Migration statistics: our biggest weak spot
– Angel Gurría is Secretary-General of the Organization for Economic Cooperation and Development; Nancy Birdsall is President of the Center for Global Development. The views expressed are their own. —
All financial crises end. The question is not if we will recover, but how we can build a resilient global economy to speed and bolster that recovery. While many immediate dangers remain, now is the time to look beyond the exigencies of today.
We must take a hard look at weaknesses in the international system that might stand in our way as we rebuild. There are several, but we take this opportunity to highlight one weakness in our ability to build a resilient global economy for the future: the inadequate state of comparable data on international migration.
This is our biggest weak spot on globalization. While many countries collect and publish detailed data on who legally enters or leaves their territory, they do not do it in the same way. In consequence, it is difficult to know clearly and to compare across countries how many persons immigrate and emigrate, for how long and for what reason. Strangely, it is much easier to get a good picture of global movements of textiles and Treasury Bills than global movements of human beings. Vast disparities in income per head between countries mean that small changes in labor mobility may have large effects on the global economy. But we cannot begin to manage such changes well if the community of nations is not counting even legal migrants in the same, systematic way.
The main obstacle to good statistics is not that labor mobility is such a hot-button political issue. That would tend to raise interest in better data. Rather, the main obstacle is that statistics are a classic “public good”: the benefits are generalized, but the costs are localized. Everyone would gain from better statistics, but the individual governments that must bear the cost of compiling them have competing priorities. Result: decades of international recommendations for better and more comparable migration data have gone largely unheeded. The Organization for Economic Cooperation and Development (OECD), the United Nations, the World Bank, and many others have made great strides towards compiling better public global data, but much more is needed.
That is why, last year, the Center for Global Development in Washington convened a blue-ribbon commission to tackle this issue. It was co-chaired by Patricia Santo Tomas, a former cabinet minister of the Philippines and current chairwoman of the board at the Development Bank of the Philippines, and Lawrence Summers, a Professor at Harvard University prior to joining the Obama administration. The commission brought together a small, stellar group of some of the world’s top experts on migration data. It asked the group to name five ways to improve international migration data in the short term, within existing institutions, at the lowest cost.
The resulting report, Migration Counts: Five steps toward better international migration data, starts with the simple recommendation that every census on earth include a small number of questions relevant to migration. These include, “In what country were you born?” Answers to this simple question, asked in every country, can be a powerful tool in systematically tracking all types of international movement. The 2010-11 round of censuses is already beginning, but this basic question is still not even asked in many countries where migration is important and growing—including Japan, Mexico, Korea, the Philippines, and Egypt.
Bank rally ready to be marked-to-market
– James Saft is a Reuters columnist. The opinions expressed are his own –
U.S. bank operating earnings are going to have a hard time outrunning credit losses, making the massive rally in bank shares look ready to be marked-to-market.
A series of positive statements about profitability in the early part of the year from major U.S. banks, notably Bank of America, Citigroup and JP Morgan helped to spring a rally in the beaten down sector, as investors bet that with government assistance they could earn their way out of their troubles.
The KBW bank index has enjoyed a blistering rally, rising 51 percent from its March 8 low, though it is still down almost 40 percent from where it ended 2008.
To be comfortable with that, you have to believe two difficult things; that investors will value the earnings banks are now making as if they were sustainable and that banks won’t be swamped by credit losses and potential forced dilutions of shareholders.
“We are unconvinced that the banks have turned a corner,” FBR Capital Markets analyst Paul Miller wrote in a note to clients. “Investors who believe that the recent financial rally is here to stay expect that most banks will remain profitable.
We expect that profitability at these banks will be driven by favorable fixed-income trading revenues, as well as mortgage banking revenues.”
Reality, yes… lets do a ‘realistic’, if somewhat cynical tour of the process of origination before the crisis: the Borrower pops up at a Broker, full of tales of secure income and overtime and bonuses. It is opportunity city – but… the Broker knows that in spite of this, the application will not fly with the Packager. Besides, he gets paid his commission, regardless of the repayment behaviour of the Borrower. So the Broker ‘helps’ out by oiling the gears, so to speak. After all, the Broker isn’t in this game for love. So we add a zero here, subtract a one there – and send it off to the Packager.
The Packager takes one look at this application, shakes his head… this won’t fly with the Originator. Better ‘package’ this up a bit, make it a more attractive proposition, so we delete this, add that – after all, the Packager isn’t in this game for love… and he gets paid his commission regardless of the repayment behaviour of the Borrower. Sell, sell, sell… right? And off to the Originator.
Now, at the Originator, the Underwriter has to review this application, along with 70 others before knock-off time. ‘Better hurry then. Yes, it all looks ok… I’m sure the Packager, and the Broker and the Borrower wouldn’t embellish on a mortgage application, would they?’
If we do not find a way of changing the process described above, it won’t be long before we see Ninja mortgages again. You remember the term, don’t you? No Income, No Job Application. And there, you wondered how it was possible for these to occur.
Without change, there will be no foundation for trust. Which means that any Securitisation Vehicle that is constructed on such a portfolio, will fail to attract investors (add to that, a small trust issue with the ability of Rating Agencies to rate).
To get the ball rolling again, we need to find a way to eliminate the possiblity of deceit. Maybe we should come up with a solution whereby all the intermediaries are paid their fees over a period of time, based on repayment performance. That’ll remove a number of barbs from the origination process, and we all can live happily ever after.
“Implementation of all of the Commission’s recommendations will require international collaboration and national support” I suspect is where this ideal will succeed or fail.
I’m not entirely convinced that the various governments around the world will collaborate and at least in the UK the government will need to rebuild it’s credibility to get national support.
I’m sure there will be lots of people who will look with suspicion for ulterior motives behind a political system that has blotted it’s copy-book and wants information on your ethnicity.
(I left the country I was born in, Australia, when I was 1.5 years old, and have lived in quite a few different countries for forty something years, so how would that fit in? My mum was born in the Argentine and has lived in many different countries, my dad was born in the UK and has lived in many different countries… although I must admit that possibly wouldn’t be the experience of the majority of the world’s citizens. I’m not too worried by say the US, UK wanting my ethnic info, but what about in say 15 years time when a different world may exist? Would I want an Adolf Hitler type leader having my ethnic info?)