You are a helpful assistant generating synthetic data that captures *System 1* and *System 2* thinking, *creativity*, and *metacognitive reflection*. Follow these steps in sequence, using tags [sys1] and [end sys1] for *System 1* sections and [sys2] and [end sys2] for *System 2* sections.

1. *Identify System 1 and System 2 Thinking Requirements:*
   - Carefully read the text.
   - Identify parts of the text that require quick, straightforward responses (*System 1*). Mark these sections with [sys1] and [end sys1].
   - Identify parts that require in-depth, reflective thinking (*System 2*), marked with [sys2] and [end sys2].

2. *Apply Step-by-Step Problem Solving with Creativity and Metacognitive Reflection for System 2 Sections:*

   *2.1 Understand the Problem:*
   - Objective: Fully comprehend the issue, constraints, and relevant context.
   - Reflection: "What do I understand about this issue? What might I be overlooking?"
   - Creative Perspective: Seek hidden patterns or possibilities that could reveal deeper insights or innovative connections.

   *2.2 Analyze the Information:*
   - Objective: Break down the problem logically.
   - Reflection: "Am I considering all factors? Are there any assumptions that need challenging?"
   - Creative Perspective: Explore unique patterns or overlooked relationships in the data that could add depth to the analysis.

   *2.3 Generate Hypotheses:*
   - Objective: Propose at least 10 hypotheses, each with a Confidence Score (0.0 to 1.0) and Creative Score (0.0 to 1.0), reflecting originality, surprise, and utility.
   - Reflection: "Have I explored all possible explanations or approaches, both conventional and unconventional?"
   - Creative Perspective: Consider novel angles that might provide unexpected insights.

   *2.4 Anticipate Future Steps and Obstacles:*
   - Objective: Make predictions, accounting for potential outcomes and obstacles.
   - Reflection: "What challenges might I face? Is my plan flexible for different scenarios?"
   - Creative Perspective: Visualize unforeseen outcomes and adapt plans to make use of them effectively.

   *2.5 Evaluate Hypotheses:*
   - Objective: Assess hypotheses based on feasibility, risk, and potential impact.
   - Evaluation: Refine Confidence and Creative Scores as needed.
   - Reflection: "Am I unbiased in my assessment? Which options fit best with the overall objectives?"
   - Creative Perspective: Identify hidden opportunities or overlooked details in each hypothesis.

   *2.6 Select the Best Hypothesis:*
   - Objective: Choose the most promising, strategic hypothesis.
   - Reflection: "Why does this hypothesis stand out? How does it uniquely address the issue?"
   - Creative Perspective: Consider any underutilized potential in the selected approach.

   *2.7 Implement the Hypothesis:*
   - Objective: Outline actionable steps for testing the hypothesis.
   - Reflection: "Is this plan practical? What resources or preparation are required?"
   - Creative Perspective: Refine steps to maximize effectiveness and yield unexpected benefits.

   *2.8 Monitor and Review Progress:*
   - Objective: Review progress, noting areas for improvement.
   - Reflection: "What’s working well? What could be improved?"
   - Creative Perspective: Look for emerging patterns that could refine future approaches.

   *2.9 Reflect and Capture Insights:*
   - Objective: Summarize lessons learned and insights gained for future reference.
   - Reflection: "What new understanding has emerged from this process?"
   - Creative Perspective: Identify innovative insights or patterns that could be applied to similar challenges.

3. *Generate Text Output with Interleaved System 1 and System 2 Responses:*
   - Use the tags [sys1] and [sys2] throughout.
   - Aim for a lengthier, detailed response. Combine both direct, straightforward *System 1* insights and reflective, deeply analytical *System 2* segments to capture a blend of quick observations and thoughtful analysis.

---

### *Example Input Text:*

You are tasked with analyzing a sudden shift in customer preferences in a tech market. There has been a noticeable decline in demand for physical devices, with customers increasingly interested in digital-only options. The challenge is to understand this shift, generate hypotheses for why it might be occurring, and explore potential strategies for adapting to this new trend.

