Meeting The Migration Challenge And Reforming Capitalism Through Mutual Solidarity

How would you characterise the migration issue today? How has it become such a hot topic, and how do you think it’s likely to develop in the future?

At the moment, obviously, public policy on migration and refugees is a complete mess. It’s a broken system. In fact, it doesn’t really deserve the word ‘system’. How has it got into such a mess where we’re changing policy week by week? That, incidentally, is a symptom of a totally broken system when you have to change policy week by week. It’s unsustainable.

How did we get there? By incredibly irresponsible, short-term political decisions by the major figures of Europe – most prominently, Chancellor Merkel, who, first, pretty well ignored the refugee problem when it started in 2011, then woke up to it in a panic in 2015. Very irresponsibly, then unilaterally, opened the door, thinking only 10,000 people would come, and then, six months later, unilaterally slammed the door again by doing an incredibly expensive deal with Erdogan – such a nice man – and then attempted to coerce other European countries to taking the refugees that she unilaterally let in.

This is astoundingly irresponsible, so of course European policy is in a mess at the moment. It couldn’t be anything else. There’s no reason it should be in a mess. There are very straightforward policies that would be sustainable. That’s what we’ve got to get to: we’ve got to build some sustainable policies.

Before we get to the policies, I know that you’ve done a lot of work especially on Africa and development economics. What do you think, beyond obvious sources of refugees, such as wars, what are the key drivers of migration, and how do you think they’re going to develop in the future? Is this issue going to solve itself to an extent or is it likely to get worse?

I think, first of all, we’ve got to distinguish very sharply between migration and refugees. Refugees are a sub-component of people who are displaced from their homes. By definition, the people who are displaced are the people who choose not to migrate. So, refugees, by definition, are people who don’t want to migrate. They’re not migrants. That’s the first point.

Most people who are displaced manage to find somewhere else within the same country, and they’re classified as internally displaced people – about 65 million worldwide. About a third stagger over the nearest border and so legally become refugees, but nearly all in regional havens just, in effect, next door to the conflict. There are ten regional havens worldwide where most refugees are. That is the refugee problem: providing for the refugees in those regional havens.

Like most refugees in Syria are in Lebanon or…

They’re in Lebanon, they’re in Turkey, and they’re in Jordan. Alex (Betts) and I got involved in all this because we were jointly called into Jordan. Jordan had nearly a million refugees who’d been left to hang out to dry: “Your problem.” Turkey: two million got no help, virtually no help. These were absurdly irresponsible European responses and so that was the heart of the refugee failure: a failure to respond to the crisis in situ.

There is this agency, UNHCR, which was designed for a completely different context: beginning of the 1950s, coming out of the problems of the late 1940s. Its solution was tented camps, with free food, free accommodation. That had made sense in the late 1940s in Europe. By the time you get to modern refugee situations, it doesn’t.

90% of refugees worldwide ignore the whole UNHCR system because it’s not what they want. What they want is to restore autonomy. Imagine… You’ve had to flee your home. You want to restore autonomy, you want to restore your community, and the easiest place to do that is to go to a town, which is what most refugees do: find a job in a town.

The Syrian refugees coming to Jordan, in one sense, were in paradise: same religion, same language. The big difference was that Jordan, per capita, is over six times richer than Syria, so, if a Syrian could get a job in Jordan, they’re doing very well. They’ve reached heaven there.

That became a hell of a problem for the Government of Jordan because it couldn’t allow people – the Syrians – to undercut Jordanians. The Syrians would be willing to deeply undercut the Jordanians, and that would have produced a big reaction – political reaction, understandably – on the part of the Jordanians. So, understandably, the Jordanian Government said, “You can have haven here, but you can’t work.”

What Alex and I came up with was a strategy that said: “If we can make this work for both the Jordanians and refugees, would you agree to let refugees work?” The idea was Europe would bring jobs in – both for refugees and for Jordanians.

The Jordanians themselves said: “We’ll split it. Let’s split it: 70 jobs for refugees, for every 30 for Jordanians.” They said: “If you do that, if you can get jobs to come here, firms to come here, because we desperately need firms – we’re stuck in the middle-income trap, we need firms – if you can get firms to come here, we’ll issue up to 200,000 work permits. That would have been a job for every refugee family.

 So, your idea was, basically, to align incentives?

Yes, of course.

With a country like Jordan stuck in a middle-income trap.

Yes. Absolutely crazy to wag your finger and say: “You should give them jobs.” We can make globalisation work by bringing jobs to refugees where they are. Europe – and Germany in particular – was superbly equipped to do that. Germany is the place par excellence with firms that are operating in the region.

