Introducing Modern Migration Theory (MMT)

Modern Migration Theory (MMT) is a new concept introduced by the same proponents of the original Modern Monetary Theory. This new MMT suggests that increased migration, leading to higher housing demand, does not necessarily cause inflation (house price growth). Advocates argue that most of these migrants will either build new homes or live in densely populated conditions. However, this theory is fundamentally flawed and ignores key economic principles.

Alarmingly, proponents of this new MMT often use the race card to stifle debate, invoking its powerful influence to shut down opposing views. Yet, the reality is that it doesn’t matter who arrives or where they’re from; it’s about people and houses. When demand outstrips supply, prices rise, impacting everyone, regardless of their background. The most significant harm falls on the lowest income earners, who suffer the most from housing affordability crises. This issue is not about race but about ensuring adequate housing for all. Ignoring these fundamentals will only exacerbate economic and social issues, harming the very people this theory claims to protect.

Key Criticisms of Modern Migration Theory:

1. Underestimation of Supply Constraints:

? Just as the original MMT underestimated inflation, Modern Migration Theory underestimates the impact of limited housing supply.

? When demand outstrips supply, prices rise. This fundamental economic principle does not change, irrespective of the theory.

2. Ignoring Real-world Housing Dynamics:

? The assumption that most of the migrants will help build new homes or live in overcrowded conditions is overly optimistic and unrealistic.

? In reality, many migrants compete for existing housing, driving up prices and rents due to insufficient new construction.

3. Economic and Social Implications:

? Ignoring the supply-demand imbalance can lead to housing affordability crises, social tensions and economic instability.

? Overcrowded living conditions can strain infrastructure and public services, leading to broader societal issues.

4. Historical Evidence:

? Historical data consistently shows that increased demand without corresponding supply growth results in higher prices.

? Examples from various global cities illustrate the consequences of housing shortages exacerbated by migration.

The MMT Conviction and its Flaws:

1. Misplaced Optimism:

? Proponents of Modern Migration Theory believe that the influx of migrants will naturally balance housing supply and demand.

? This optimism disregards the complexities of housing markets and the time needed to build new dwellings.

2. Selective Interpretation of Data:

? Advocates often highlight isolated cases where migration did not lead to immediate price increases, ignoring broader trends and long-term effects.

? They overlook other contributing factors, such as government policies and economic conditions, that may temporarily mitigate price pressures.

3. Appeal of Simplified Solutions:

? The notion that migration can solve housing issues without leading to inflation is appealing but simplistic.

? Policymakers and the public may be drawn to this theory as a quick fix, ignoring the deeper structural challenges.

Conclusion:

Just as the original MMT’s flawed assumptions about money creation led to economic instability, Modern Migration Theory’s misconceptions about housing demand and supply are likely to result in higher house prices and broader economic issues. The fundamental principles of supply and demand remain unchanged, regardless of new theories. We must recognise these realities and address housing challenges with practical, evidence-based solutions rather than hopeful but unrealistic concepts.