An interesting lack of a relationship between two metrics. A thought spurred by the immigration debate.

So I did something a little silly and nerdy. I was pondering the notion that there might be any relationship between a country's size and its levels of individual access to economic opportunity. That is, as a country gets larger, is there a trend toward more or less economic growth and opportunity for the individual? So I took the rankings of countries by GDP per capita and plotted the top 100 on a bar chart from left to right and then entered in rounded numbers for the population of each country. Some countries are so small of course that they do not visibly appear on the chart.

I ended up with the graph you see here. That big yellow bar showing a population of 323 million is the United states at 17th place in the ranking and that big red one at 207 million people is Brazil at 75th place in the GDP per capita rankings. You can't see it because its population is just 38,500 people, but Monaco leads this group at the very far left at #1.

Fun fact; I believe the average cost of real estate in Monaco is over $6,000 per square foot so while the people in Monaco apparently have money, they kind of have to.

What's immediately evident here is that in the top 100 countries, there's clearly no relation between population and GDP per capita. I can't at a glance find any clear up or down correlation there from left to right. I'm sure the average does lean one way or the other, but looking at this, I don't see how we could argue that it's anything more than statistical noise.

It's worth noting however that India and China are excluded from this graph because they are 103rd and 158th on this list respectively. That would skew the average pretty massively in the direction of larger countries being less economically successful as both are in between 1 and 2 billion population, but the two countries individually defy the correlation because India is less successful than China despite being smaller. So if we ranked more than the top 100 countries by GDP per capita as I've done on this chart, from Monaco to China (1st to 103rd) the trend would be increasing populations correlating with less economic growth, but from China to India, (103rd to to 153rd) the trend would be decreasing populations correlating with less economic growth. Again, nothing but statistical noise so far as I can see.

So why was I thinking about this? It's because I was thinking of "terk er jerbs" type objections to immigration. As I see political cartoons and commentary on the harm to Canada and Europe letting immigrants in, among some compelling arguments for and against that is an argument that I've never found any sense or logic in; the argument that increased immigration threatens to take jobs away from people. Among all of the more thoughtful arguments about immigration policy, this absurd argument seems to keep carrying water among at least a sizable number of anti immigration advocates and I find it absolutely mind boggling.

This has never made sense to me specifically because it's been my understanding that economies are built with human capital. Without human capital, (labour and innovative management) you can't build an economy because the labour and innovative allocation of resources simply doesn't exist. One of the reasons that I find borders to be a kind of an offence to the human condition is because it is an artificial hinderance to the desire to move about to seek out opportunity which adds to an economy which is why I thought of the potential for a corollary relationship between population and GDP per capita. I was hoping when I created this chart that perhaps I'd see some logic I'd missed or at least a new dimension to the argument but as we can see, no.

I'm not arguing in favour here of welfare benefits for new immigrants by the way. I don't see value in that and I think that's a separate discussion in which I take the position that affording opportunity to people is not done by writing cheques. In respect to whether or not an immigrant threatens to "take" a job away from a native born individual in a nation though; this is what I firmly object to because it just does not make sense.

For one, there's an ethical illogic to the notion that an employee is entitled to a job. A job belongs to the employer and it's theirs to give to someone who applies (asks) for it. To assert that an immigrant shouldn't be given that job isn't protecting anyone's rights. That is only taking away the right of the employer to hire who they please based on this flimsy notion that because someone was born on the wrong side of a line on a map, they're not entitled an opportunity to ask for a job. To me, that defies any reasonable standard of logic and the arguments to justify that seem equally as esoteric and baseless to me. Further however, the notion that this takes away from an economy is equally as absurd and illogical. Again, human capital is what builds economies and all else being equal, the more of that an economy has, the better.

Another dimension to this protectionist justification that is commonly applied to this notion is that if an immigrant is employed that results in unemployment for another person and thusly impoverishes them. So, the "terk er jerbs" crowd argues that immigrants drive up rates of poverty. Nothing could be further from the truth. If this were indeed true, then every high school graduate or first time employed native born person in a country would drive down prosperity by taking the job of a more experienced worker in that economy. Of course, this is absurd and we know that young people entering the workforce is a vital component of a functioning economy. If all of the young people today in a country stopped working, the whole deal would just fall apart. Businesses would close and economic activity would violently contract. While it is a funny joke to note that babies are perhaps the greatest threat to those who fear their jobs being taken from them, the comical absurdity of such an idea really does illustrate the absurdity of the notion that an immigrant is any threat to an economy at all. In fact, Immigrants bring along the advantage of arriving as a complete package in respect to ready employability.

Now again, I readily acknowledge compelling discussions when it comes to allowing new immigrants into a country that may draw on a healthcare system, are clearly seeking state benefits, and so on and so on. While I'm happy to address those arguments, the point I'm trying to draw here is much more simple. That in the case of even an unskilled 30 something wanting to enter a country, that this person could be anything BUT a statistical benefit to an economy is absurd to me because again, economies are built from human capital. It should follow that if economies are built from human capital, than the more you have of that, the better.

You know what's perhaps most interesting about this graph in that regard? The absolute lack of any correlation between population and GDP per capita here in this top 100 list suggests that the differences in how a nation achieves a high GDP per capita is entirely policy based. Not policy on immigration, but other domestic policy that frees up or contracts economic freedom. A lot of these countries rank well in the economic freedom index for example, but at a glance the relationship is still pretty erratic. The top ten have a lot of tax havens/banking centres like Monaco (#1) and resource rich nations like Qatar (#5). Macau (#8) is a global gambling capital that's benefited massively from Chinese capital flight. So looking at these developed and wealthy economies, we start to see not only natural resources in play, but also innovative structuring of service economies.

While I haven't plotted it, I imagine if we took a significant metric of economic freedom like...I dunno...gov't spending to GDP maybe or perhaps the quality of property rights law by country; I bet we'd start to see a clearer correlation to GDP per capita over time. I bet also that it would show very very little correlation to immigration. The bottom line here is that immigrants by themselves are no threat to a country's economy. If immigration is indeed linked somehow to economic deterioration, this is almost certainly a symptom of bad policy and it should be this bad policy that is the target of our ire.