Hundreds of thousands of jobs in Turkey have been generated by German firms over the years. That hasn’t cost Germany jobs. On the contrary, it’s raised productivity in Germany because the less skilled jobs, the less productive jobs, have been moved to Turkey. This is globalisation at its best.

Instead, UNHCR, their response was: “We’re not a jobs agency. We don’t do jobs for refugees. We do free food and tents.” That’s the problem. People don’t want free food and tents for ten years. They want a job.

Yes. If I understand you correctly, first of all there is an institutional dysfunction because the UN agency was set up for something completely different.

Yes, that’s right, so they’ve just not got the skillset to do this.

Yes, and the policymakers are not on the same page, either, because they see it as some sort of help, and maybe just cutting deals on keeping them away from their own borders, rather than trying to empower them where they could rebuild a life.

Exactly; exactly. When Merkel flew to Turkey, what was the deal? “You take one, we’ll take one back,” as if the currency is, “We don’t want these people. You take them, and we’ll take some of the people you don’t want.”

That is both a disgusting formulation but absolutely misses the opportunity that we can make the global economy work in the interests of the most desperate people on earth, which are the refugees displaced from their homes.

At the beginning of the conversation, you made a distinction between displaced people, refugees, and other sources of migration, because they’re not migrants.

Yes. Of course there are lots of people who are aspirational migrants. If you dangle a big enough carrot in front of a refugee, you can turn them into a migrant. You say, “Come to a scholarship at Harvard,” or, “Come to California,” then a lot of refugees in Jordan would turn into migrants. They wouldn’t be refugees still.

Refugee status, what it demands is the restoration of a degree of autonomy and a safe haven. Once you’ve got that, once Jordan’s providing that, refugee status isn’t a meal ticket to go live anywhere on earth.

I could double my income if I moved to Norway. I don’t see why… Most of the population of the world would increase their income by much more than double. There’s no right to that. It’s actually very sad if people define themselves by an aspiration to get out of their country. Inadvertently, Europe is in danger of doing that with Africa.

90% of my time is working with African governments, and their nightmare is that their young people are starting to get this narrative that hope lies in getting out. I’m working with the Governor of Ghana – very fine government; President, Vice President, Finance Minister, very good, better than most of Europe’s top three. Ghana is growing at 9% (last year). They’re doing a good job.

There’s no way that the Government of Ghana can create economic opportunities that are better this year than getting a job in Europe – no way. That doesn’t mean we’ve got a right to lure the brightest and best young Ghanaians to Europe. They’re needed in Ghana.

Inadvertently, people think that they’re performing some great[morallynoble act by saying, “Welcome to Europe,” luring bright young people away from their real obligations and opportunities within Africa, to come and lead frustrated lives on the streets of Rome, which is what the reality is.

Yes. You said these are some pull factors, that Europe, sort of, dangles the carrot.  But the concern at least, rightly or wrongly, among many policymakers is that there are push factors at work in Africa, as well.

There are, and that’s why I’ve been part of two big initiatives in the last year. Last year, I worked with the German Government, with the then Finance Minister Schäuble, whom I greatly respected. We travelled together to Africa to launch ‘Compact with Africa’.

‘Compact with Africa’ is a programme. It’s now got ten African countries who’ve joined it, and it’s pitched at the best-run countries of Africa. For example, Ghana immediately joined up. So did Morocco, and so did Rwanda, Ethiopia. What’s the objective of the ‘Compact with Africa’? It’s to get European firms and other G20 firms to go to Africa, bring jobs to Africa.

Volkswagen recently opened a car plant in Rwanda.

Exactly; exactly. That’s exactly the right thing to do: make globalisation work for people. The humane form of globalisation is bring jobs to people, not lure people across the sea to jobs which very often don’t exist. That’s the humane strategy. Public policy should be making globalisation work for African societies.

We can do that by the million. Africa needs jobs by the million. Instead, we’re luring Africans by the thousand to get into boats. That is deeply irresponsible and unethical because, once Africans get to Europe, they discover the reality, but they’re trapped because to go back and face your friends is to be humiliated.

Humiliated as a failure. Had to come back, didn’t make it.

Exactly; exactly, and so we are parading ourselves as, “Aren’t we good?” and actually being deeply unethical.

Where do you think this narrative, then, comes from: the perception, probably widespread, that, in order to make it, you have to move to Europe because of good jobs? Are the European countries themselves to blame for establishing that kind of narrative?

Yes, I think so. I think a lot of European NGOs, this incessant stuff of, “Give money to Africa” – incessant, the begging bowl image of Africa, as if what Africa needs is entitlements to consumption, which the noble charities provide.