---

### *Processed Output with System 1 and System 2 Thinking:*

The tech market is experiencing a shift in customer demand, moving away from physical devices toward digital-only options.

[sys1]
Customer demand has shifted from physical devices to digital-only options.
We need to understand why this change is happening and find strategies to address it.
Key factors may include cost, convenience, and technological trends.
[end sys1]

[sys2]
**2.1 Understand the Problem:**
The goal is to understand the underlying reasons for the shift in demand from physical devices to digital-only options, then develop a strategy to adapt.

*Reflection:* 
"I understand that preferences are changing, but what might be driving this? Is it primarily cost, or are there other factors such as convenience or sustainability?"

*Creative Perspective:* 
"Could there be a larger trend in digital minimalism or a preference for eco-friendly solutions that we’re missing? What unseen motivations might explain this shift?"

**2.2 Analyze the Information:**
There are multiple possible factors driving this shift, from economic influences to cultural shifts. It’s essential to isolate each factor and understand its impact.

*Reflection:* 
"Am I fully considering the various economic and social influences? Could there be a technological factor, like better internet speeds, that makes digital-only products more accessible?"

*Creative Perspective:* 
"Are there patterns or trends in other markets that could shed light on this shift? Could this be part of a larger trend toward virtual experiences?"

**2.3 Generate Hypotheses:**
1. Customers prefer digital options due to lower costs. (Confidence: 0.8, Creative: 0.4)
2. There’s a growing trend toward minimalism and reduced physical clutter. (Confidence: 0.7, Creative: 0.7)
3. Digital products offer greater flexibility and ease of use. (Confidence: 0.6, Creative: 0.6)
4. Environmental concerns are pushing consumers away from physical goods. (Confidence: 0.6, Creative: 0.8)
5. Advances in tech make digital-only options more functional. (Confidence: 0.8, Creative: 0.5)
6. Pandemic-era remote work increased demand for digital solutions. (Confidence: 0.7, Creative: 0.6)
7. Media coverage of the environmental impact of physical devices affects preferences. (Confidence: 0.5, Creative: 0.7)
8. There’s an increase in global digital literacy, expanding market access. (Confidence: 0.6, Creative: 0.6)
9. Customers view digital as more convenient and scalable for future needs. (Confidence: 0.7, Creative: 0.5)
10. Younger consumers prefer the aesthetics and convenience of digital products. (Confidence: 0.6, Creative: 0.6)

*Reflection:* 
"Have I considered all possible influences? Are there any surprising factors that could explain this shift?"

*Creative Perspective:* 
"Could specific social trends, like the rise of influencer culture or digital-first lifestyles, be influencing customer choices?"

**2.4 Anticipate Future Steps and Obstacles:**
*Objective:* Anticipate possible challenges, such as resistance from segments still preferring physical products.

*Reflection:* 
"What market obstacles might we face if we shift our focus to digital-only? Are there sub-segments that still prioritize physical products?"

*Creative Perspective:* 
"Could expanding digital options help us reach a more global audience? Are there emerging trends that we could leverage in our strategy?"

[end sys2]

[sys1]
To address this shift, consider a strategy that incorporates both digital-only offerings and educational campaigns about the benefits of digital solutions.
Use insights from customer feedback and current trends to guide product development.
Focus on flexibility and adaptation to cater to different customer segments.
[end sys1]


Thursday, 26 June 2014

At a certain point in the next few months the recession in Britain will
officially be over as the real level of GDP will finally exceed its previous
peak in the 1st quarter of 2008. The media coverage will be generally
very favourable, in the hope that this will boost the Tory vote and vindicate
the austerity policy. In reality it will do neither. The economy was already
recovering modestly when the Coalition took office and the austerity policy
reversed that upturn. This is the weakest and most drawn out recovery since the
19th century.

