There are two major problems with contemporary British society, according to David Goodhart in The British Dream, and both are primarily caused by immigration. The first problem is economic: the plight of the white working class, especially the young, and the decline of social mobility. Goodhart argues that low-skilled immigrants have taken jobs from unskilled natives, leaving them languishing on benefits, while high-skilled immigration reduces both the incentives and opportunities for ambitious and talented natives to move up the ladder. Many find this thesis convincing, and it has been accepted as fact by much of the political elite. There is, however, almost no evidence to support it. The second problem is social: the decline of a shared sense of community, local and national, which Goodhart relates to the failure of at least some immigrants to integrate, either ‘physically’ (where they live, who their kids go to school with, what language they speak and so on) or ‘mentally’ (in terms of the degree to which they identify with Britain, or share a common set of values). Some may think this argument has more force, but again, his conclusions far outrun the facts.

I’ll start with the economics. Goodhart gives a fair summary of the current consensus about the effects of immigration on the labour market. It comes in two parts. First, in the medium to long term the ‘lump of labour’ fallacy is just that: it isn’t true that the number of jobs in the economy is fixed, and more jobs for immigrants doesn’t mean fewer for natives. Second, the evidence suggests that in the UK immigration has little or no impact on employment even in the short term; it may drive down wages for the low-skilled, but the effect is small compared to that of other factors (technological change, the national minimum wage and so on). These things are now well established, and Goodhart appears to accept them. So it comes as something of a surprise that he should cite with approval Fraser Nelson’s observation that mass immigration ‘broke the link between more jobs and less dole’, and that he goes on to argue:

To have millions of long-standing residents sitting at home on benefit while poorer foreigners come in and take the jobs that they should be doing makes no sense for the country as a whole; it creates a kind of Saudi Arabianisation of the labour market. The number of British citizens on out of work benefits has fallen from a peak of about six million in the early 1990s but even in the long boom it never fell below 4.5 million.

It can certainly be argued that had better policies been pursued – in particular, if more had been done to get lone parents and those on incapacity benefits back into the labour force – the number of people on benefits might have fallen even further in the 2000s. But the idea that reducing immigration would have made a meaningful difference doesn’t fit the facts, in terms of timing or geography. In the period between 1979 and the early 1990s, which Goodhart describes as one of low and stable immigration, the numbers on out of work benefits tripled to six million, from two million in 1979. This wasn’t just an effect of the deindustrialisation of the early 1980s; much of the rise actually came in the early 1990s. And the persistence of benefit dependency in the 2000s among long-standing UK residents was at least as great in areas with few immigrants as in those with many.

Goodhart cannot escape from his instinctive view that the political economy of immigration is a zero-sum game, even as he accepts that both economic theory and the evidence say no such thing. ‘A disproportionate number of new jobs,’ he writes, ‘seem to have been going to recent immigrants.’ But this is an expression of the ‘lump of labour’ fallacy he elsewhere dismisses. The belief that if immigrants get ‘more’ of something (jobs, education, opportunities, political power), natives (or whites) must get less. This guides his discussion of the local economic impact of immigration in Merton, South-West London: ‘Poor whites [are] doing the worst of the lot.’ Such people have ‘mainly opted out: they seldom vote, and a lot of the younger people are “Neets” – not in employment, education or training.’ It isn’t entirely obvious from Goodhart’s description of Merton why immigration is responsible for this. Do the immigrants displace natives from jobs, schools and polling booths, or do they somehow drag them down? Either way, such facts as there are in this sentence appear to be wrong. Do fewer working-class whites vote in Merton than elsewhere? I’m not aware of the existence of any statistics on local voting by ethnicity or class, but both the Merton constituencies (Mitcham and Morden, and Wimbledon) had a higher than average turnout at the last election, and more than two-thirds of Merton voters are white. As for Neets, the Merton Council report cited by Goodhart found 87 white Neets aged 16-18. Is that a lot? Not really: there are about 2300 whites in the relevant age group. Whether the council’s data are directly comparable with official statistics isn’t certain, but if they are then the chances of a white teenager being Neet are considerably lower in Merton than they are nationally. (The official statistics suggest that Merton’s Neet rates are pretty low.)