What Africa needs is empowered production, not entitled consumption. It doesn’t need our charity, it needs our firms. In trying to get firms to go to Jordan to employ refugees, we talked with a lot of firms. Do you know what the number one obstacle was?

What?

The firms feared that, if they went in and employed refugees, the European NGOs would accuse them of running sweatshop labour, exploiting refugees. The NGOs that claimed to be the big defenders of refugees were actually the big problem. Again, it’s ethically disgraceful, and these NGOs need to be shamed so that their behaviour is actually called out.

Presumably, you can, obviously, do both: you can create jobs that are decent in terms of working conditions and standards.

Of course, but, frankly, if you’re a Syrian, as I say, who, even before the conflict, was on $2,000 a year – average for Syria – and you’re working in Jordan, average $13,000 a year, pretty well any job is going to seem great.

Of course, we were bringing proper firms into industrial zones which would meet legal requirements in Jordan and so be fabulous jobs for a Syrian, so no issue about labour standards and so on, none at all. It’s a totally spurious concern.

Instead what happened was we got less than 5% of Syrians moved to Germany, but highly selectively. Who moved to Germany? Young, well-off men, so approximately 40% of all the Syrians with university degrees are now in Germany.

40%?

So, less than 5% of the population but around 40% of graduates. Exactly the people who will be needed to rebuild Syria. This is so irresponsible it needs to be called out.

If I understand you correctly, if your solution, or the beginning of a solution, is to turn the whole mechanism around, saying, basically: “It is about economic development in the region,” what is your explanation for why the refugee issue in particular has become such a polarising issue in Europe?

Because it’s not been thought through. We’ve had policymakers who haven’t done their job of actually thinking long term what would be a sensible, long-term policy. Instead they seem to have reacted week by week, or even day by day, to events. If you just take short-term decisions driven by short-term events, you get deeper and deeper into a mess.

And then nitty-gritty details, in the grand scheme of things, don’t mean much, such as the recent spat in whether you should secondary migrants back at the Bavarian border.

These are just short-term, reactive things. We should start by saying: “What will a sustainable policy look like?” I believe that we can very rapidly build a very broad consensus, across both the left and the right, on what a sustainable policy will look like.

A sustainable policy will, I think, have three features. One is it will be ethical. It will meet our ethical duties towards refugees and towards the people in poor countries who desperately need credible hope. They need opportunity.

What exactly are these duties?

The duties towards refugees are we must show solidarity. In 2011, when there’s a huge refugee flight out of Syria, that is a European responsibility, as well as a Jordanian, Turkish, and Lebanese responsibility.

We must show solidarity, but we join solidarity with the principle of comparator advantage. “You Jordanians do what you do best: keep your borders open, and provide safe haven, and allow people to work. We’ll do what we do best: make it in your interest, as Jordanians, to allow all that to happen. We will bring the jobs that provide refugees with autonomy, and we’ll provide the money that makes it viable for Jordan.”

We didn’t. Jordan’s budget deficit exploded because it was paying for those refugees, unhelped. That’s the ethical duty to refugees. The ethical duty to people who live in societies without credible hope is to bring credible hope.

‘Compact with Africa’ is about the top end. I’ve just co-directed a new commission which reported in April, called ‘Escaping the Fragility Trap’, which is about what to do with the highly stressed end of the spectrum – not just in Africa but worldwide. They’re the societies which are generating the refugee.

You can all just Google ‘Escaping the Fragility Trap’ and there’s a hard-hitting report. I was in Berlin last week, speaking about it to the German Government. There are very clear things we can do which we’ve not been doing – very clear.

The main things being?

One is economic and one is political. The economic thing is – remember that Clinton phrase: “It’s the economy, stupid” – the only way long term to lift states out of fragility is to grow the economy, to grow economic opportunities. There are desperately, desperately few firms in fragile states because why on earth would a decent firm go there? But there’s a huge public interest in getting firms to go there, and so we need public money to bring firms into fragile states. Not big firms, not firms that will export, just firms that will organise people in groups of more than two. Most Africans in fragile states work on their own, solo – no scale, no specialisation, very low productivity, doomed to poverty. The basic thing that a firm does anywhere is organise people, in scale and specialisation. So, paying, using public money to bring decent firms into environments where they’d rather not go but are desperately needed, that is the use of public money that’s important.

All our governments have agencies that deal with that. It’s the part of the aid programme or aid agency that deals with the firms. In Germany that’s DEG, which is a part of KfW (credit agency for reconstruction: Ed). In Britain it’s CDC, which can get its money from DFID (overseas development ministry). In the World Bank Group, it’s IFC, which at last is getting money from aid. Until last year, IFC had to make a profit to pay for the public aid programme. That was crazy.

