support economic growth.

But they are both wrong. On both points. And what is more surprising is that they both have stuck with these views despite the clear evidence. It’s almost as if they won’t let the facts sway them.

Keane quotes a 2006 Productivity Commission report to support his view, which found that

…the overall economic effect of migration appears to be positive but small.

But that report mostly supports Dick Smith’s view, which is the standard economic one. It concludes with:

The distribution of these benefits varies across the population, with gains mostly accrued to the skilled migrants and capital owners. The incomes of existing resident workers grows more slowly than would otherwise be the case.

While it may well be the case that there are small overall gains, the distribution of those gains also matters. Working class wage-earners suffer a loss, while wealthy capital owners, and the skilled immigrants themselves, benefit.

And what about housing? Keane mocked Smith about his view that high immigration rates are contributing to elevated housing costs. He says:

Blaming migrants is the “they take our jerbs” argument of housing affordability.

I wish the Productivity Commission could clear this one up too. Oh, here. Look.

Urban land owners, in particular, might benefit from increased land values or rents.

Aly and Keane both make the point that immigration is helping to solve a population ageing, which leads to a decline in the share of the population actually in the workforce (because of more retired people). Yet that too is a myth. Here’s the Productivity Commission to tell us about it.

Despite popular thinking to the contrary, immigration policy is also not a feasible countermeasure. It affects population numbers more than the age structure.

Not surprisingly, immigrants age as well.

The economic analysis Bernard Keane used to try and discredit Dick Smith actually supports all of Dick Smith’s fundamental points.

I don’t know why this is so hard to fathom. Keane and Aly aren’t arguing for open borders, which would be the natural conclusion of their arguments. So they implicitly realise immigration policy is a choice, and that it has economic and social consequences.

Making a proactive choice about immigration policy isn’t being anti-immigrant, nor is it anti-refugee. Australia’s absurd immigration policy choice has been to lock up the most needy refugees, while at the same time adopting an immigration policy that has been off the scale in global terms, and affecting local wages.

Keane and Aly can go on ignoring economic reality. They can paint as racist everyone who understand that population and immigration outcomes are the result of policy choices. But they can’t change the facts.

Comments

  1. Most people have lost the ability to reason from first principles. Instead they rely on prejudice, beliefs and group think. The core fallacy here is that growth is a divine truth never to be questioned. In fact, any system that is only stable if it is growing is a metastable system. It will collapse. This is not a 21st century breakthrough either – ideas about dynamic systems go back to at least the 19th century.

    When I read the output of people like the above Bernard Keane and Waleed Aly, it just depresses me. Do they know how ignorant they are? Perhaps they just don’t care about ideas? They must put on their suits and puff themselves up and go forth and spout stupidity before returning to their leafy home to feel good about the day. That is a bad omen for us all.

  2. Yep. The lefties love Canada but it has a lower immigration rate than AUS!

    So in order to become a refugee-loving utopia like Canada, AUS should slash immigration.

    The expensive and inhumane offshore detention gulags that Gillard opened are no longer providing the subterfuge. The bogan voter has finally realised that the traffic jams are caused by “skilled” foreign workers and not refugees.

    • mild colonialMEMBER

      I think boons (as they were called in my town before the homogenisation of Australian culture happened) actually have realised for ages exactly what was going on and that explains a lot of the popularity of the Coalition over the past two decades. They fell for little Johnnie’s bait and switch with refugees for a while but if you were someone who didn’t want to be too racist but did want immigration to be cut which party would you think would be thinking like you. The naive so-called Lefties of Labour or the hardline not very progressive and therefore somewhat racist Coalition. Obviously you vote Coalition.
      The beauty of my theory is that it also explains, to me at least, how Australians ever voted for Howard and Abbott. The average boon didn’t see them as their type of person at all but they did think, given the choice, that the Howard and Abbott were the solution.
      Why the ALP hasn’t been able to see this and seize the advantage I’ve never understood except to think that they really are completely divorced from the people they were formed to represent. I know their polling shows rampant population growth is an issue because it was the first topic Ms Gillard spoke on when she became PM. and for a brief moment there looked like she’d ratchet immigration back for a bit. but then straight back to the (very convenient) silence.

