118. The Poverty Fix Nobody Talks About – Lant Pritchett
Jan 18, 2024
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The podcast delves into the concept of labor mobility as a key solution to poverty, emphasizing the importance of moving individuals to high-productivity areas. It challenges traditional development models and advocates for well-regulated temporary labor mobility. The discussion also touches on migration policies, brain drain, and the ethical dimensions of human mobility.
Labor mobility can significantly improve global well-being by allowing people to move from low to high productivity places.
Misconceptions about migration, such as reliance solely on development assistance and brain drain, need to be addressed.
A fair and well-regulated labor mobility system prioritizing worker protection and partnerships between countries is essential for addressing migration challenges.
Deep dives
The Importance of Labor Mobility
There is a strong case for embracing labor mobility as a way to improve global well-being. The world doesn't consist of poor people, but rather places that are low in productivity. By allowing people to move from low productivity places to high productivity ones, they can significantly improve their own well-being. This idea challenges the notion that migration is a problem and highlights the potential gains that can be achieved. Development efforts alone cannot solve the migration issue, as increasing people's prosperity in their home countries actually increases the demand for migration. To address this, a well-regulated, rotational labor mobility system is necessary, one that protects workers and establishes partnerships between countries and industries. The focus should be on core skill workers and creating opportunities for temporary, contract-based work that benefits both the host and sending countries.
Challenging Misconceptions about Migration
There are several misconceptions surrounding migration that need to be addressed. The first is the idea that development assistance alone can solve the migration issue. But the reality is that economic gains from migration far outweigh those from development programs. Additionally, improving conditions in poorer countries does not decrease the demand for migration; in fact, it often increases it. The second misconception is that migration leads to brain drain, as skilled workers leave their home countries. However, research shows that brain drain is not as significant as believed, and there are ways to mitigate the impact. Finally, there is a misconception that migration poses a threat to national identity. In reality, migration can enrich societies and contribute to their overall development. By challenging these misconceptions, we can have a more informed and open discussion about the benefits and challenges of migration.
Implementing a Fair and Well-Regulated Labor Mobility System
A fair and well-regulated labor mobility system is essential to address migration challenges. This system should prioritize the protection of workers' rights and prevent any human rights abuses. Countries like Sweden are capable of establishing such systems without compromising their values or standards. Instead of a traditional guest worker program, a rotational labor mobility approach can be adopted, ensuring that workers move between countries temporarily and have clear contracts. This approach encourages workers to maintain ties with their home countries, including remittance flows, while benefiting host countries with necessary labor. Such a system requires cooperation and partnerships between countries, ensuring the safety, well-being, and fair treatment of workers. By focusing on implementation and regulation, the potential benefits of migration can be harnessed while addressing concerns in a responsible and ethical manner.
Recognizing the Value of Identity and Local Affiliation
Identity and local affiliation play an important role in human well-being. Acknowledging and preserving national and cultural identities is not inherently wrong or exclusive. People have a deep connection to their local identities, and these connections should be respected. However, identities can evolve and become more inclusive over time. Balancing the importance of identity with the benefits of labor mobility is crucial. Openness to migration does not have to mean sacrificing identity. By having open and honest conversations about who can live and work in a country, under what conditions, and for what duration, a more nuanced and balanced approach can be achieved. The recognition of identity should not hinder the potential for global cooperation and the benefits of labor mobility.
The Potential of Remittances and Creating New Opportunities
Remittances, the money sent by migrants to their home countries, are a significant source of economic support. By creating a well-regulated labor mobility system that maintains strong connections between workers and their home countries, remittance flows can be increased. This can provide a substantial boost to the economies of sending countries. Rather than preventing migration, a fair labor mobility system can enable remittances and ensure that workers can contribute to both their host and home countries. The existing system often hampers remittance flows by breaking the connections between workers and their hometowns. By establishing a rotational mobility system, where workers have clear temporary contracts and the expectation to return home, these connections can be maintained, leading to more sustainable remittance flows.
When Lant Pritchett worked as a development economist (many years at the World Bank), he noted the approach was very place centric. It was about how to develop Senegal, India, Nigeria etc. Mobility was not a big deal.
“I realized gradually that the mobility of people across places could be at least as big a way for people to improve their well being as the efforts to improve places”, says Lant Pritchett.
“The wage differentials, which are driven by productivity differentials, are so huge that the ability of people to move from low productivity to high productivity places is far and away the largest way to improve human well being.”
Lant co-founded the advocacy and action group/think tank LaMP to promote labor mobility. The acronym stands for Labor Mobility Partnerships.
The economic development models that were developed some decades ago got one thing completely wrong: productivity didn’t converge. Education, health and even capital per worker converged, but productivity didn’t.
“Productivity isn't primarily about knowledge, it's about complex features that we now call institutional, political and social.”
The a-ha insight is that the world has people in poor places, not poor people.
“It’s simply hard to make a person productive in rural Ethiopia, and there's no magic bullet.”
To many people, the term migration brings up images of people moving permanently and acquiring new roots. But if the world could achieve well-organized and orderly temporary labor mobility on a scale that is an order of magnitude larger than today, this could bring tremendous benefits, according to Pritchett.
Calculations show that the gains would be at least 20 times the size of the ODA in the world.
In the migration discourse the elephant in the room is the fact that the labor force is shrinking rapidly in the rich parts of the world, relative to the aged population.
How to deal with this demographic transition if you only talk about permanent migration and refugees?
“You can’t. The only way is to open a third question: who are we going to allow to live and work on our sovereign territory, without any expectation they are becoming citizens?”
Is the temporary nature of this mobility meant to appease those who worry their national identity is being threatened? In a way, Lant says.
“But appease is a stronger word than we need. It's not just a necessary appeasement objective, it’s a legitimate objective to want to preserve a sense of 'spanishness' or 'englishness', even if those are socially constructed and imagined identities.”
What about the risk of brain drain in the countries that provide the labor force?
“Brain drain gets attention because it rhymes”, Lant says smilingly.
“There is not much analytical foundation for the claim. If we used the rhyme cortex vortex, brains moving round in a circular way, we would have a more accurate and interesting picture of what is going on.”
Isn’t living where you want as basic a right as free speech or religious freedom? Are we primarily humans or are we primarily citizens?
“Ah, there's the rub of it.”
“I think the conversation on open borders versus closed borders is silly. Open borders is not politically how the world is going to be organized in the foreseeable future. And there is something unique, valuable and important about maintaining identities.”
“But these identities can change over time, and they can be inclusive.”
