The Great Wealth Migration
Greetings from a gorgeously cool and autumnal Asti.
We’ve only had a six-week summer here in Italy. It was cool until mid-June, and as I stand here typing, it’s a mere 69F (20C).
The global warming nuts are having a tough time with this. The weather maps are blue and green, even in environMENTAL Germany.
Though we’re still three weeks away, autumn is my favorite time of year.
I get to cool down and think again. As David Landes wrote in The Wealth and Poverty of Nations:
In India and other tropical countries, I have noticed farmers, industrial laborers, and in fact, all kinds of manual and office workers working in slow rhythm with long and frequent rest pauses. But in the temperate zone, I have noticed the same classes of people working in quick rhythm with great vigor and energy, and with very few rest pauses. I have known from personal experience and the experience of other tropical peoples in the temperate zone that this spectacular difference in working energy and efficiency could not be due entirely or even mainly to different levels of nutrition.
Weather matters. It really matters.
I noticed this when I lived in Southeast Asia’s sweltering, humid air. In fact, it was one of the main reasons I wanted to get back to the West. I needed cool air to regain my intellectual and physical vigor.
After a long train trip through Europe over the past two weeks, I feel I’ve finally “returned” to the West. A long walk through the Louvre will help that out. Walking through seaside Barcelona, the canals of Amsterdam, pristine Brussels, and the tight alleys of medieval Antwerp will erase the rest of the Eastern residue.
Kipling once wrote:
Oh, East is East, and West is West, and never the twain shall meet,
Till Earth and Sky stand presently at God’s great Judgment Seat;
But there is neither East nor West, Border, nor Breed, nor Birth,
When two strong men stand face to face, though they come from the ends of the earth!
What I love about this passage is that the first two lines don’t deny the immense difference between Eastern and Western cultures.
But the third and fourth lines of the poem contradict the first two, allowing that individuals of diverse cultures can easily get along, no matter where they’re from.
Unfortunately, no one reads Kipling anymore, as he was an unabashed Empire lover.
For if they had, they’d know he was no racist. Kipling was a realist.
With this in mind, let’s tie together economics and politics to explain why governments, even Italy’s, opt for the intellectually lazy open borders strategy.
Ultra-Low Rates and Ultra-High Asset Prices: Ethically Offensive
I’ve written about this many times and am sorry to keep beating a dead horse.
But sooner or later, we’ve got to learn that a central bank can’t keep its foot on the yield curve for years and expect good outcomes.
Even if we allow for the argument that a certain amount of money-printing enables the economy to restart itself, there’s simply no excuse for keeping the spigot open for multi-year periods or, in the case of 2008-2021, over a decade.
In his masterpiece, The Ethics of Money Production, Jörg Guido Hülsmann writes:
The characteristic feature of fiat inflation is that it is done openly and legally. However, official approval does not diminish the pernicious effects of inflation; and it is far from removing its ethical offensiveness.
Hmmm… “ethical offensiveness.”
Yes, depriving prospective families of the means to have children is ethically offensive. And by that, I mean the ability to have a family in a well-priced house on a single income. I genuinely don’t think that’s too much to ask.
In the old days, Dad bought a house for $50,000, Mom stayed at home until at least the third kid was in grammar school, and the family wasn’t left wanting.
How people try to say we’ve “progressed” on that front is beyond me.
You simply can’t progress when a couple needs both people to work and still can’t afford a down payment, let alone a house, because they’re still paying off their student loans.
This is because central banks hold rates on the floor far after their stimulating effects have been extinguished.
And it transfers wealth from the poor to the already wealthy in the stealthiest way possible.
As a result, demographics are disastrous.
Not Mass Migration, But Forced Integration
And what’s the answer to this demographic disaster?
Politicians think it’s mass migration. Unfortunately, politicians also think these migrants will easily fit into their new societies. This clearly isn’t the case.
And while France has a terrible integration problem because they were horrific colonial overlords — see Niger and Gabon (currently) — the UK has had similar issues integrating its immigrants.
This “forced integration,” as Hans-Hermann Hoppe calls it, is where the demographic project falls.
As Sean Gabb writes in Property, Freedom, & Society:
[Hoppe] regards the mass immigration of the past half-century into Western countries as an instance, not of libertarian open borders, but of “forced integration.” It is different from free trade in goods and services so far as it is not a free choice of individuals to associate as they please. Instead, it is a product of anti-discrimination laws and state welfare policies.