      • The Traveling Wilbur

        Because explaining reality to a bunch of cardigan wearing inclusivists is hard? And no one would get a trophy after?

    • The Turnbull government likes immigrants to keep the ponzi going. The Trudeau government likes them because anything PC appeals to the Canadian sense of moral superiority to their southern neighbors. Fucked if I know which is worse.

      • Canada makes cars. AUS does not. AUS has faster population growth than Canada. Obviously AUS is worse.

        Vancouver puts an extra tax on foreigners buying Vancouver houses – South Australia refuses to and then wonders why industry is leaving South Australia.

  3. Waleed has a law degree. What the hell would he know about economics?

    He should shut up about economics.

    • Walleed is a classic example of ethnic tokenism. To disagree with his logic is to risk being labelled a (you know what) yes one of those.

      • I’m sorry, but that is a ridiculous statement. Using that logic anyone who speaks who is not white (I assume) is a “token ethnic”.

        Waleed is a very smart guy and talks lots of sense on most things. I do differ with him on this topic, but play the ball not the man right? To me I don’t care what his ethnicity is, he’s Australian. End of story. And if he wasn’t Australian, I’d still listen to him and judge what he says on its own merits. Pretty good rule of thumb, no?

    • There’s are great YouTube video with Richard Dawkins and Waleed debating Islam. At one point Waleed says he believes Mohammad literally flew to the moon on a winged horse… He’s no intellectual heavy weight!

      • I work with a guy who borders on genius in his scientific field but takes the Bible to truth. The funny thing is that our work often brings up conflicts with the Bible, but he can mentally accommodate them.

        A person having a false belief in one thing does not mean all further things that they say should be dismissed.

      • I agree footsore, but haw often do you see people say that one is not factual because that person’s views are dismissed as being those of a racist nazi bigot? The quality of the fact that was asserted is disregarded.. Whith committed Muslims jihad of the pen is laudable as it is seen to be good to promote Islam. With some committed Christians like your friend, he can reconcile his beliefs with his work. Likewise Ali can do the same. But don’t expect objectivity in either. Ali wants more Muslims period.

      • There is a difference between islam and Christanity in that the deception of non believers is permitted in one and not the other (taqiyya etc)

      • He hasn’t that I know of, but I wouldn’t expect him to. The former head of public affairs for the Islamic Council of Victoria, and a member of its executive committee, would not say more than more big migration is a good thing and the policy should be non discriminatory. This necessarily means more Muslims. In Islam there is a process called Hijrah by which non Islamic lands are colonised by Islam by migration.

      • Fitzroy,
        So you are positing that Aly is defending immigration in order for Muslims to become the largest group in this country. You also seem to infer that, even if he was, and was confronted with this theory of yours, he would not admit to it.
        Smells like you’ve cooked up a conspiracy theory me.

        That is unless you have some evidence to back up your notions.

      • Not a theory at all. Let alone a conspiratorial one. Just fact. The current policy means more Muslims and Islamic influence.
        “Larger-scale Muslim migration of non-White non-European Muslims began in 1975 with the migration of Lebanese Muslims, which rapidly increased during the Lebanese Civil War from 22,311 or 0.17% of the Australian population in 1971, to 45,200 or 0.33% in 1976…..By the beginning of the 21st-century, Muslims from more than sixty countries had settled in Australia. While a very large number of them come from Bosnia, Turkey, and Lebanon, there are Muslims from Indonesia, Malaysia, Iran, Fiji, Albania, Sudan, Somalia, Egypt, the Palestinian territories, Iraq, Afghanistan, Pakistan and Bangladesh, among others. At the time of the 2011 census, 476,000 Australians (representing 2.2 percent of the population) reported Islam as their religion.[26]
        https://en.wikipedia.org/wiki/Islam_in_Australia#Increased_immigration

        As for Hijra, there is nothing controversial about this either. It has been around since the very beginning of Islam. Google it.

