During his recent state visit, Nicolas Sarkozy joked, proudly, that London is now the seventh largest French city by population. This was the same Sarkozy who earned a reputation, while Interior Minister, for defining the difficult French children of North African immigrants as "scum". French workers in the City are, of course, a different variety of migrant.

In the United States, meanwhile, three individuals aspire to the presidency of the original melting pot. Amid the new protectionism, many want to know what the candidates would do about "illegals" and about North America's free trade agreement (Nafta). Some highly sane people want a fence along the length of the Rio Grande/Bravo to keep the less-white out. Meanwhile, Nafta has thrown an estimated 1.6 million Mexicans off the land.

Like generations before them, they have headed north. Perhaps they have heard the rumour that Los Angeles would cease to function without illegal labour. But the agreement that forced them off their farms is also held responsible for the economic pressures facing the indigenous population. There is hostility. The ethos that shaped America is exhausted.

Such an ethos, if it ever truly took root, is having a thin time in these islands, too. Anecdotal reporting suggests it isn't hard to find people with family roots in the Caribbean, the Indian subcontinent or Hong Kong prepared to testify that Britain is "full up". No more immigrants with strange tongues and alien habits are welcome or required. According to most surveys, the white majority could not agree more.

The majority, blessed with historical amnesia, always agrees. Who could welcome a poverty-stricken mob embracing a weird and offensive faith, breeding like rabbits, stealing our jobs and disturbing social cohesion? But that would be the Irish, after a bit of bother with the tatties, a few generations back. The least they could do was dig the odd canal, build a railway network, provide hydro power and produce descendants capable of forgetting the meaning of emigration.

Immigration, meanwhile, is but rarely achieved without hysteria, abuse and exploitation. The subject has been taxing the creativity of the tabloids since the reptilian Enoch Powell saw a chance to combine racism with a classical reference. His admirers will tell you he intended no offence. Powell merely delivered the same bloody, foaming speech twice in case anyone failed to notice.

Governments since have appeased or exploited the prejudices he fomented. After four and some decades the Thames is not, apparently, a river of blood thanks to black Britons, but why quibble? New Labour, never to be outflanked, has surrendered each of decency's weapons, one by one, in order to make immigration (and itself) "tough". Playing to the mob, it recruits for the mob. By failing to challenge myths, it gives credence to fiction. Such has been the moral slippage, it is now impossible to find a minister prepared to say, quite simply, that immigration of itself is not, in fact, a problem. Instead, these people try to smuggle a shred of self-respect past the tabloid border controls. Nothing fancy. "Say what you like about immigration," says this year's Home Office who-he, "but it's good for the economy." Prejudice can be bought off, it seems, with that single claim.

If "good for the economy" means revolting exploitation, there is an implicit response: the complainants can go home. Is that what is meant by wealth creation? In a letter to one of the London papers this week, the Rev David de Verny, ecumenical chaplain with new-arrival communities in south-east Lincolnshire, wrote of the feebleness of the Gangmasters Licensing Authority. He said "financial, physical, emotional and sexual abuses of migrant workers are rampant in our country", adding that the problem is no longer confined to farms: "There is hardly a hospital, care home, restaurant or factory without gangmaster involvement."

Which is it: good for the economy, stealing our jobs, or both? This is not, in any case, the immigration problem preoccupying ministers or the tabloids they read assiduously. A points system for migrants - a kind of human culling - is the latest novelty, the better to extract maximum economic benefit by blessing only graduates and the like with entry to these welcoming isles.

What happens, though, when you feed the beast? Is it satisfied with "good for the economy" and "toughness"? Not for as long as the House of Lords, august and unelected, not in the least conservatively inclined, still stands. Let a wealth of experience and intellectual rigour flow. "Good for the economy! Foreigners? Piffle."

I summarise slightly. The Lords Economic Affairs Committee, with former chancellors Lawson and Lamont on board, concludes that, far from contributing £6bn to the economy, immigration has been largely neutral in its effects. This is short of a tabloid catastrophe, but the committee does claim that migrant labour has had a "negative impact" on the low-paid. It also believes that GDP is an "irrelevant and misleading" measure, and that house prices will go up if immigration is not capped as, by coincidence, the Tory party demands.

Let's summarise again. The committee appears to have decided that the free flow of labour is, all of a sudden, a bad idea. Goodbye EU. The committee, meanwhile, does not appear to imagine that a government could simply declare wage exploitation illegal. It further makes the claim that house prices will rise by 10% if population inflows continue "unchecked", but only - sound economics - after 20 years. (And only if you ignore the state of the housing market.) Gordon Brown has rejected a crude immigration cap, and that counts as something. Yesterday he repeated the "good for the economy" claim, though he failed to add that the paradigm Pole appears to be heading home as his domestic economy expands. In fact, the "negative impact" the peers fail to address lies in an actually serious thought. Forget their presence: what economic effects might there be if "they" all decided to quit?

Danny Sriskandarajah of the Institute for Public Policy Research posed the question recently. He said what industry and agriculture already knew: "That tap of Polish workers is going to run dry. And I fear that policymakers haven't quite grasped the immense challenge that might bring, because if the Poles don't do the jobs, who will?"

At the end of last year, Scotland's Demography Research Programme, embracing five universities, said that "in-migration" stands between this small country and absolute population decline, with all that implies. Yet here was Lord Lawson yesterday: "The increased size of the economy is neither here nor there if it doesn't bring increased prosperity."

I do not recall that as a lesson of the Thatcher years. I do not remember GDP being declared irrelevant when Lawson was in No 11, or much fuss over the affordability of housing. Never mind. Eastern Europeans were not scapegoats in those days. The French are in London, just as Britons are in Paris, because they are EU citizens. Others come because they need and want to work: why else would anyone bother? And Britain, if memory serves, colonised half the world by "working abroad".

The point is this: in kicking away the economic prop to the government's last, pitiful defences, the Lords allows open season. The economic argument was all that stood between this Britain and outright xenophobia. Now New Labour can fight back, or it can fold. What are the chances?