Economic Integration and Labour Mobility: Are Australia and New Zealand Short-Changing Pacific Forum Island Countries?

I had not even heard of this mooted migrant worker scheme. A fellow by the name of Prof. Biman Prasad of the University of the South Pacific apparently has.

Delivering a paper, ‘Economic Integration and Labour Mobility: Are Australia and New Zealand Short-Changing Pacific Forum Island Countries?’ at Otago University in New Zealand, this week, Prasad said Australia’s outright rejection of the scheme has further strained its relations with regional countries.

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“Already there was a perception that Australia was proposing and getting Forum Island countries to adopt trade and other policies from which it stood to gain the most in terms of tariff and duty free access,” said Prasad.

“It would not be an exaggeration to say that Australia is seen to be self-serving and hypocritical over the labour scheme in that it has no qualms about cherry picking the cream of the human resources in Forum Island Countries while denying access to the poor who are in most need.”

That certainly sounds like my government, at any rate. World Bank President Zoellick is also on board with the idea (no end of amusing – by which I mean hypocritical – given his job prior to taking up that position). Prasad has an interesting supplementary argument to make: that allowing for non/semi-skilled labour to enter Australia would siphon unemployed youth away from an environment with few opportunities except to be angry and violent – possibly contributing to economic development ‘back home’ via remittances.

In an interview with IPS, Prasad supported the call by Zoellick. “The Pacific provides doctors, nurses, educators, IT experts, sports people and professionals in various fields to help prop up institutions in Australia and add to the quality of life and economic growth.

“Yet Australia denies entry to a small number of unskilled labourers despite a clear demand for such labour,” Prasad said.

He added that Australia was aware that most Pacific Island countries had serious youth unemployment problems. In some countries, these youth were sources of political and social instability. A labour scheme that provided employment and improved the quality of life of people could save a costly military intervention later.

“While, in the long-term, economic growth in these economies would be a better way to resolve unemployment problems, in the short-term there needs to be a safety valve and the seasonal workers scheme would be one,” Prasad said.

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On concerns raised by some studies about the emergence of a “remittance economy” in more countries in the region, Prasad said: “One of the immediate benefits of allowing unskilled and low-skilled workers is the flow of remittances to FICs. Globally, remittances have become an important source of external income for many countries amounting to about 167 billion dollars — about three times the level of development aid.

“While it is true that you cannot build economies on remittances and it is correct that much of it (remittances) may be spent on consumption, this is not always the case,’’ Prasad said. “In Fiji, it is estimated that annual remittances amount to about 300 million US dollars, accounting for about six percent of GDP.

Data from household income expenditure survey shows that a good proportion of remittances goes to the poor households for education and other productive expenditures.

Interesting? Rather.

Addressing Rising Health Care Costs — A View from the Congressional Budget Office

The New England Journal of Medicine’s “perspective” editorial is more than a little interesting:

The long-term fiscal balance of the United States will be determined primarily by the future rate of growth of health care costs, as we have recently noted. If costs per enrollee in Medicare and Medicaid continued to grow at the same rate as they have over the past four decades, federal spending on those two programs alone would increase from about 5% of the gross domestic product today to about 20% by 2050 — roughly the share of the economy now accounted for by the entire federal budget. Compounding the challenge for policymakers is the difficulty of controlling federal spending over the long term without addressing the underlying forces behind the increase in both private and public health care costs.

A variety of evidence, however, suggests that there are opportunities to constrain health care costs without incurring adverse health consequences. One approach that could reduce total health care spending (rather than simply reallocating it among different sectors of the economy) involves generating more information about the relative effectiveness of medical treatments and enhancing the incentives for providers to supply, and consumers to demand, effective care.

There is also an interview (audio) with one of the authors, Peter Orszag.

Basic economics on Def Poetry

I’m a big fan of this show. Being a fan of Mos Def didn’t hurt, but it’s an excellent forum for spoken word artists/performers. Plus, economics!