        I didn’t “imply” anything other than he wants to see more Muslims in Australia. The “largest group in Australia” are your words not mine. Why do you imply conspiracies and words that I did not say? Wouldn’t you expect that he would wish to see a maintaining of the policy that has seen such a large increase of Islam in Australia, why would you presume the reverse?

        I doubt that he would publicly declare it as it might scare the horses.

      • I might have missed something, but it seemed to me that you were adding an ulterior motive to Aly’s support for immigration. That’s where my suggestion that you’ve created a conspiracy theory comes from.

        You should send him an email and pose the question to him. (I’m being serious here. If you think he “wants more Muslims period.” instead of just being a supporter of immigration, like Bernard Keane is, shoot him an email. Try to turn your theory into fact.)

      • I might have missed something, but it seemed to me that you were adding an ulterior motive to Aly’s support for immigration.

        You’re not, he is.

        “In Islam there is a process called Hijrah by which non Islamic lands are colonised by Islam by migration.”

        “There is a difference between islam and Christanity in that the deception of non believers is permitted in one and not the other (taqiyya etc)”

      • Higher immigration and more Muslims are unrelated.? The facts would suggest otherwise.. It is a natural consequence of the current policy. That becomes an ulterior motive? You are seeing reds under the beds

      • I omitted to answer the point about the email. I do not expect that the former publicity officer and executive member of the Islamic council of Victoria to reply that Islamic immigration to Australia is anything other than a good thing. Would you expect him to say it was a bad thing?

        This of course means more Muslims and a more concentrated Islamic presence in society. I don’t think he would wish to publicise this consequence st present given the unpopularity of such a consequence given the latest stats.,
        http://www.abc.net.au/triplej/programs/hack/half-of-australia-wants-muslim-ban/7865630

      • Smithy the statements that you quote are fact. The last one you quote about Taqiyya is of course out of context. I did not accuse or imply that Aly was indulging in this, Taqiyya does not mean deliberately giving a false impression, that is tawriya, something different. As you can see from my post I did not imply this either, but was speaking in generalities comparing the two religions. That you see otherwise says more about you than me.

    • He should then understand the false binary logical falacy he spouts.
      Its the rate.
      What is an acceptable rate Waleed? Bernard? 1 mill?

    • The old “let’s charge more to deliver poorer services” trick did really well for the post office’s profitability.

      I have a problem with the colour of Farour’s skin – the unnatural look of artificial tanning makes me uncomfortable. Give zero f**ks about the guy’s name but no public servant should earn ten times the amount of the dude running the country. I loved his press conference, it was patently clear this was a second rate intellect completely incapable of having his position questioned.

      • ErmingtonPlumbing

        A good thing we got our fairwork commission pulling up income excesses like Sunday penalty rates etc eh?

        Time for an CEO/Executive wage Accord I recon.

      • Don’t you know that laws and regulations which inhibit the capacity of the big end of town to earn themselves mega profits are anti-free market, leftist garbage put forth by losers and hypocritical chardonnay socialists?

        On the other hand, laws and regulations which enable megaprofits are good for us all, even if they are bad for you personally. In order to allow an eagle to soar, you have to crush a million pigeons. Therefore, restricting CEO pay = bad, however restricting shop assistant pay = good.

    • Yeah he’s a massive cuck. He’s leaving the role due to heat over his salary. Even if he says otherwise.

  4. why is the argument “it could stoke racial tensions” invariably applied whenever somebody calls for a reduction in immigration, but it is never applied in the opposite direction? how is an immigration policy that expressly will reduce european-descended people to an ethnic minority not going to “stoke racial tensions”, and why is it not okay to say that?

    • You my friend are a racist ! Welcome to the club.

