Economics: Predictably, the Irish Ferries affair has generated a substantial backwash. No doubt some of the flotsam and jetsam will surface in the new social partnership agreement in the shape of stern denunciations of unscrupulous employers, Government commitments to strengthen or replace the labour inspectorate, a dollop of placatory rhetoric about union recognition and the like. But, in the overall scheme of things, this is the stuff of sideshows.

The real issue and, it seems, the issue around which the new cleavage in Irish politics is forming is immigration. Do we want to share this space we call Ireland with significant numbers of people from the new EU accession states and others? Or do we want, to paraphrase Paul McCartney, to keep Ireland for the Irish.

Conscious of our own history, one could take a strong moral view on these questions, but in what follows I'll stick in the main to economics.

Probably the most frequently invoked economic argument in favour of immigration is that it is needed to alleviate labour shortages. We don't have enough engineers, IT specialists and construction workers of our own to keep the show on the road, so we must bring them in from the outside.

The notion that we need immigrants to keep the Celtic Tiger sweet has its dissenters. What's the sense, they ask, in pursuing a rate of economic growth if a large proportion of the jobs it creates go to foreigners? What would be the point, for example, in attracting a US financial services company to set up here if most of the jobs it provided were filled by immigrants?

Well, the point might be that the company in question might buy in a substantial amount of service inputs (accounting, legal, security, catering etc) from local firms, might contribute handsomely to the Irish exchequer, and its predominantly non-national employees might spend the greater part of their earnings locally and in doing so, support output and employment in sectors like retailing, leisure and construction.

A more refined argument against immigration is based on the distinction between growth in output (GDP) and growth in output per person. It goes something as follows. The great national project of the last 10-15 years was all about boosting employment and eliminating unemployment by growing GDP, a challenge that has been met with spectacular success.

The main challenge in the years ahead is to raise living standards - that is, to raise GDP per head of population. The faster the population increases, so the argument goes, the harder it will be to meet this challenge. Immigration is obviously a source of population growth, so we should end it or, at least, restrict it.

The influence of economists long since dead and discredited can be detected in this argument. Malthus springs to mind, and his notion of population growth as a burden rather than an asset, as a source of congestion rather than creativity. This kind of thinking focuses entirely on the denominator in GDP per capita and not at all on the numerator or, more especially, not at all on the rich and complex interaction between numerator and denominator.

The truth is that we don't know what the long-run effect of immigration on GDP per capita, or average living standards, will be. No doubt it will depend in part on what qualities immigrants bring with them and how the economy (and society) of which they become part harnesses those qualities. But there are reasons to believe that immigration can have a powerfully positive long-term effect on productivity and living standards.

For readers who would like to be exposed to a wonderfully eloquent articulation of this view, I would strongly recommend Diane Coyle's book Paradoxes of Prosperity. For those who just want to hear the gist of the argument, here goes.

What causes economies (GDP) to grow? Essentially three things: labour supply, investment in physical and human capital, and technological progress.

What causes living standards (GDP per capita) to grow? Well, assuming that labour supply and population move in tandem with each other, which they are inclined to do over the long run, the answer is two things: the amount of capital per head and technological progress. Of these, by far the more important determinant of living standards in the long run is the latter.

What is meant by technological progress? Essentially, what is meant by technological progress is the discovery of new and more efficient ways of combining the factors of production (principally labour and capital) to produce goods and services that people want.

How does it come about? It comes about through the creation, dissemination and application of ideas: new ideas and new combinations of old ideas.

What does this have to do with immigration? Immigrants bring with them different values, experiences and perspectives. They introduce diversity into our everyday lives. They challenge our patterns of thinking and looking at things in a way that we don't challenge each other.

They can help us discover and penetrate new markets (they have already created new markets within this economy). But most of all, they offer the potential for us to exchange ideas, to fuse old ideas into new combinations and to come up with new ones.

They offer not only the possibility of a more colourful, more vibrant and more diverse society but also, ultimately, a more creative and productive economy.

This is, if you like, the big picture, long-run take on immigration. There are, of course, other perspectives that need to be woven into the analysis. The impact of immigration on pay and working conditions is one, its contribution to infrastructural overload is another.

I may return to these in a later article. For today I will end by saying that we should not allow our attitude to immigration to be dominated by the problems that may arise in the short run. Instead, our thinking should be shaped by the potential for immigration to transform our economy and society in a positive direction.

Jim O'Leary lectures in economics at NUI-Maynooth. He can be contacted at jim.oleary@nuim.ie