Labour’s recent victory in the general election was hardly welcomed by the public. After all, they received fewer votes than Jeremy Corbyn’s failed campaign in 2019. Keir Starmer’s victory was only secured because Reform ate into large swathes of the Tory base, a reality that also redounded to the benefit of the Liberal Democrats. Nigel Farage’s rise to Parliament, with the capture of the Clacton constituency, is to be celebrated as a step in the right direction, but at the same time we should not ignore the monumental problems that a Labour government will now face.
It is difficult to know where to begin. No doubt many on the Right will point to mass immigration, and this of course is a major threat to the West. Yet, to understand why this is, we must go deeper into the economic frameworks that bureaucrats have been building in recent decades, because immigration can be blamed as much on shoddy monetary theory as the cult of global universalism.
It is unquestionable that mass immigration is a liberal project, one built on naivety in presuming that everyone who arrives will benefit our society and thus the economy. However, this is only part of the story—and probably the most well known part—because it’s easy to remember, understand, and is repeatedly trumpeted by left-wing activists. That said, the economic pretext for current demographic change has been typically neglected. This is because the idea that flawed monetary and economic policy could be driving the West into a downward spiral strikes us as unlikely, such that we’d rather just pin the blame on social justice warriors and NGOs. This is a mistake.
Recently, a group of Nobel Prize winning economists let the cat out of the bag. Responding to Donald Trump’s draft manifesto for his second term in office, they warned that wages might go up. Yes, you did read that correctly. They were concerned that deportations and curtailing immigration would make American citizens wealthier, because it would force employers to compete for their labour by increasing wages. The reason they gave for this was that it would cause inflation to rise, whilst conveniently ignoring both the quantitative easing and COVID stimulus which have caused enormous inflation anyway, and mass immigration which has led to house prices rising exponentially as well. The deep irony that this group is led by Nobel Prize winners is not lost on me; credentialism having been overrated for some time. And indeed, there may also be political biases baked into their assessments as they seek to undermine Mr. Trump’s hopes of re-entering the White House.
Keeping wages down for this specific reason has been a central policy position amongst government economists since the late 2000s; it’s just never talked about in polite company or down the pub. The fear of the wages line on the graph going up—a similar fear that surrounds GDP stats when the line goes down—is the main reason why the various Conservative governments in Britain between 2010 and 2024 never implemented their successive pledge of reducing net immigration to the tens of thousands, and why Canada has implemented a policy of mass immigration unprecedented in the developed world, with over 409,535 people from India alone given residency between 2015 and 2021.
This is also driven by a policy of what we might call human quantitative easing, in which national GDP grows by simply growing the population. The problem is that productivity and competitiveness don’t rise alongside this and the qualifications of many people coming in are often worse than those already present. This all creates the rather strange scenario whereby economists urge governments both to depress the wages of citizens (by importing workers) and to grow GDP at the same time (by hoping those imported workers will spend their money here instead of sending it home). Next to no thought is given to the social, cultural, and demographic consequences; and no care shown towards the domestic workers who have seen no pay increase in real terms since 2009. Wouldn’t it be better simply to raise the wages of citizens already here, so they could spend the money in their own countries? And wouldn’t it make more sense to grow GDP by increasing the birth rate, rather than importing people from around the world? Well, it seems these are not acceptable solutions to government economists, because they are never implemented.
But it doesn’t stop there, because, whilst all this has been going on, politicians from Washington to Berlin have implemented some of the tightest planning restrictions ever assembled. These days, whether it’s high speed rail in California or a nuclear power plant in Britain, a million hurdles have to be overcome to get anything built. In Wales, for example, a proposed nuclear plant has been repeatedly delayed so that an impact assessment can be done for a rare species of bird. One might have thought that powering millions of people’s lives might be a priority of government, but think again. Thus, not only have elected governments and economists abandoned developing the West’s industrial and manufacturing capacity by outsourcing it (largely to East Asian powerhouses like China), but they have also made it extraordinarily difficult to get any domestic project off the ground.