      To discriminate on the basis of race (actually on DNA) is hardwired into our biology to deny it is absurd. Its another example of anti-science

      • Apparently decoding the human genome isn’t such a big thing after all. Humans have DNA sequencers built-in !

      • @Tonydd – think you are stretching on the attribution to DNA (modern concept) but you are close to the mark, any psychologist worth their salt will tell you its more the visual stimuli we process, ie. facial recognition / distinction. There is some scientific backing to statement “they all look the same to me” (now considered racist) when referring to members of another race. There are studies out there that suggest you recognise faces of your own race better than other races. But as @footsore says it’s incumbent on us to realise that discrimination is in operation and that we need to override it.

      • boomengineeringMEMBER

        Travis responding to Tonydd,”They all look the same to me”referring to members of another race . But But some engineering types or extreme male brain types have that problem with their own race, lacking facial recognition but great with numbers. My Mrs is racist against all races including her own( just hates people in general) and shes part Jamaican.

      • We all have natural thought tendencies and biases, which are able to be observed when they arise. However, we also have the ability to decide whether those tendencies and biases should be acted upon in any given circumstance.

    • In Sydney, English or European descendent Australians are already looking to be a minority. Catch a train or walk around the city, white people are no longer the norm. In another generation they’ll be a rare sight to behold.

      Just like the term racism, the word multiculturalism is used as a weapon to silence debate and validate any kind of exploitation of the population ponzi.

      • +1
        If one cares to look, it is evident a certain segment of society, a tribe, if you will, can get away with anything. 😉

    • A reduction in immigration will improve radical harmony. The current trend of racial groups concentrating in small areas is huge policy failure. Racial harmony requires interaction and integration, rather than producing a generation of young kids growing up in a segregated environment.

      • desmodromicMEMBER

        It is not a policy rather a sensible response by immigrants to develop community and protect one self from the less tolerant elements of our society. It is no threat unless you choose to make it so.

      • Works just as well in the obverse desmodromic!
        ‘It is not a policy rather a sensible response by a nation of people to develop community and protect one self from the less tolerant elements of the world. It is no threat unless you choose to make it so.’

      • desmodromicMEMBER

        M, except one is a product of individual human decency and the other a collective response with a wide range of potential adverse outcomes from alienation to fascism.

      • Yeah nah desmo I think they’re one and the same, only with a different scale, micro vs. macro. If I have you correctly from what you wrote, you’re talking about communities of common ethnicity banding together and pulling up the drawbridge to protect themselves from less tolerant elements of the wider world. Ghettos are micro-national socialist states. I’ll let you chew on that for a moment.

      • desmodromicMEMBER

        M, yeah, nah not really. To characterise as ghettos is extreme. That isn’t a desirable endpoint whatever the reasons or means. One would hope civility and decency would prevent that happening here. I’ll leave it there.

  5. boomengineeringMEMBER

    Reply to deleted comment by powermonger,True,on Australia day at Opera House no whities anywhere to be seen, good to see all colour’s in Aust but never good to have lopsided ratio’s

  6. St JacquesMEMBER

    Enjoy the show. When things either grind down endlessly over a long time for an ever increasing share of the population or get smashed by some unexpected shock, these mathematically and logically challenged corporate stooges and bubble apologists will become among the most derided figures in the land. That is as certain as night follows day.

    • The territorial argument seems a stretch. On the one hand we are supposed to be driven by base animal urges about protecting ‘our patch’, yet on the other we are defining ‘our patch’ by a several-orders-higher concept like a nation-state ?

      The endowments position has a similar problem with, on the one side supposedly being driven by a very low-level urge but on the other side being weighed up against a very high-level concept.

      They’re basically saying that humans are completely rational when calculating the benefits (driven by complex, high-level, forward-looking decision making), but completely irrational when estimating the costs (driven by instinctual desires).

  7. I have worked out how to reduce the immigration rate and appease The Greens in the process. Introduce a non-discriminatory clause which prevents privileged white men from entering the country.

