John Gascoigne: Immigration - what worked for US will fail in NZ

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The highly adverse effects from our present immigration policies are now glaringly apparent. Photo / AP
The highly adverse effects from our present immigration policies are now glaringly apparent. Photo / AP

The huge inflow of immigrants into New Zealand is the result of official policy largely inspired by a totally flawed interpretation of the American experience. In the 19th century, millions of Europeans crossed the Atlantic and created the richest and most powerful nation in history. Our political masters naively believe that a similar, proportionate migrant inflow will catalyse our transformation into a nation of greater wealth and opportunity.

A century ago, Europeans in search of a better life left the old world for the Americas. Their destinations of choice were New York and Buenos Aires. Around 20 million Europeans settled in America and 7 million reached Argentina. A sprinkling colonised Canada, South Africa, Australia and New Zealand.

Every nation's growth path and development potential is a function of a plethora of unique factors; replicating another nation's development path can lead to very different results in an uncongenial environment.

America's vast physical expanse, the unparalleled geospatiality of its immense resource endowments and the vastly different circumstances of its historical evolution totally invalidate comparison with New Zealand.

Powerful forces in a process starting with the first European settlement at Jamestown, Virginia, in 1607, and extending over centuries, pulled millions of European immigrants in a relatively even spread of settlement across a huge continental landmass.

Proponents of immigration are apt to forget one of the great lessons of economic history. A century ago, Argentina, inspired by the American experience, modelled its immigration policies on that country with disastrous results. Great waves of European migration crowded layer upon layer into the capital, Buenos Aires, creating conditions which led to the rise of Argentine fascism in the 1930s and the subsequent uncoupling of that nation from the world economy.

Today, Argentina has a highly diverse, vibrant and well-educated population of 40 million, over half of which lives below the poverty line.

Argentina prospered fabulously in the late Victorian and the Edwardian age. But the basis of its glittering prosperity was exceedingly fragile. It rested on huge inflows of foreign, chiefly British, capital to compensate for the domestic savings shortfall and unrestricted market access for its primary products. The cessation of these two factors brought about by the Great War and Depression-era trade restrictions marked its demise. Fascism only accelerated the process.

Argentina was splendidly suited to pastoral agriculture but little else. The vast expanse of the interior - the Pampas - required few labour inputs. Hence the gravitation to the capital. By contrast, America needed millions of new settlers to transform the wilderness, develop its immense natural resources and, following the 1812 war with Great Britain, bolster national defence.

America aspired to become a world power of the first order to dissuade the great European powers of the time, notably France and Imperial Spain, against any reassertion of pre-independence territorial claims or aggrandisement and, more generally, interference by those powers in the affairs of the Western Hemisphere.

By contrast, throughout all this, New Zealand, as a loyal member of the British Empire, enjoyed the protection of the Royal Navy.

Accordingly, the absurdity of invoking the American experience in support of our present immigration policies must be self-evident. New Zealand is not America, or Argentina for that matter. However, there are disconcerting parallels between New Zealand and the Argentine experience. For example, the infrastructural costs of an additional million people crowding into Auckland would be astronomical. Those costs will be met by the resident population. The hugely detrimental environmental effects, let alone the impacts on housing and social cohesion, must also be considered.

America has always beckoned as the land of unlimited opportunity. By contrast, in an increasingly uncertain world, New Zealand beckons as the perfect bolthole. A sunny place for shady foreigners. And a back door entry to Australia, if required.

The highly adverse effects from our present immigration policies are now glaringly apparent. Our resources, unlike America's, are finite. Accordingly, the argument that more of the same will eventually lead to diametrically opposite and hugely beneficial outcomes all round is, quite simply, totally implausible.

John Gascoigne is a UK-based economic commentator.

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- NZ Herald

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