Goodhart is of course right that young Brits, especially those not from middle-class backgrounds, are having a pretty hard time. But the question is why. Think about it this way. Suppose you’re poor, young and white: where in the UK don’t you want to be? That’s a subjective question. But from an economic point of view, one might want to consider such criteria as the proportion of young people who don’t get decent GCSEs and the number who are out of work. By those yardsticks, the answers are reasonably clear. Nationally, just under 60 per cent of kids whose first language is English get five good GCSEs including maths and English. There are eight local government districts where that figure dips below 50 per cent: Hartlepool, Middlesbrough, Knowsley, Blackpool, Barnsley, Hull, Nottingham and the Isle of Wight. Job prospects for young white school-leavers in these areas are, not surprisingly, poor: the proportion on the dole ranges from 12 to 18 per cent, compared to the national average of about 8 per cent. Yet of these areas, only Nottingham has a substantial non-white or immigrant population. In London, children whose first language is English are somewhat more likely (about 62 per cent) than the national average to get five good GCSEs, despite considerably higher poverty rates. Young whites in London don’t often end up on the dole: only about 5.5 per cent, close to the lowest rates in the country. Things are a little worse in Merton, where GCSE results are about average, and the proportion of young whites claiming benefits is about 6.5 per cent, but that’s still well under the national average.

So, to put it bluntly, if you’re going to be white, British and poor, all the statistical evidence suggests you’d be better off being born in Merton – or anywhere else in London, surrounded by immigrants – than in the mostly white areas where educational outcomes, in particular, are worse. We need to be careful here. Correlation doesn’t imply causation. There are lots of possible explanations for the figures I have given; in particular, the remarkable improvement in London’s schools, especially for more disadvantaged children, over the last decade. And there’s little doubt that the depression of local economies in some Northern cities is responsible for both the high unemployment and relatively low immigration in those places. Econometric analysis suggests that there’s little or no association between high immigration and employment or unemployment rates.

Goodhart is right that we should be worried about the future of ‘our’ young people from disadvantaged backgrounds. Youth unemployment was stubbornly high even before the recession, and labour market prospects for young people without skills and qualifications are likely to remain bleak if and when the economy recovers. But surely he should be focusing his attention on those areas where young people’s prospects are objectively worse, not places like Merton, where they appear to be improving. And surely the issues to focus on are the ones that matter in those areas: economic decline, poor schools, employers uninterested in developing the skills of young people in low-paid jobs – not immigration. To believe, as Goodhart does, that the ‘renegotiation of EU rules on free movement to allow for local worker preferences’ (in other words, to keep out Romanians or Bulgarians) would do anything to improve the life chances of young Brits isn’t just wrong, it’s a dangerous delusion.

The strain is even greater when Goodhart turns his attention to the supposed decline in social mobility. It has become the conventional wisdom on both right and left that social mobility is decreasing. As Goodhart recognises, the extent of the decline, let alone its causes, is controversial; while mobility as measured by income does appear to have declined, the story is less clear when it comes to social class. But he decides to blame immigration in any case: ‘One third of all graduate jobs in London are now taken by people born outside Britain,’ he writes, ‘which may be one factor behind the apparent slowdown in social mobility in recent years.’ How on earth are we supposed to understand this claim? I’ll make two remarks. First, the disputed evidence of the decline in social mobility in the UK relates to the period before 2000; the very sketchy subsequent evidence we have suggests there has been no further decline. As with Goodhart’s analysis of benefit dependency, the effect he is looking at – in this case the putative decline in social mobility – does not coincide with the years of high immigration. Second, Goodhart’s theory sits a little oddly, to say the least, with his general argument that recent migrants have been disproportionately low skilled, depressing wages and reducing job opportunities for low-skilled natives, while benefiting better-off natives. Indeed, he cites the best-known paper on wage impacts, which, as he says, ‘found that immigration overall had led to a small increase in average [native] wages’ and a somewhat larger increase in the wages at the top end, ‘but also a small reduction in the wages of the bottom 20 per cent’. These effects are fairly minor, but they are hardly consistent with the idea that British graduates are losing out.

So let’s ignore Goodhart’s talk of social mobility and reinterpret the sentence in a way that makes sense. Let’s assume he is simply saying that there are fewer graduate opportunities in London for natives because so many immigrant graduates come here. If that were the case, presumably the London graduate labour market would be oversupplied with graduates compared to the rest of the country, which is much less attractive to high-skilled immigrants; as a result, the graduate earnings premium would be lower in London, and native graduates would seek employment elsewhere. Yet every quantitative analysis tells us that graduates earn more in London compared with less skilled workers than they do in the regions. London has more graduates, both foreign and native, than anywhere else, but it is not oversupplied with them – on the contrary, the market suggests.