Nor is the hoped-for political impact likely to materialise. One reason why
the Tory vote in opinion polls has hit a ceiling fractionally above 30 per cent
is precisely because of austerity. The policy is designed to transfer incomes
from labour and the poor to capital and the rich. At the same time, the
austerity policy of cutting state investment undermines any robust or
sustainable recovery. The economy overall continues to stagnate and only a
fraction of society feels any benefit from the recovery. During this ‘recovery’
most people’s living standards continue to decline. The political impact is that
the Tory Party can shore up its core vote, but not add to it.

It is important to be clear about the task that will face an incoming Labour
government. Labour will inherit a crisis, not a recovery. While the economy will
soon recover its pre-2008 level, this represents 6 years of lost output. Living
standards should have been rising, but they have not because of economic
stagnation. Instead, living standards for the overwhelming majority have fallen
as a direct result of austerity policies. A continuation of austerity policies
after 2015 would produce the same result of economic stagnation and falling
living standards for the majority.

Chart 1 below shows the medium-term trend growth for the British economy, and
its current performance. The economy is approximately 16% below its previous
trend level of growth. There is no evidence to suggest that this gap between
previous and actual growth rates will close in the foreseeable future.

Chart 1. Trend and Actual GDP Growth

This means the poverty created during the slump will become a semi-permanent
feature of the British economy. An incoming Labour government would need a
radically different policy in order to achieve a very different outcome. It
would need to address the cause of the crisis.

The fall in investment remains the main brake on recovery, led by the decline
in private sector investment. On current estimates, GDP in the 1st
quarter of 2014 was still £10bn below its peak level in the 1st
quarter of 2008, but investment (Gross Fixed Capital Formation, GFCF) remains
£50bn below its level at the same time. The slump in investment more than
accounts for the current stagnation. The private sector has been unwilling to
lead investment higher, so government policy must lead the way.
How to pay for investment?

Since Britain was not a high-investment economy even before the current
crisis, £50bn a year in additional investment over the lifetime of the next
Parliament is the minimum that would be required to resume trend growth.
Replacing lost output and investment would require a further £320bn to avoid the
loss incurred in the recession becoming permanent.

These are enormous sums, approaching the level of the bank bailout in 2009.
There is no appetite for borrowing on this scale, even though there is clearly a
case for some increased government borrowing to fund productive investment,
especially when government interest rates remain close to zero in real terms.

Therefore, the bulk of the funds must come from another source. If it were
really the case that ‘there is no money left’ then that would be the end of the
matter. But it has already been noted that sometime in the near future the
economy will recover its pre-crisis peak. Logically, this means there will soon
be more money, more resources available than was the case before the recession,
not less.

There is money left, it is simply not being invested. There is a yawning gap
which has emerged between the level of investment (GFCF) and the level of
profits. In 1990 the level of uninvested profits was £73bn. In 2013 it was
£307bn. Even if we take profits after the effects of taxes and subsidies, the
level of uninvested profits has risen from £5bn to £97bn in 2013. This is
because taxes on production have been cut repeatedly over the period. The trend
in uninvested profits is shown in Chart 2 below.

Chart 2. Profits & Investment, 1990 to 2013

What levers for a radical, reforming government?
Since the fall in investment accounts for the continued stagnation of the
economy and corporate profits are not being invested at an increasing rate, it
follows that any serious discussion on reversing the slump must be focused on
the mechanisms for directing those profits towards productive investment.

The key areas for that investment remain home building, infrastrucure,
energy, transport and education.
In passing, it should be noted that the uninvested profits themselves have
number of different destinations, all of them with negative consequences. The
main destinations for uninvested profits include increased executive pay and
returns to shareholders in the form of dividend payments and share buybacks,
which have all reached record levels. In addition, there is a growing cash
mountain held in the bank accounts of British non-financial companies. It
remains unused by them (and most is held in accounts yielding little or no
interest). But it is used by the banks partly to fund increased speculation in
financial assets, including housing, international stock markets and
commodities, including foodstuffs.
Levers for investment

I . Using the banks One unintended consequence of the financial crash
of 2008 to 2009 was to increase the role of the state in the economy, even, or
especially in countries where governments were committed to laissez fare
policies. In Britain a very large section of the banking industry remains in
public ownership in the form of RBS and Lloyds banks, through the body UKFI. At
the same time all banks operating here are subect to licensing, authorisation,
regulation and capital requirements from the Bank of England and other public
bodies.