If you’ve got to make a profit, you invest in China – complete denial of purpose, misunderstanding of what these agencies were for. There are 45 development finance institutions around the world – public agencies, with public money to get firms to do things. Many of them have not yet understood their true purpose. We’re convening all of them jointly with IFC here in Oxford, in February, to try and just get a new sense of purpose.

The tools are there. Let’s use them. This is not that difficult, frankly. It’s just that we’ve had these institutions for years and not used them.

Why do you think that is?

Because policy hasn’t been joined up. Refugee policy has always been given to UNHCR. When Alex Betts and I first went into Jordan, my first thought, because I used to work for the World Bank, directing the research department, was: “What’s the World Bank doing? Where is it?”

I went back to my friends at the World Bank and they said, “Paul, you’ve forgotten, we’re not in Jordan. It’s not a middle-income country, so we’re not there.” I said, “There are a million refugees.” They said, “No, no, no, if it’s refugee, it’s UNHCR.”

I challenged my friends, “Take it to the board,” so they took it to the board. The board unanimously agreed that they change policy, and they created a $2bn programme every three years for work in the haven countries, bringing economic opportunity both to refugees and to local citizens where they’re providing haven.

That is now pumping big money into Jordan and into Lebanon. Yes, that’s a sensible strategy, so things have woken up. If they’d been running like this for 20 years, the Syrian crisis would have played out very differently.

So, there is a lot of institutional inertia where the institutions either are not designed to respond to this or not, in their own view, in charge.

Yes. The migration people, when you talk to migration people – I had two European officials here yesterday – and when you talk to them about the need to get firms into fragile states, and that their own countries have agencies which could do that, they look amazed. They write it down and they’ll go and do something, but it never occurred to them. It never occurred to them.

They’re migration people and so they think, “What should we do with Africa? We should say, ‘If you take your people back, we’ll take other people’” – in other words, migration for migration. They just put it into a damn box of migration and are not understanding that you’ve got to think outside that box.

So, there’s a complete lack of joined-up policymaking and thinking. Okay, let’s use that opportunity, then, at least where we have a polity, a framework in the European Union running up into the European elections next year. Obviously, the refugee issue and migration in general, we’re in Oxford, we’re in the UK, where EU freedom of movement has been a big issue recently. These issues – asylum policy, refugees, freedom of movement, and non-EU migration – will be big issues, so, if you were advising a European policymaker, what would be a good policy mix? What kind of measures would you put in place immediately, in the medium term and long term, to deal with a lot of these pressures?

Yes, actually, Alex and I are advising on European migration and refugee policies. Our starting point is we’ve got a polarised debate because people are fighting over the wrong things and that actually, once we’ve shifted focus from, “What do we do tomorrow?” to, “What would be a sustainable system?” there’d be very widespread agreement.

Just to summarise, the widespread agreement starts from whatever we do has got to be ethical. That means it’s got to meet our duties to refugees, which we do by bringing jobs to refugees and providing big support for the governments of haven countries so that those borders stay open. That’s vital. If it’s not to the advantage of the haven societies, they won’t keep their borders open, and then you get the dreadful pressure cooker of displaced people not able to get out.

The other ethical duty is to bring opportunities to countries where there’s a dangerous narrative developing that the only thing you can do is get out. My whole working life, for over 40 years, has been dedicated to the idea that poor societies have got to catch up with us. They don’t catch up with us by being drained of their brightest and best people.

I’ve got a student at the moment who’s a Sudanese doctor. I’m not teaching him medicine, I’m teaching him public policy because he wants to go back and work in the Prime Minister’s office in Sudan. You know, his friends – other Sudanese doctors in Britain – think he’s crazy. There are more Sudanese doctors in London than in the whole of the Sudan. It’s an ethical disgrace that Britain has run a health service in which it’s recruited Sudanese doctors rather than train doctors here. Britain has three of the top ten universities in the world. Africa doesn’t have any. The idea that we need African-trained doctors is absurd. Africa needs British-trained doctors.

There’s a whole political story of why Britain chose to undertrain. It’s somethingto do with the trades union for British doctors (BMU), which found it very advantageous to keep their numbers of British doctors very small so they got the plum jobs, but the idea that it is anything to celebrate that we’ve had a lot of immigration of Sudanese doctors, that is just manifestly false. It is shaming that Europe runs its policy like that. We need our duties. Ethical duties. Then we have to run a policy which gets broad democratic endorsement, that the majority of people say, “Yes, this is fine.” If you try and run a policy that most people in your society think is irresponsible, you tear up your democracy.