There are obvious reasons for this. ‘Clustering’ affects high-skill sectors disproportionately; some high-skill/high-pay industries are concentrated in London; and some graduates in London are part of an international labour market (made up of a number of globalised cities) rather than a domestic one. But by these lights, an increase in the immigrant graduate population will tend to drive up wages and labour market opportunities for natives. Elsewhere Goodhart appears dimly to recognise this, noting that high-skilled immigrant workers can be both substitutes for and complements to natives. He gives two examples: the City, where immigration probably leads to more and better-paid opportunities for natives; and the Premier League, where he argues the reverse. I’m not convinced by the second example. The number of skilled jobs – in media, marketing etc – generated by hosting the most successful club league in the world far outweighs the number of British footballers displaced from it. But in any case, the argument that the negative impact on native job prospects of allowing in immigrant footballers outweighs the positive effect of allowing in immigrant workers in the financial sector seems a hard one to make, and Goodhart doesn’t even try.

What of the social impacts of immigration? I have some sympathy with Goodhart’s instincts concerning the importance of integration and the negative impact of segregation. Britain lacks a strategy, as he says, ‘either for new arrivals or for settled but “stuck” communities’. In a relatively small country like the UK, there is no future for communities isolated from the economic and social mainstream. Both immigrants and the country as a whole will be much better off if immigrants learn English soon after arriving, participate fully in the labour market, and send their children to schools that are not dominated by a single ethnic group. But Goodhart takes the same eccentric approach to the evidence here as he did with the economics. He manages a reasonable summary of the research, which shows that the non-white population is diffusing into previously all-white areas and that, at the same time, many urban areas are becoming ‘majority-minority’ rather quicker than expected – although the number of people from an ethnic minority background who live in areas dominated by their own ethnic group remains small. Most non-whites live in fairly diverse areas; it is whites who don’t. This is generally accepted by geographers and demographers, and isn’t exactly surprising. Yet when it suits Goodhart, he just ignores the facts. Take his reference to ‘the little Somalias … that dot many of our big cities’. The recently released, extremely detailed census data suggest that, even allowing for classification issues, you’d be hard put to find a single ward (each has a population of about ten thousand) anywhere in Britain where more than one in ten of the population identify as Somali.

By comparison, on Chicago’s South Side, something over half a million African Americans live in a contiguous geographical area which is about 95 per cent black. But that doesn’t stop Goodhart making an absurd, some would say offensive, analogy with the US. Talking about Waltham Forest in North-East London, he writes: ‘In America, this is called Sundown Segregation; people mixing during the day but going home to quite separate neighbourhoods.’ ‘Sundown towns’, as the sociologist James Loewen has documented, were places in the US where, before the enactment of civil rights legislation, black people (sometimes in earlier years also Chinese, or Mexicans) were not permitted to remain after dark. I’m not sure which is worse: the irrelevance of this concept to modern Britain; the failure to do the elementary research required to establish the origin of the term; or the ugliness of comparing Waltham Forest to American towns that once displayed signs reading ‘Don’t let the sun set on you, nigger.’

Even worse is Goodhart’s discussion of specific communities where there are very real economic and social problems. I know little about Bradford, so have no firm basis on which to judge his plausible-sounding claims about the Pakistani immigrant experience there: much higher segregation than in London, the dominance of clan politics, the impacts of chain marriage migration etc. A friend in Bradford – a professional, leftish woman of Pakistani origin, working in education – told me that what he has to say is ‘unscientific’, based on ‘cheap anecdotes and quite frankly baloney’. No reason you should take her word for it, so let’s provisionally accept Goodhart’s suggestion that there is a prima facie case that first-cousin marriage is responsible for a higher than average proportion of birth defects among Bradford Pakistanis. He cites some relevant research, but follows it up with assertions which are unsubstantiated, inaccurate and alarmist: ‘Bradford has just opened two more schools for children with Special Educational Needs,’ he writes. ‘On some measures nearly half of all children in the area qualify for special help.’ No source. However, the Department for Education publishes the statistics, and it turns out that in Bradford, the proportion of children who ‘qualify for special help’ is about 21 per cent. Well, 21 per cent is not ‘nearly half’. It is, in fact, only slightly higher than the national average of 20 per cent. And it is significantly lower than in some other, mostly white places. Nationally, the highest figure is 27 per cent, in north-east Lincolnshire. What’s going on? Maybe the locals marry their cousins there too. But I think I’ll restrict myself to saying that this is a complex phenomenon on which I’m no expert. It’s a pity Goodhart didn’t do the same.

