Ideas@TheCentre
Boat people circa 1871
On 11 August 1871, the three-mast iron sailing vessel Friedeburg of the Hamburg Shipping Line arrived in Brisbane with my three times grandfather Friedrich, wife Louisa, and baby Anna in steerage. The Brisbane Courier of 15 August noted their arrival:
The German immigrants ex Friedeborg were brought up yesterday by the Settler, and certainly, as far as appearance goes, they promise to become as useful a class of settlers as have been received here under the Immigration Regulations for some time past. They are a hardy looking lot, who appear to have been well used to work ... The hearty manner in which they commenced cheering and singing before reaching the wharf shows at least that they arrive in good spirits, and with an evident determination to appreciate their new home.
Courier readers were led to think that immigrants were valuable mainly for their labour. The article went on to list the trades and occupations of those on board for the benefit of prospective employers. The Queensland government actively recruited German migrants with free passage and offers of land to promote economic development.
There is little argument on the part of economists that immigration and population growth have contributed to ‘extensive’ growth in the size of the Australian economy. There is much less agreement, however, on the extent to which immigration and population growth have contributed to ‘intensive’ growth, that is, growth in real GDP per capita, a widely used proxy for average living standards and well-being. Many economists assume that immigration and population growth dilute the capital-labour ratio, leading to lower productivity and thus lower average living standards.
The conventional view is based on a very narrow reading of the contribution of people to growth in real GDP per capita. An alternative perspective considered in my Hands, Mouths and Minds argues that the main contribution of immigration and population growth to intensive economic growth comes through an increased supply of ideas and innovations. Population growth and increased density generate price signals and incentives that drive long-run gains in productivity.
The migrants aboard the Friedeburg were not only responding to incentives but also changing incentives for others. Yet many economists argue that average living standards were reduced in the long run by the arrival of the likes of the Friedeburg migrants. As one of their many descendants, it’s not hard for me to imagine Australia being poorer without them.
Dr Stephen Kirchner is a Research Fellow at The Centre for Independent Studies and a Senior Lecturer in Economics at the University of Technology Sydney Business School. His report Hands, Mouths and Minds: Three Perspectives on Population Growth and Living Standards was released this week.