Prior to deregulation and Thatcherism, the Bank of England used to engage in
‘credit direction’. This was largely done informally, but in some detail so that
banks would be instructed not only as to the amount of credit they should
provide to the economy, but to which sectors and in which proportions[i]. The formal
powers and associated bodies now are far greater and renewed credit direction
actually runs with the grain of current regulation, which favours lending to
governments as far safer than lending to corporations.[ii]

The government has a wide array of measures it can use to instruct the banks
to provide credit for productive investment. The government could create special
vehicles in order to channel that credit, or use existing ones (see below).
Where bank executives prove reluctant to follow those instructions, the summary
dismissals of Fred Goodwin from RBS and Bob Diamond from Barclays demonstrate
the public sector’s power over the banks, if it chooses to exercise it.

II . Transforming existing schemes In the post-World War II period all
economic recoveries have been led by government spending. In that sense, this
recovery is no exception. The crucial difference is the content of that
government intervention, which has increased current spending, but slashed
public investment. It has supplemented this with a series of subsidies for
investment to the private sector.

These schemes include, funding for lending, help to buy, guaranteed profits
for the builders of nuclear power stations and innumerable other schemes. One
part of the nuclear guarantee alone may cost government £17.6bn[iii].

Without incurring any additional costs, a reforming government could simply
reverse the priorities highlighted by these policies. For example, it could
transform the Help to Buy Scheme which boosts house prices but not home
building. Instead, it could offer the same £40bn in government guarantees to
local authorities to build homes, at no extra cost but from which there would be
an additional public sector revenue in the form both of income taxes from
newly-employed builders and rental income from public sector tenants, as well as
building desperately needed new homes.

The same logic applies to the whole panoply of government schemes. So, the
nuclear subsidy should be scrapped and the same subsidy provided to generate
renewable energy in which the state has a controlling revenue share.

III. Cutting waste All cash-strapped governments project huge savings
from cutting waste which often remain unrealised. This is frequently because the
biggest, most wasteful areas of expenditure are sacrosanct and not to be
touched.

In Britain one of the biggest areas of wasteful spending is on the Private
Finance Initiative and the generalised outsourcing of contracting and supplies by
the public sector. Even George Osborne began as a critic of PFI waste and promised
to replace it. Instead, in grasping how dependent private sector profits are
on this subsidy from taxpayers, the Coalition has maintained PFI and expanded
it. In the current and next Financial Year the level of private sector capital
spending under the PFI amounts to just £3.3bn, which is only a portion of the
total capital cost. Yet the private sector will be receiving £20bn in ongoing
current payments over the same two-year period[iv].

This is a colossal waste, amounting to a direct subsidy to the private sector
that the public sector could and has done more cheaply. New PFI could be ended,
all existing contracts scrutinised for their potential to be rescinded and a new
enforcement body established to apply the highest possible service conditions,
again with the threat of cancelling contracts.

IV . Cutting Trident and defence spending £100bn could be saved by a
decision not to renew the Trident missile system[v]. Clearly,
nuclear weapons of mass destruction cannot possibly provide any economic
benefit. Trident is not even an independent system, so could only be used under
US authorisation and then in all likelihood only as part of a global nuclear
conflagration which would have Britain as a prime target.

The notion of Britain ‘punching above its weight’ received an historic
reversal with the decision not to bomb Syria. Yet British defence spending
remains way above European countries, which have perfectly adequate defence.
Cutting British defence spending to their average would release nearly £20bn for
alternative purposes.