In a democracy, politicians will have an interest in importing those most likely to vote for big government, or those most likely to lend themselves to an electoral balkanization that puts an end to the accountability of rulers to ruled. Given enough pressure by the majority, these politicians will make immigration laws that look tough. But these will lead, at best, to random acts of oppression against the sorts of immigrant who, in any rational order, might be welcomed. The policies of indiscriminate welfare that attract paupers into the country, and of political correctness and multiculturalism that prevent the majority from resisting, will continue unchecked.
Hoppe wrote about this in 1999 in his now-famous essay, On Free Immigration and Forced Integration.
Despite all this, the latest country to fall for this codswallop is my very own Italy.
They Like Me! They Really Like Me!
Once upon a time, Giorgia Meloni was one of the most ardent anti-migration voices in the European Union. As an opposition politician, she warned the New World Order would substitute native Italians with ethnic minorities. She even promised to put in place a naval blockade to stop migrants crossing the Mediterranean.
Someone’s pants are on fire.
Now that her EU colleagues have shown her some respect, Meloni has presided over a spike in irregular arrivals. She also introduced legislation that could see as many as 1.5 million new migrants arrive through legal channels.
Meloni is presiding over a country that is economically stagnant and in demographic decline. Over the last decade, Italy has shrunk by some 1.5 million people (more than the population of Milan). In 39 of its 107 provinces, there are more retirees than workers.
It’s numbers like these that prompted Italy’s Economy Minister Giancarlo Giorgetti to warn earlier this month that no reform of the pension system would “hold up in the medium-to-long term with the birth rate numbers we have today in this country.”
Meloni’s legal migration decree estimates Italy needs 833,000 new migrants over the next three years to fill in the gap in its labor force. It opens the door to 452,000 workers over the same period to fill seasonal jobs in sectors like agriculture and tourism as well as long-term positions like plumbers, electricians, care workers, and mechanics.
Meet the new boss. Same as the old boss.
It’s the same story all over the developed world.
Central banks stomped on the yield curve, lowering interest rates to artificial levels.
That goosed the asset market for far too long, which made housing, cars, and children too expensive.
To clean up the mess, governments didn’t interfere with central banks’ stupid decisions but opened the borders to mass migration and forced integration.
In a few years, Italy may be experiencing the same problems France, the UK, and the rest of the developed world face now.
Where’s Kipling when you need him?
My story starts in Hasbrouck Heights, New Jersey, where I grew up. My childhood was idyllic. I never thought I'd leave the Heights. Well, maybe just for college. When I was searching for colleges, I only looked within a hundred miles or so. I wound up going to Villanova. I stayed there for four years and earned — their word, not mine — a finance degree with a minor in political science. After that, I went to work on Wall Street. I had a menial job at Paine Webber to start, but then I got my first real Wall Street job at Lehman Bros. (before its collapse, of course). I worked there in Global Corporate Equity Derivatives as an accountant, believe it or not. Honestly, I hated the job back then. I didn't know how spreadsheets worked — yes, even with a finance degree. (Now I'm a Microsoft Excel nut. I think it’s one of the most extraordinary things ever invented.) After that, I moved to Credit Suisse, who sent me to London — the center of global operations for banking. I was young. Not only did I love the city for being a Candyland for alcoholics, but I also needed the international experience to cancel out my mediocre grade point average to get into a top 25 U.S. business school. Somehow, though, I stayed for a decade, until I discovered London Business School. There I earned a master’s (HA!) degree in finance. My next job was as a futures broker, which I utterly loathed. When I had enough, I took a year off — pub crawling around London and pissing away my bonus money. Then I figured out that I needed a new job. So I went to work for a company called 7city Learning, where all of the best finance trainers were working. I had no idea about any of that, but imagine walking into the 1927 Yankees locker room and being taught how to hit. I spent my time teaching all the traders exams, the graduate programs of the various big banks and then the CFA Level 1 review courses. Yes, that's the only level I've passed. I hate that exam. I never really wanted to run money anyway. In 2009, my boss asked me to move to Singapore to help build the business in Asia. Then I went to work for another financial training company where all of my friends had migrated. Around the time I was getting bored of Singapore, my old bank asked me to work at talent development for them in Hong Kong. Nearly three years later, I moved to the Philippines, where I started an EdTech startup called Finlingo. Along the way, I’ve racked up a ton of qualifications — I am a CAIA, FRM and CMT, amongst a few other things — but they don't mean anything. All that matters are my experience, my connections and my takes on things. So every day I'm going to do my snarky best to inform and entertain you.