  8. You just compared Aussie workers to the most self entitle duopoly around. They have zero productivity advantage, zero technical excellence and they expect undeserving riches simply being Aussie. They are horrible to their suppliers and creditors (less powerful ones anyway), and their only counter to competitors from overseas is to whip up xenophobia.

    • This is certainly the case. They are excellent milkers of the population Ponzi model. They are on the road downhill from here though. Amazon will disrupt them and as the economy and immigration slows their fat margins will slim down.

      If they were any good, they’d be looking to expand in Asia. They don’t because they know they’d get creamed.

      • Amazon is not a direct competitor to our supermarket giants. Amazon is woeful for perishables or anything you cannot buy just based off specifications ( stuff you buy simply from specifications include books, electronic gadgets etc).

      • Not completely Kevin. Amazon typically sells lots of bulk items like cereals, toilet rolls, soft drinks etc. The bedrock of Colesworth business is the weekly shop where people get everything in one hit. In Aus, people can use Butchers, greengrocers etc to shop for fresh stuff, often better and cheaper than Colesworth. if Amazon hits their bulk items they will erode the weekly shop.

        Whilst not yet an existential threat, assuming Amazon looks to sell these items in Aus, this is definitely going to have an impact. FWIW I worked for Colesworth for a while, and believe me they were concerned by these and similar threats.

      • “Amazon typically sells lots of bulk items like cereals, toilet rolls, soft drinks etc. ”
        Amazon is a few years too late for that too. Catchoftheday.com.au already have that covered too. They already do parallel imported dishwasher tablets and cereals. Though you still have to go to the supermarket if you need the stuff very soon.

  9. I always wonder how on earth the ‘left’ manages to avoid being wedged on the whole population vs environment thing.

    • Because the vast majority of people claiming to want less immigration take barely a nudge before focusing on their real concern, which is muslims/azns/non-Xtians/non-whites.

      Take Abbot, for example, who on the one hand has called for less immigration, but on the other hand (the one not grasping his person), has previously called for open borders between us and the UK, is neoliberal to his bones and spent most of the last few decades actively conflating refugees with immigrants.

      The wedge is certainly possible, but finding anyone able to execute it with any sort of credibility is nearly impossible.

      • I, and others, have been saying for ages this is a goldmine for the greens. Push the humanitarian side and keep the numbers low. Instead focus on paid immigration (visas, houses, business etc.) and in particular 457s. It’s not only possible, it’s a bazooka, not sure why they won’t go this way.

        I’d also challenge your assertion that it’s is about race. I think the actual pressures of congestion, transport, health education and housing has made this homogeneous. The reason why race is concerned is because Chinese are associated with outbidding aussies and middle eastern folks are associated with terror. However I’m sure if you took eurpoean descent immigration and were actualyl honest about the number most would baulk. The fact that it’s about skin colour is largely a media attention grab. Most will still oppose greater immigration regardless predominantly due to housing. Don’t piss of the electorate. Hansen.

      • I, and others, have been saying for ages this is a goldmine for the greens. Push the humanitarian side and keep the numbers low. Instead focus on paid immigration (visas, houses, business etc.) and in particular 457s. It’s not only possible, it’s a bazooka, not sure why they won’t go this way.

        I agree completely. Have been saying this for years as well.

        As I understand it, internally the Greens are split on the issue and thus, due to their processes, unable to formulate a clear and direct policy.

        I’d also challenge your assertion that it’s is about race.

        Really ? How often do you look into the past of someone claiming to be anti-immigration in general and find that most of their complaints or actions are highly targeted towards a handful of racial and/or ethnic groups ?

        People in general face the consequences of non-specific immigration, and that is where their frustration takes root. But they are agitated into action by people like Hanson with much more specific immigrant targets.

        Be honest with yourself. Do you really think the majority of people being stirred up Hanson, Bernadi, et al, would be anywhere near as concerned with high levels of immigration from the UK, USA or New Zealand ?

