The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [83]
For example, many people find it uncomfortable to deal with others who are different in one way or another. It has been a massive and incomplete struggle for Western societies to acknowledge that women should have broadly equal parity with men in many aspects of life, or that sexual preferences should not matter for the way people are treated at work or socially. Ethnic diversity is a fraught issue in all countries I know of, and all the more so when it involves sometimes quite dramatic cultural differences too. All the leading economies now consist of many groups of people from a range of backgrounds, cultures, and countries of origin, with a huge array of beliefs and ideas about what is socially acceptable. In the early 1980s, most places were still fairly homogeneous in terms of the cultural and racial origins of their population. During the past quarter century virtually every town and city—in all the OECD countries and in many developing ones too—has become kaleidoscopic in its cultural diversity.
Yet the rich economies have an institutional structure built on a rather specific set of social foundations dependent on standard patterns of behavior and cultural homogeneity. This included as part of the social glue the welfare state whereby richer households would support poorer ones through the use of tax revenues to provide welfare benefits. The highest degree of redistribution is found in Scandinavian countries. Until very recently, these were the most racially homogeneous. The least redistribution is found in the United States, where almost all of the richest taxpayers have been white and a majority of welfare benefits are paid to blacks. Harvard economists Alberto Alesina and Ed Glaeser have looked at the pattern in a number of European countries as well as the United States and have concluded that a redistributive welfare state is indeed more likely the less ethnic diversity there is in the population.33 To put it bluntly, we’re more willing to support people who are similar to us.34
This is a rather uncomfortable finding for some people of a liberal or leftward-leaning inclination. We prefer, for example, to suppose that decent people want to support the poor by paying tax and are color blind. But equally it is hardly controversial to say there are ways in which racism or cultural intolerance characterizes many or most societies. What’s more, the big increase in international migration from about the mid-1990s has brought about quite widespread anti-immigrant sentiment in countries ranging from Sweden and Italy to the Anglo-Saxon lands, such as Australia, the United States, and United Kingdom. Some of this is understandable concern about competition for scarce housing, for example, or pressure on health services and schools, or the impact on the native-born in low-skill jobs, and their wage levels. Few studies in key destination countries for international migration such as the United States, United Kingdom, Australia, and Ireland have found any large economic impacts from increased migration at all—the most frequent finding is that there is some small downward pressure on the wages (in real terms) of the native-born low skilled. In general the evidence doesn’t indicate any other negative economic impacts of significant size. For example, migrants make a net contribution to government finances as they tend to be young and in work, and not entitled to claim any benefits. However, no amount of evidence will overturn the fear of adverse economic effects, as there is no social capital associated with newcomers to a society.
Many existing citizens also simply fear the effects of cultural difference—this is true whenever there has been a wave of immigration. It was true of the United States in the early twentieth century as poorer and foreign-speaking European immigrants took over from the earlier English-speaking waves. It was true of the United Kingdom when West Indians arrived during the