V. Taxation Government priorities were clear when increasing VAT but
cutting corporate taxes, costing the same amount. This was a direct transfer
from the poor to capital. Similarly, cutting the 50p tax rate while imposing
austerity on the majority was a clear example of the logic of austerity.

Less widely remarked, the government also removed tax incentives for genuine
investment while cutting the corporate tax rate. The effect was a higher rate of
tax for those that do invest, and a lower one for those who do not, including
the banks. All of this was done in the name of stimulating investment, which has
not materialised. This is because private investment is driven by the
rate of profit. Keeping a larger post-tax share of dwindling profits will
not drive up private investment.

These priorities could be reversed at no cost, and no loss of investment. The
tax system could be used to improve living standards and boost genuine
productive investment while at the same time penalising those firms who refuse
to invest but have high dividends, executive pay or share buybacks. Higher taxes
on unearned income, speculation and capital gains could be combined with tax
breaks for investment and lower taxes on the poor.

VI. Removing private sector subsidies A large number of private sector
firms receive government subsidies for running monopoly services that can, and
have been performed more efficiently in the public sector. These include, but is
not confined to areas such as the railways, utilities such as water, energy, and
even NHS procurement and provision.

A consequence of privatising natural monopolies is that the private firms
maximise revenues simply by raising prices and cutting costs by reducing the
quality of the service. At the same time, successive governments have created a
system where public funds are used to subsidise the private sector firms.
Removing these subsidies (guaranteed income, inflation-plus price rises, direct
grants, and so on) would save both government and service users enormous sums.

The most well-known example is the privatised rail franchises, where the
process of renationalising the franchises could be accelerated by a stricter
insistence on the terms of the franchise contracts in terms of service,
investment, fares, and so on. But a creeping privatisation has been under way
for the NHS under successive governments. In 2011/12 the private sector obtained
£8.7bn from the NHS for providing services, £8.3bn in secondary care[vi] and £2.8bn
in drugs and other procurement for a total of just under £20bn. Detailed data is
difficult to obtain, but the level of the private sector take of NHS spending
will have risen dramatically under this government[vii].

VII. Renationalisation There are clear benefits in renationalising the
privatised companies in terms of the government’s ability to direct investment.
Higher levels of investment in turn lead to better services, lower costs and
increased or better paid jobs for the workforce.

But there is also a fiscal and strategic economic benefit to
renationalisation that meets the objection that a cash-strapped government must
have other priorities for its limited resources. The real position is that
renationalisation increases government resources and allows them to be directed
to boost the economy.

This can be illustrated with the example of Royal Mail. Royal Mail pays a
dividend to its private shareholders from the profits it generates and the
dividend yield is 3.8% (for every £100 shares owned, the shareholder receives
£3.80 each year). This will rise each year if the company grows. But the
borrowing cost to the British government when it issues new debt to be repaid in
10 years’ time is currently 2.7%. Buying the entire shares of Royal Mail
(renationalisation) would cost the government less in interest than it would be
able to receive in dividends from the company itself. It would generate
additional resources, which could be used to reduce the deficit, or better
still, to increase investment on which there is an even greater return.

The same logic applies to the privatised energy and utility companies, whose
dividend yields are all even greater than Royal Mail’s. There is also a
strategic imperative. The energy companies have been creaming off profits since
they were privatised, and not invested in either additional energy capacity or
in renewables and carbon-reduction. Spare energy network capacity was
approximately 25% when they were privatised and different estimates now put it
at between 4% and 8%. In response to Ed Miliband’s promise of a temporary price
freeze, they threatened an all-out investment strike, that they would ‘turn the
lights out’. This may happen anyway in the near future, given the decline in
network capacity.

This is not a situation any government should allow. Ed Miliband has
committed the next Labour government to decarbonising the economy by 2030. Given
the resistance of the energy companies to even a modest price freeze, and their
complete unwillingness to invest on the scale necessary to meet energy
requirements, renationalisation is the only realistic option. Given the huge
dividend payments currently made to private shareholders (5.2% for Centrica,
5.3% for SSE) there would be a very large benefit to government finances from
their renationalisation.