        The are very, very few people who could credibly (to the majority) stand up and say their complaint is with immigration in general. Dick Smith blew his whole foot off in this regard by associating with Hanson, and his perfectly reasonable views on restricting immigration in general, are from here forward going to be tainted in the eyes of a huge proportion of people as being part of Hanson’s anti-muslim, anti-asian bigotry. Lie down with dogs and you’ll wake up with fleas.

      • I agree with you to some extent. But I think it is somewhat based on what is happening on the ground. Chinese do outbid many aussies, sudanese gangs do wreck havoc and muslims are responsible for most of the current crops of terrorist attacks (not to mention misalignment with their views). However I think we have reached a new paradigm where a lot of people are voting hansen purley for immigration policy. I am one and you’d be forgiven for mistaking me as a high net worth Chinese outbidding you! Strangely, I know a lot of traditional greens voters turning this way, and labour folks scrambling off the ship.Housing affordability is real and it’s not just the white Caucasians that are voting hansen, I know for a fact that many asians are too (keep in mind asians are really really racist, even to their own kind lols). Keep in mind, like Trump, being a Hansen voter still carries a large degree of shame factor, thus it’s not uncommon that the only Hansen supporters are the actual racist variety. That’s just my 2c anyway.

    • “Do you really think the majority of people being stirred up Hanson, Bernadi, et al, would be anywhere near as concerned with high levels of immigration from the UK, USA or New Zealand ?”

      I think the issue is religion, rather than race. There are no restrictions sought for Hindus, Sikhs and Buddhists that I am aware of. The issues outlined by Calvin affect every inhabitant of Sydney and Melbourne on a daily basis.

  10. Back on the actual topic… have a good mate who’s a Store Manager at Colesworth in SE Melb. Says that more or less his top-line growth exclusively comes from population growth in the surrounding area (this is a well-established burb). So Colesworth sales numbers are probably a really good reflection of population growth, once you take out the effect of the limited completion (Aldi is pretty much it).

  11. The chart for Canada/Australia is invalid as you fail to mention the ABS methodology changed significantly in 2006. Of well, best not let the get in the way or even to mention it. Oh and by “ageing” myths, I assume you mean NOM to address, rather than the actual issues we face as a ageing nation right?
    Apart from that, good article.

  12. The way people here immediately conflate immigration with race and non-white really shows what their real issue is.

  13. There is no chance of infinite growth on a finite planet.
    The crunch will come in time.
    Resource scarcity will increase over the medium term and real prices increase.
    There are limits to growth and we are effectively on track for the business as usual case described in the book “Limits to Growth”
    http://donellameadows.org/archives/a-synopsis-limits-to-growth-the-30-year-update/
    Greed will ensure that we will grow until the limits to growth slowly kick in and cause contraction for the lower socio economic groups, then the middle class.

    • Global peak population growth rate was 1965 and it has been declining since. No need to worry at all.

  14. It’s a bit of a pity this discussion headed off in the direction it did away from the economics lesson.
    The economic and social policy settings have resulted in most immigrants flocking to Sydney and Melbourne where there are almost zero externally oriented industries and those that were/are there have been on a downhill slippery slope as a result of a deliberate redistribution of income away from such sectors. (See discussions re value of the A$)
    The result is that in order to accommodate high levels of immigration without IMMEDIATELY causing a melt-down in living standards, we have been forced to embark on a high speed sale of almost everything in the nation to foreigners. (Note immigration is not the SOLE issue in this regard)
    Immigration should be the RESULT of economic growth not the CAUSE of economic ”growth”!!!!

    Note again we need to get down to fundamental economic discussion about what actually constitutes REAL growth!!!

  15. For the past decade, Australia’s big business lobbyists have provided the “skills shortage” and “ageing” myths as cover stories for

    For the past decade? Actually for the past half century since the arguments started about overpopulation and how there weren’t going to be enough young people to provide for all the old people. The fall in Australia’s natural population growth was pre-empting that argument until the government decided to let immigration skyrocket.