As such, we find ourselves in a situation where GDP is being artificially grown through mass immigration, which is also depressing the wages of people already here. At the same time, despite claiming to use the latter to keep inflation down, they have also caused record inflation through quantitative easing since the banking crash, before adding to this with COVID stimulus policies post-2020. The result of this is that GDP-per-capita, a better approximation of a people’s prosperity, has declined consistently since the fall of Lehman Brothers in 2008. And then, on top of that, the competition for housing caused by mass immigration has caused prices to rise exponentially, whilst planning laws prevent the scale of house building which would ease this problem. This in turn makes it harder for young couples to buy or rent, which causes birth rates to decline.
There is perhaps no set of economic policies worse than the one outlined in the above paragraph, yet this is a system endorsed—and quite frankly enforced—by the economists who advise governments throughout the Western world. To say that policymakers oppose wage increases might sound unhinged, but it has been consistently practised for a generation.
Like the flawed scientists whose bizarre predictions of COVID being like the Black Death pushed governments into lockdown, there is simply no accountability for their misguided policies and advice. It doesn’t matter if a new government comes in, the same people embedded in HM Treasury and think tanks across the Atlantic are promulgating the same mistakes. The Office for Budget Responsibility (OBR) in Britain was designed to make government fiscal policy transparent. Instead, it has become a power with no oversight whatsoever. Liz Truss, the ousted prime minister who recently lost her seat, revealed in an interview that they threatened to reveal ‘bad data’ if she didn’t increase immigration. To me that sounds like blackmail, and Rachel Reeves, the new chancellor, is planning to give them more power! This example also shows another error that is consistently made—the obsession with growing institutions rather than shrinking them or changing their outlook.
Like the over-reliance on renewable sources of energy instead of nuclear, stagnation in the West from a monetary perspective is caused by bad policy, not by magic forces that are out of people’s control. As Margaret Thatcher proved, a new economic model can turn around a country’s fortunes. It just takes somebody with willpower—and knowledge—to get it done. The dollar is still the world’s reserve currency, although slightly under pressure, with the British pound and continental Euro also strong. Moreover, Britain is still the third most popular destination for venture capital worldwide. Unfortunately, the West is being held back by ignorant decision making. The foundations are there for a better economy, so long as there is the political will to implement it in the right way.
This begins with instilling an ethos that domestic workers come first, and that domestic industry and manufacturing are a priority, especially when it comes to energy, infrastructure, raw materials, and defence. There has been too much emphasis in the West on financial services at the expense of everything else. Secondly, the fear of inflation caused by rising wages must be abandoned and replaced with optimism, because wage growth actually stimulates higher living standards and a happier society. Indeed, wage growth was so strong after the Black Death, a pandemic which caused a heavily decreased labour force, that elites worried too many ‘commoners’ were adopting their dress codes and lifestyles and implemented laws to curtail them.
And this neatly brings me onto the third point: artificially growing GDP by increasing the population through mass immigration is fake growth. Focusing on GDP-per-capita is a much better tool for measuring societal wealth. Rather than believing that a larger population automatically equals a strong economy, the focus must be on real-terms gains in wages, the productivity of citizens, and a return to a TFR rate of at least 2.1, which would ease fears of a shrinking tax base amongst future generations. This latter point is now all the more urgent, as recent data from Germany suggests that 47% of welfare spending is allocated to foreign arrivals, who were supposed to get jobs, and thus help pay for the pension burden facing the country.
The West always has the potential for strong economic growth, but this is often squandered by bad policies implemented over decades, usually by left-wing governments but also occasionally by the Right. As Argentina has recently demonstrated, things can be changed quickly with the right person in charge, as that nation is now turning a corner after decades of stagnation. Politicians need new economists with a more home-focussed outlook, because as the last 15 years have shown, printing money and mass immigration are not the answer. The mandarins have got it wrong, and they need to be replaced with a new generation of sounder monetary theorists.
It’s important for those advocating immigration restriction to offer an alternative economic model for the future, because the last 25 years of mass arrivals have been driven largely by a mistaken fiscal model. Too often an ideological reason is given for why—against voter’s wishes—successive governments of different stripes have implemented unprecedented demographic change. Rather than seeking answers in the obscure left-leaning philosophy of Foucault or Chomsky, it’s more often to be found among economists in the civil service and think tanks. They bear much of the responsibility.