That’s what’s happening. Governments around Europe have lost the trust of citizens – very measurably. That’s a disaster because government, to function, depends on trust – not just in this area of migration but in any area.

In general terms, yes.

Yes. The third criterion is that we should run policies which are sufficiently precautionary that we don’t end up regretting them.

What would that, for instance, mean in practice? Can you give some examples?

At the moment, if you asked, if you did a survey, “Do you think there’s been too much migration?” what would be your guess?

There are these surveys, and it is high up on the list of what people are concerned about.

Yes, so there’s a regret. It means we run policies in a way that people don’t end up in ten years’ time saying, “We regret that.” That means we don’t regret leaving refugees stuck in camps, with no jobs; that young Africans coming to Rome don’t regret having done it; that we don’t run our health system in Britain dependent on Sudanese doctors and find that Sudanese have got a high mortality rate because there are no doctors. These are the ‘no regrets’ stuff.

Those are the three criteria. I believe there’s a very large majority of people who say, “Yes, we want policies that meet those three criteria.” We can broadly agree on what they’ll look like. In that system, people getting on rubber boats to come across the Mediterranean manifestly has no place whatsoever. That cannot be a sensible part of a sustainable policy on migration.

Let us finish on this trust point, because that is, in a sense, a precondition to policy change. Across Europe we’ve seen the rise of populist politics, and using that issue and abusing, obviously, sentiment to erode trust in the political (system).   What would be your starting point, because, in the run-up to the European elections or in the run-up to national elections, one of the fundamental underlying problems that every mainstream party is addressing is how can you regain trust?

Yes. I’ve just written a whole book on that. It’s called ‘The Future of Capitalism’, and it comes out beginning of October. It is about how the centre can restore trust, and I believe that can… I’m a kid who grew up and benefited from that glorious period, 1945 to ‘70, in which social Europe was built.

The British National Health Service was started exactly 70 years ago, 1948, July, and 9 months later I was born in a National Health Service hospital. I then went to a school which had, until 2 years before I was born, been a private school, but it was turned into a state school. I got there, it was only a high-quality state school for 19 years. I got 7 of them. Both my parents had left school when they were 12, so, without that school, I’d still be a poor butcher, like my dad.

Then I came to Oxford. My education at Oxford was completely free because at that time, for poor kids, there were scholarships. There aren’t now. I then went on to graduate work. I got a doctorate in Oxford, and again that was all free because at that time there was money for it if you were poor enough.

I was made by that period. What was the defining feature of that period? People built reciprocal, mutual obligations around real anxieties. I think it was the co-operative movement, which was born in the North of England, where I grew up. Rochdale, Halifax Building Society, these were all the towns around where I lived. Sheffield was the first Labour council in the whole of Britain.

That was the period when ordinary people and their anxieties were met by these mutual obligations. The genius of mutual obligations is all the rights you generate are precisely matched by the obligations you generate.

Then, from about 1980 onwards, all that got dismantled, partly by the lunacy of the Right – the, sort of, Milton Friedman type of agenda: what’s good for business is good for everyone, this crazy agenda – and partly by the craziness of the new left, which abandoned the idea of reciprocal obligations, mutual obligations, in favour of individual rights, and the rights of victim groups and stuff, and social paternalism.

The last 40 years, in my view, have been a tragedy of dismantling the true foundations of social democracy. That’s what people are rebelling against.

 In that sense, the solution to the displacement problem and the solution to regaining trust domestically is, in a sense, similar: rebuilding economic incentives around mutual interests and reciprocity.

Absolutely; absolutely. Reciprocity is the big theme of the future of capitalism.

Also, there is a very strong political implication there. About two months ago, I wrote a column for the ‘Süddeutsche Zeitung’ about Brexit. What I’m worried about, or what a lot of commentary seems to miss, is the three major fault lines in Brexit: education, geography, and age.

They have one thing in common: it’s broadly the net taxpayers and the net tax recipients. If these two camps are remaining disjointed and opposed, as they are now, the basis of solidarity, which is the foundation for any welfare state, which is the foundation for any redistributive economic system, in my view, will erode.

That’s it. That’s exactly my own analysis of Brexit, is it is a tragedy of… We cannot afford polarisation into 0:41:07 rival ideologies, because, now more than ever, we need a sense of solidarity. The people who are suffering the most need to be able to draw on that social capital – accumulated social capital – of reciprocity, mutual regard.

This is the ninth in a Social Europe series on the Crisis of Globalisation sponsored by the Friedrich-Ebert and Hans-Boeckler Foundations.