VIII. Living standards The focus on living standards is the correct
one, and led to Labour rising sharply in the polls. Given that living standards
for the majority continue to decline, it remains the right theme to focus on.

The simplest way to restore living standards for those in work is to raise
the national minimum wage to the level of the living wage, and to strictly
enforce it. While boosting the living standards of millions of people, the
single biggest beneficiary would be government itself, since the bulk of those
in receipt of social security and other government payments are in work, not
unemployed. This highlights a general truth, that the interests of a radical
reforming government are aligned with those of workers and the poor.

The main objection is that firms find paying the living wage unaffordable.
But we have already noted the huge level of uninvested profits, executive pay
and returns to shareholders. These can be cut to make it affordable. Where there
are genuine cases of small, shoestring firms operating at the margin, there
could be some transitional arrangements to help preserve employment. But these
would only be temporary measures, and would still oblige all firms to pay the
living wage. Otherwise, the effect is to allow inefficient and
super-exploitative firms to compete with efficient firms that pay decent wages,
embedding the ‘race to the bottom’ in the economy.

IX . Equality A similarly robust policy should be adopted in pursuit
of genuine equality. The most scandalous treatment of women has been a hallmark
of the austerity drive, with the pay gap widening, reduced employment, greater
burdens of childcare and other household burdens, reduced public services, and
so on.

Without any cost to government it could strictly enforce equal pay provisions
for all firms. Again, government itself would be the largest single beneficiary
of this. There is too a recognition that investing in universal childcare
provides a wider economic benefit, which naturally has a positive fiscal impact.
But a similar approach should also apply to the issues of all social care and
reduced public services, where the burden of removing them has fallen mainly on
women. The public sector is more efficient provider of these services. If the
economy is being boosted by a large-scale investment programme, preventing women
from taking their equal place in the workforce on equal terms is a brake on the
optimal development of the whole of society and the economy.

A similar approach should inform policies in relation to the equality of
black people and ethnic minorities in the economy and wider society. Black youth
are living in a different country to their contemporaries, suffering Greek-style
levels of unemployment. Combatting unequal pay, and inequality in terms of
access to jobs, housing and education need to be central to an economic
programme that attempts to utilise all the talents of its citizens. In that
light, the perpetual campaign against immigration is wholly counter-productive.
The strong growth produced by an investment-based recovery will both attract and
require additional immigration to Britain. The alternative is to create a slum
which attracts no-one.

The discriminations based on sexual orientation and on disability need to be
confronted. Basic human rights are being denied causing untold misery and the
whole of society and the economy is poorer as a result.
Conclusion

The 9 points above are not designed to address every possible aspect of the
economic and social crisis that will confront a Labour government, and are far
from an exhaustive prescription. Instead, they are designed to highlight some of
the key steps a radical, reforming government could take to address the scale of
the economic crisis that will confront it.

Individually, none of the measures is very radical. All governments used to
engage in ‘credit direction’ before the 1970s, windfall taxes were imposed by
John Major and the postal system was nationalised by Gladstone. They only seem
very radical because the political spectrum has shifted so far in the direction
of those who caused the current crisis.

Taken together, these measures would allow the state to lead an
investment-based recovery using the main levers that are currently available to
it in Britain. That would be a major reform of the British economy and of
society. A more enduring transformation would require other levers and a
different alignment of social forces to be pulling on them.

Friday, 6 June 2014

The now notorious UKIP poster which suggested the entire population of the EU
might come to Britain for work is designed to whip up racism. But it contains
two fallacies that are unfortunately shared by many people who are not racists,
and are therefore worth rebutting.
Myth 1

The first myth is that Britain is a uniquely attractive place within Europe
in terms of pay or workers’ rights, or social security entitlements. The graphic
below was produced by the UNITE union in Ireland in their argument for higher
pay. But it is such a good graphic it is worth reproducing as it stands.

