Remittances - A Long term Perspective

The World Bank is claiming that remittances are the best way to help developing countries and that third world immigration to the West won’t harm western economies.

However, this ignores the fact that many western countries are increasingly in debt to East Asian creditors and that East Asia doesn’t play the western game when it comes to immigration.

In western countries like The United States and Great Britain, most of the jobs done by immigrants from developing countries are service jobs like cleaning, catering and labouring. These activities may benefit individual middle class westerners but they don’t contribute to increasing exports or decreasing imports. Not surprisingly, the fiscal health of the United States is deteriorating as third world immigration continues unabated.

In contrast, immigrant workers in East Asia are usually compelled to do productive jobs in factories. Subsequently, countries like Korea and Japan are still managing to stay out of debt and are maintaining healthy trade surpluses.

Although the volume of remittances from the West to developing countries may be impressive to World Bank economists, there is no evidence to suggest it is sustainable. When the West finally has to face up to its debts, the volume of remittance contributions will rapidly decline as the West can no longer afford the luxury of employing legions of unskilled service workers.

Also, lets not forget the global population is still increasing as the number of rich westerners is decreasing. This means that we will need to become even more decadent and wasteful to satisfy the third’s world’s expanding need for remittance money. This is not something that social conservatives are likely to be happy about.

The two factors that will finally make the West face up to its debts are population aging and rising commodity prices.

China is short of resources and has an aging population so it is eventually going to have to float the Yuan to pay for essential imports. That will cut off the supply of easy credit and ultra-cheap goods to the West.

If western governments are going to import workers from poorer countries then they should at least make sure these people are directed into productive jobs like food processing and seasonal farm work where there may be genuine labour shortages.

If workers from developing countries are channelled into specific jobs, in productive industries, and in limited numbers, then it will be easier for the government to monitor them. This will benefit both foreign workers, who are vulnerable to exploitable, and local workers who may be forced out of work by unscrupulous employers trying to undercut minimum wage rates.

Although the ‘guest worker’ programmes used by East Asian countries, and some western countries, are far from ideal, they arguably do less harm to the host country then large-scale, liberal immigration policies that may have huge external costs for future generations.