Where will all the workers go? A chat with Kenneth Rogoff
Amid dire Eurozone economic figures â€” deflation, recession and stagnant unemployment â€” and the European Central Bankâ€™s announcement this week to introduce quantitative easing measures to stimulate the economy, many Davos participants are weighing in on the global impact of these statistics.
BBC Capital columnist Lucy Marcus caught up with Harvard University economist Kenneth Rogoff to get his take on jobs and why people are fleeing to other countries for better opportunities. Below is an edited excerpt of their discussion.
Q. One of the things the BBC Capital is interested in is labour markets and migration. In Spain, you see difficult times with young people moving away. Where do you think that will happen next?
A. Thereâ€™s a lot of international migration going on with Russians leaving Russia, people from the Middle East leaving, but I donâ€™t think the numbers are giant at the moment. They are big within pockets and hit individual cities. Itâ€™s not that easy to immigrate. A lot of the worldâ€™s not that open. There are only a few countries that are really willing to take large amounts of immigrants for a sustained period.
Q. So even though people may want to goâ€¦
A. Oh my goodness, there are a lot of people who want to move. There are some people who are in very dire circumstances, who I think for humanitarian reasons you want them to be able to move â€” certainly for economic reasons. I think many countries are very sympathetic in these circumstances.
Q. But what happens for the economic reasons? Do we worry about brain drain or are people trapped and canâ€™t go so easily.
A. Ireland is an interesting example where during the â€˜80s Ireland was doing terribly and everyone left. Then when Ireland started doing better, everyone came back. Itâ€™s not permanent. Itâ€™s an ebb and flow. Itâ€™s sort of a safety valve. In an ideal world, Spanish workers who have a huge unemployment rate, especially in jobs like construction, would be able to go other places. I have often said the ideal thing for the Eurozone would be to have infrastructure in Germany built by Spanish workers.
If political borders were less absolute and labour mobility were freer, I think, certainly in terms of poverty and extreme duress it would be fantastic. There are a lot of people in the middle class in the advanced countries who donâ€™t want this and thatâ€™s one of the tensions that I think is arising over time.
That is a bigger tension than the one often talked about â€” about the middle class and the rich countries and the very rich. The middle class and the rich countries are hugely rich by world standards and so [Parisian economist] Thomas Pikettyâ€™s discussion that the French middle class should get more is sort of tone deaf to the fact that there are people in South Asia, Africa, who heâ€™s not talking about.