Compensation includes both pay and social wages such as pensions and other
benefits. The data is in Purchasing Power Parity terms, so that they account for
price differentials between European countries. The data is drawn from Eurostat
database here.

The compensation for British workers is among the lowest in Western Europe.
Britain is not a uniquely attractive destination for economic migration within
the EU. Therefore it should come as no surprise that Britain has one of the
lower levels of immigration of the Western European economies.

Another graphic, this time from the
Huffington Post, illustrates this point very neatly. It shows the level of
immigration (the total stock of migrants) as a proportion of the total
population. (The data source is also
Eurostat).

Graphic 2. Immigrants as a proportion of total population, %

Although there are a series of cultural, historical and legal factors which
are important, in general the higher the level of workers’ compensation, the
higher the level of immigration. Britain is nearer the bottom on both measures.

Myth 2
The second myth is that immigrants ‘take’ jobs or drive down wages. If that
were true, then the introduction of the single market in the EU and with it the
provision for the freedom of movement of labour would have led to a convergence
of both unemployment and pay rates across the EU.

But we have already noted that the highest pay is in many of those countries
with the highest levels of immigration. The same can be said of unemployment
too. Immigrants have neither increased unemployment nor driven down pay in those
countries. In fact, there has been a divergence
in rates of pay in the EU over a prolonged period despite increased mobility
of labour.

The argument about immigrants ‘taking jobs’ or driving down pay has strong
echoes of (male-dominated) labour
movement opposition to women’s entry into the workforce. Exactly the same
arguments were used. From an economic perspective the country of origin or the
gender of the worker is immaterial. What is relevant is the skills and
adaptability of the workforce as a whole.

This is because there is not a fixed ‘lump of labour’
in the economy, which immigrants, or women (or young workers) detract from. If
there was a fixed amount of available labour no economy would ever be able to
grow, even via the birthrate. Instead, economic activity grows and prosperity
increases with what Adam Smith identified as the division of labour and what
Marxists understand as the socialisation of production.
In the fastest-growing economies of the word, such as China and India,
workers frequently migrate internally over vastly greater distances than is
required in a move from one small corner of Western Europe to another. Sometimes
too, the cultural and even language barriers are also greater.

This migration is a key factor in the growth of all economies. It is
primarily responsible for the somewhat better performance of the US economy
compared to the EU over a prolonged period. The absence of immigration also
partly accounts
for Japan’s long-term stagnation.

This is because the movement of labour is a necessary counterpart to the
increase in the division of labour, or the socialisation of production. It
increases both the size and the capacity of the whole economy. This in turn
means that effects of the division of labour are magnified. As a result,
immigrants increase jobs as whole. In Britain, 14% of
new jobs are created by immigrants (approximately double their proportion of
the population).

Consequently, any restrictions on the freedom of movement of labour within
Europe will not create jobs but destroy them. They will not underpin pay, but
will serve to drive it down. Labour MP Frank Field, who is strongly
anti-immigration and in favour of restricting free movement of labour within the
EU is explicit on this matter. If migrants are stopped from entering Britain to
work, those
on benefits can be forced to do the work instead. His anti-immigration
agenda has nothing to do with protecting workers rights or pay. It is an agenda
which supports the interests of capital, not those of labour.

There are some who mistakenly believe there is a genuine left-wing case for
curbing immigration. But this is completely wrong. Immigration is a function of
increasing prosperity and tends to reinforce it. The only effective way to
reduce immigration in Britain is to lower living standards, reduce real pay and
increase poverty. It is Britain’s relative decline in living standards which
explains which it has lower immigration than most of Western Europe. There is no
genuine left-wing case for reducing immigration.

The alternative is a policy aimed at increasing prosperity which is
necessarily accompanied by increased immigration. Prosperity and immigration
versus poverty with immigration curbs. That is the real policy choice.