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2 The immigration reality
show By Chan Akya
Over
the past few days, on a visit to India to improve
economic ties, the message of UK Chancellor (and
prime minister in waiting) Gordon Brown has been
muddied by an unseemly media controversy over
apparent racism being suffered by a second-rung
Bollywood actress on a third-rate British
"reality" program, Celebrity Big Brother.
Undoubtedly upset with the row stealing his
thunder on an important visit, Brown declared,
"India and Britain are bound by shared values that
support fairness and tolerance. We are against any
form of racism or intolerance."
Beyond the
usual politicians' platitudes, though, there are
important trends that Asia would do well to
understand in greater
depth. In particular, the
process of globalization is inextricably tied with
the destinies of nations. Economic performance
depends very much on the ability of societies to
maximize their output in line with competitive
advantages.
Backlash against
globalization In issuing an apology of
sorts, Brown was perhaps not being merely
solicitous of his hosts' feelings. The wider issue
for the United Kingdom, as with the United States,
has been the backlash against globalization.
Indian outsourcing firms have stolen a march over
rivals from other countries in both the UK and the
US, leading to frequent job losses in these
countries to the benefit of Indian employees, as
well as the shareholders of outsourcing firms.
It has been cheaper for firms to outsource
processes such as those in the back offices to
India, which has led them to focus on tasks that
provide higher revenues per employee. In the
mind-boggling management-speak of consultants,
this process would be termed value addition.
From a purely macro-perspective, the UK
has achieved one of the most significant
turnarounds in modern economic history by
transitioning from a manufacturing-based economy
to a services-based one. [1] Former prime minister
Margaret Thatcher, now Baroness Thatcher, can
claim much of the credit for this, as her
obstinate dismantling of Britain's nationalized
industries sowed the seeds of the country's
transition.
A similar process has been
afoot in the United States, although the key
driver for change was the market, rather than
government forces. It did not hurt that the
Republicans under president Ronald Reagan followed
a more laissez-faire approach than the preceding
administration of Jimmy Carter had indicated.
Herein, however, rose an important
difference between the United States and the UK. I
am referring, of course, to the differences in
skill levels. While the school system in the US
was necessarily egalitarian, that of the UK was
less so, with a disproportionate number of
entrants into the famed Oxford and Cambridge
universities coming from private rather than
government-run schools. This elitism, combined
with an educational system that had been out of
touch with modernization, led to a rapid skills
shortage in the services sector.
Fortunately, post-Thatcher governments
realized these difficulties and set about creating
an open immigration system. Almost alone in
Europe, the UK has the most flexible immigration
laws that allow pretty much anyone within the
European Union - including its most recent
additions such as Poland, Slovenia, Hungary and
the Czech Republic - to move in and work.
Immigrants from other countries, including those
in Asia, face greater restrictions that are
designed to allow only the most highly qualified
to immigrate.
Indeed, the typically
pro-worker anti-immigrant Labour Party changed its
stripes to be elected into power. That team,
including Brown and the current prime minister,
Tony Blair, has managed to hold on to power for
more than 10 years, driven by the strong economic
performance that has itself fed on net
immigration. It goes without saying that positive
changes to UK demographics have been at the heart
of the country's economic growth in the past few
years, marking a sharp contrast to the failed
policies of countries such as Japan, France and
Germany, whose over-reliance on manufacturing and
agriculture have caused significant economic
underperformance.
Dole versus Pole This process of economic adjustment has not
been without pain for the UK, though. [2] The
country's manufacturing heart was in essence
ripped out by Thatcher-era policies, which forbade
any government assistance to failing state
undertakings. A lack of competitive manufacturing
advantage in a range of industries caused those
companies to collapse, particularly after the
removal of tariff barriers with the rest of the
European Union. All car manufacturers of British
origin were either purchased by foreign companies
or have declared bankruptcy in the past few years.
Some did both.
Against these armies of
newly unemployed in the heart of the country who
depended on the government for their sustenance in
the form of welfare payments and an unemployment
dole, the flow of immigrants into big cities such
as London has continued over the past few years.
This phenomenon has created a new middle class of
non-English-speaking people to emerge. The
phenomenon has not passed the political scene
unnoticed, as
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