The refugee crisis – a crisis of international cooperation

One of the biggest headlines in the news last year must have been the Syrian refugee crises. Mostly as a direct results result of violent conflict or the indirect economic impact of war, millions of people have been forced to flee their homes and look for a better life elsewhere.

Lots of discussion has been in relation to how to solve the conflict in Syria. And no one doubts their incapability of doing so. At the same time as these nations do not solve the conflict they also grossly neglect the need for international cooperation to help out the people fleeing the conflict.

More than 10 million people are without home
While the actual numbers vary across sources, the horrific conflict in the region seems to have displaced around 10 million people. Between four and five million of the displaced Syrians are registered in the neighbouring countries (most in Turkey and Lebanon). And a Further million or so are now believed to be in Europe.

While the numbers of refugees that currently reside or have shown interest in finding a new home in Europe are few compared with other countries, the debate in Europe over what to do with asylum seekers has been fierce.

Some of the arguments made in the debate are purely non-factual based and racist, some points made by more informed people in a certain context can show some merit. But as this post will show, reasonable people with these worries could be put at ease with cooperation of rich nations.

Three things that worries locals in regards to new citizens
While there are many angels to the refugee discussion, what I observe is that the major worries that most people have can be boiled down to three things:

  • Locals fear that refugees from different cultures will not “mix-in” and that the local culture is at risk of being “deluded” due to foreign influences;
  • Locals fear that foreign workers crowed out local workers and reduce opportunities for locals and push downward pressures on wages; and
  • That the immigrants will add to the cost of local welfare systems.

These views are most commonly voiced by people with pre-installed ideas and prejudices against the migrants. In some cases however, these things also worry the liberal more open minded population. That should not come as a surprise given that we care about our local culture, labour market and welfare.

If the rich world cooperates the impact on local cultures will be minimal
If million Syrian refugees are to be relocated to Iceland – with a population of 329,100 – then the local culture would have to step into the second place to make way for the new Syrian-Icelandic nation. I think this scenario describes how some people feel about accepting refugees.

It is however, blatantly obvious that this is not going to happen. After all, no nation possesses the institutions and infrastructure to massively increase their population overnight. Most reasonable people know and understand that. Nonetheless, some people are worried about impacts on local culture even if the new population is only a small portion of local population. But no one should be worried at all if the arriving population is small enough. Take for example the proportion of Germans of Turkish background. They represent around 4% of the German nation and do indeed contribute to the cultural identity of Germany. But there is no-one that will convincingly argue that German culture and identity has been diluted because of the demographic change.

A small demographic change only enhances and does not override local culture. Therefore, a solution that should put people who worry about local cultures at ease is simple. The worlds nations should all sit down; count the refugees that seek asylum; count the number of inhabitants in each country; and then redistribute the refugees in proportion to their current population.

But counting, dividing and multiplying is hard work for diplomats and politicians, so I have saved them the effort and done it for them. In the figure below, using World Bank data and definitions, I have selected the world’s wealthy nations (in per capita terms) and calculated how many refugees each country should accept on the basis of total population. Note that the most realistic numbers are in the blue columns and below.

figure 1

The calculation was carried out on few different scenarios. The least realistic one is a scenario where the entire population of Syria would have to relocate to the rich world. while completely unrealistic, I present the calculation in order to underline the fact that if the rich nations of this world were to work together on solving the refugee crisis completely, they could easily accommodate the entire Syrian population. In this scenario, the new residents of each nation would make up around 1.43% in each country. Such demographics change might add to the cultural diversity of each country, but it will never threaten nor disturb local culture compositions.

The population of the rich world only makes up around 15% of the entire world population and it is unlikely that all Syrian refugees would seek asylum in in the 15%. Even out of the 5 million “registered refugees at concern” it remains likely that many of them will prefer to resettle in places that are more like home. So, in another scenario were all 5 million would be invited to live in the rich world, these people would represent around 0.4% of total population in their host countries. And that tiny number is the realistic upper limit.

Jobs and wage worries can be eliminated
Again, the first step in ensuring that local labour market would not be overwhelmed in the short run would already have been taken by allocating refugees peaceful homes based on population numbers. While most of the jobs and wages argument are wrong, different rich nations could be impacted differently. For example Nations that have low unemployment rates should indeed be operating closer – or even above – full employment levels and therefore should be better prepared to accept more new workers.

Take UK and Spain as an example. Each country has an unemployment rate of around 6% and 25%, respectively.  The UK is probably in a better position today to deal with and benefit from a sudden increase in workers. After all, health of the host countries economy matters. What is not obvious is the weight that local labour markets should play against population in the allocation of asylum seekers. This would obviously require further investigation.

But, like a kid learning how to ride the bike, a small push can make the difference. So, I my small push to the world leaders is an adjustment to the population figures using each nation’s unemployment rate relative to world average (see chart below). Hopefully this will help them pedal them selfs.

figure 1

The white bar representing 20 million refugees has been removed for clarity and the yellow bar now represents another extreme case of 10 million people being allocated asylums in the rich world. As before, the upper bound of the realistic scenarios is the blue bar and the lower bound is in green.

In the scenario, countries with extremely unhealthy labour markets (Spain and Italy in particular) would now be asked to accept fewer refugees and instead these people would be allocated asylum in the countries with healthier labour markets. Whereas before, all countries took in refugees that would equate to around 0.4% of the population, if local labour markets are accounted for, the proportion that the refugees would make up in their new host countries would be as per the chart below (in the upper bound scenario).

figure 1.png

And see. at the extreme end of the spectrum even the nations with the healthiest labour markets in the rich world would still only see their demographics change by less than 1%. At the same time, countries with unhealthy labour markets would still play their part but would see much lesser impact on their local labour markets.

Just to be clear, welcoming new workers will not harm local labour markets if these markets function well to begin with. The main reason why the calculation is presented is to underline the following point. If the world works together, the loud voices that fear change can indeed be silenced and comforted that not much is going to change in their local environment.

Local welfare systems are not at risk if rich nations act in coordination
This worry requires the least amount of words. After all, the refugees are normal human beings. Most normal human beings work and pay taxes. Most humans prefer to do that over being sick or taking benefit. Obviously, researchers have looked into this and the conclusion is solid. Migrants have contributed more in local taxes than they taken out of the welfare system. Migrants come for better life and greater economic opportunity for them and their families and that involves working and paying taxes in the country they now call home.

Even if migrants did impose a net-cost on their host country—and they don’t—then a simple system of allocation based on population numbers would indeed ensure that the cost would be immaterial in each individual country. And since migrants are net contributors, it looks as if the most indebted rich countries could even benefit more from a migrant influx.

Ask your local MP to work with a local MdB
The sense I get from reading the news at the moment is that many local politicians want to help refugees but are afraid that if they do they will act against some of their voters’ interest. But, what the politicians fail to realise is that if they could only work together, across boarders’, they could pick up the stone right in front of them and knock both birds. With cooperation and an agreed upon system of refugee allocation, all countries could help millions of people at concern and keep their voters at ease. And for free the same politicians will get great outcomes for their local communities where culture, employment and government finances prosper.

 

Happy new year,
Eiki

 

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