The economic and social necessity of freedom of movement

FREEDOM of movement is one of four freedoms of the single market (with goods, services and capital) that the UK did so much to promote a generation ago. The Government appears determined to bargain some freedom of movement for some access to the single market. There is, however, no calculus to weigh regulations, tariffs or taxes against immigration quotas or limits on the rights of UK citizens to live wherever in the EU: a little more of this, a little less of that.

Freedom of movement is critical not only to the future of the EU economy, which is why 27 countries will not compromise on it, but also the UK one. This is not just because firms are struggling to find the staff they need. The right does not belong to employers but to people. The passports banks enjoy or tariffs that affect chains of supply can always be re-negotiated by governments.

Goods and services belong to the corporate economy of moral persons whose rights in the marketplace are fungible and tradable; priced in the market, they can rise or fall in value. Freedom of movement is a right of physical persons. No one can exchange or sell this right; it is, literally, priceless and it puts every citizen on an equal footing. The state does not choose who gets to benefit, and who does not. Taxes may go up or down; a right, once lost, cannot be so easily restored.

The opinion of the High Court of Justice on November 3 referred specifically to the right of freedom of movement in terms that bear close attention. In paragraph 66, the court, referring to the right of freedom of movement, stated that such rights “are nonetheless rights of major importance created by Parliament. Accordingly, the claimants are entitled to say that it would be surprising if they could be removed simply through action by the Crown under its prerogative powers”.

This is about more than procedure. Legislatures usually add rights; they don’t normally take them away, especially when the consequences of doing so go to the heart of how free societies prosper.

Freedom of movement has an economic impact because it changes an individual’s outlook on his life, giving him choices that he alone controls. Its impact is aspirational: with the prospect of mobility, the incentives to study harder, be more inventive, keep learning and perform better are greater. Freedom of movement valorizes human capital and enlarges the opportunities to use it.

Quotas, subsidies and tax credits are in the hands of bureaucrats; rights empower people, a principle cherished by the Left as much as the Right. As FA Hayek wrote in The Constitution of Liberty: “The discovery of a better use of things or of one’s own capacities is one of the greatest contributions that an individual can make in our society to the welfare of his fellows and that it is by providing the maximum opportunity for this that a free society can become so much more prosperous that others.”

If you don’t think freedom of movement matters, just consider what would happen if it were taken away: horizons narrow, opportunities shrink, ambitions diminish. How then will the UK economy grow?

There is a risk that freedom of movement makes it easier for people to leave Scotland. Just because people can live, work or even retire in France, Spain or Sweden does not mean they will. The proper response is not to limit freedom of movement for British citizens but to make Scottish cities even more attractive and dynamic by investing more in infrastructure, public goods, a quality public service, health care and education, all of which affect productivity, which is below EU averages in most UK cities. This has been the strategy behind growth in Switzerland, the Netherlands and France and it pays a high rate of return through inward investment, higher productivity and higher incomes. Connected, networked labour markets create effects of scale even in small countries if they are open.

The trick is to enhance the positive effects of agglomeration and control and reduce the negative ones at the same time. An urban strategy for Scotland’s growth makes sense under any scenario: EU membership, Brexit or even independence. After all, cities are where most people live.

Josef Konvitz retired from the Organisation for Economic Cooperation and Development having led work on urban affairs and regulatory policy. He is the author of Cities and Crisis and honorary professor at the University of Glasgow. This article was originally published in the Herald.