Flight From Fear

What should Europe do about Syrian Refugees?

Photo: Rebecca Harms. Source: Flickr CC.2.0

Over 4 million people have fled the Syrian civil war. That’s over a quarter of the country’s population of 14 million. The vast majority of these refugees are living in neighboring countries—Turkey, Lebanon, Jordan, and Iraq. Recently, over 300,000 have crossed into Europe—especially Germany, Sweden, Armenia, and Holland. Everyone wants to help someone fleeing a war. What are some of the issues that taking in refugees brings?

Source: City Journal

First, refugees put pressure on basic local services—water, sewers, food, health care. Because they often flee with just the clothes on their backs, these folks can’t pay right away for the assistance they receive. In the short term, the host governments have had to budget for greater spending on these items. Sometimes schools have to divide their days—one portion for the native population, one for the refugees.

European location of Syrian Refugees. Source: National Geographic

In the intermediate term, refugees can put downward pressure on low-end wages. Because they came to the host country with nothing, they’re often willing to work for less. This can create resentment. There are also cultural differences that create stress. It’s been reported that Syrian women will accept a smaller dowry than Jordanian women to marry a Jordanian man—straining social norms.

But in the long run, refugees can create a significant positive effects. A recent study looked at the impact of Yugoslav workers on the Danish economy in the 1990s and 2000s. These folks were distributed across the country, and many were low-skilled, lacking even a secondary school education. But instead of starting a race-to-the-bottom in wages, jobs became more specialized and the overall economy grew. A similar thing happened in Florida in the 1980s after the Mariel boatlift.

Refugees have produced crucial technological innovations over the years—plate glass, steam power, and atomic energy. Jewish refugees from Nazism in the 1930s were critical to the Manhattan Project: Edward Teller, Felix Bloch, Enrico Fermi—and of course, Albert Einstein. It’s also well known that Steve Jobs, Apple’s former CEO, was the son of Syrian immigrants to the United States.

Long-term economic effects are often the reverse of short-term effects. In the long run, Europe is facing an economic crisis as its population declines. The more people they can bring in and integrate into their society, the better off they—and the whole world—will be.

Douglas R. Tengdin, CFA

Chief Investment Officer

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