Despite this, Goodhart’s take on the triumphs and travails of Britain’s immigrant communities is by far the best part of the book. He has a thoughtful description, for example, of the generally poor economic and social outcomes of Somalis in the UK, ascribing it in part to ‘a British society which has been decent enough to let them in but then too indifferent to help them join in’. At the same time he admits there are signs of progress; and for those of us who believe that the glass is half full, there is no reason to believe that the Somalis are any more doomed to failure than other groups. Indeed, while noting that the Polish experience has been ‘simpler and easier’, he does well to avoid contrasting ‘good’ and ‘bad’ immigrant communities. Almost despite himself, Goodhart ends up painting a relatively optimistic picture. ‘We have come a long way in a short time,’ he writes. ‘A country that less than a hundred years ago believed that it was its right to control the destiny of many “lesser breeds” has now invited them across its threshold and learned to treat them more or less as equals.’

After all this, Goodhart’s policy recommendations come as a damp squib. It’s difficult to disagree with much of what he says about integration, but then very little of it is very new. For example, increasing the allocation of funding for English language teaching for poor immigrants at the expense of translation services was settled government policy five years ago though under austerity the provision for such teaching has gone by the board. More interesting and potentially controversial is the suggestion that the government should actively promote integration in schools, if necessary by means of targets, quotas and other measures that might directly restrict individual choice. In this I agree with him wholeheartedly. It is surprising that this recommendation hasn’t attracted more attention – particularly since the evidence suggests that most of those whose choices would be constrained would be white.

What is completely missing from The British Dream, however, is any sense that Goodhart is prepared to engage with the positive case for immigration, or indeed for openness more generally. This shows in his discussion of immigration policy, on which he has surprisingly little to say. He ends up in more or less the same place as the government, and lacks, just as the coalition does, any good economic rationale for a set of policies that tend to exclude higher-skilled migrants and students. Writing in the Financial Times recently, Goodhart defended the government’s aim of reducing net migration to the ‘tens of thousands’: ‘So if more Britons retire to Spain,’ he argued, ‘more space will be created for Canadian nanotechnologists.’ Precisely. And, as I responded at the time, if fewer Britons retire to Spain, we’ll presumably have to give up on those Canadian nanotechnologists.

What do those of us on the other side of the argument – economic ‘liberals’ – believe about migration? We believe that, for all their problems and failures, markets are usually the best way to allocate resources, and that accordingly, a more rather than less open approach to migration and trade will deliver better outcomes. By this I’m not talking primarily about the short term – filling labour shortages and the like – but rather about the longer term. We do not gain from free trade in, say, cars with the EU because we or the French or the Germans have fixed comparative advantages in the market, so that we produce one type of car better and they another. We gain because trade increases competition between different producers, diversifies the supply chain across the EU, improves incentives for technological innovation, and has all sorts of other difficult to measure but important effects that increase productivity in the medium to long term.

The same is, in principle, likely to be true of immigration. Immigrants don’t just fill specific short-term gaps in the labour market. They bring different skills and aptitudes, and transmit them to non-immigrant colleagues (and vice versa); they can increase competition in some labour markets, giving natives an incentive to acquire certain skills. Immigrant entrepreneurs can increase competition in the markets for particular products. And workplace diversity can increase (or decrease) productivity and innovation. Immigration isn’t just about the movement of labour but the movement of individuals.

There is an emerging body of research evidence on these issues, which Goodhart ignores, but we will never know precisely the channels through which immigration has an impact on growth. Nor will we ever be able to put precise numbers on it, any more than we can identify the contribution of Britain’s history as a trading nation to our current prosperity. But we do know enough to set a clear direction for policy – and it is the opposite direction to that suggested by Goodhart and the government.

Goodhart, who holds the ‘liberal elite’ responsible not only for immigration policy in the last twenty years but also for British politics more widely, describes himself as a ‘post-liberal’. By this he appears to mean that he has a less market-oriented economic policy, and ‘greater respect for “flag, faith and family” social conservatism’. Attitudes to immigration are central to both: Goodhart’s social conservatism seems to mean a strong presumption that the impact of ‘outsiders’ on British society is negative, while his rejection of economic liberalism leads to the view that the impacts of immigration on the UK economy are often negative and, where positive, not worth the downsides.

The trouble is that in order to make his case, Goodhart needs to place the blame for economic and social problems on immigration or immigration policy, where it is unlikely to be the main or even a significant cause. The result is a frustrating book and one that ultimately falls into a trap it tries hard to avoid. Goodhart is careful not to demonise immigrants, individually or in groups. But that doesn’t stop The British Dream being an exercise in scapegoating. That is dangerous for British politics, for public debate, and for policy-making.