South Africa is not unique. The problems of violence and discrimination against immigrants is everywhere, and everywhere it has the same causes.

In Europe and the US they wrongly call it racism. Germans hate their Turkish immigrants. The British have a problem with Pakistanis and West Indians. The Dutch dislike Moroccans, the Irish hate the Poles and the French fear the Algerians. Americans get highly emotional about the supposed problem of Mexican and other Hispanic immigration.

In most of these cases, it is called racism, because it happens to involve coloured people in predominantly white countries. The issue is clouded by cultural differences and the belief that crime is caused by immigrants.

In South Africa, we cannot call it racism, because our own population – predominantly black – reacts against immigrants from other African countries, who are also black. So we call it xenophobia instead.

Using these terms disguises the root of the problem. Very few people – not counting countries that have recently been at war with each other – genuinely harbour an irrational hatred of foreigners or other races. If it was a simple matter of not hating Malawians or Zimbabweans, the problem wouldn't even exist. Hating another for merely being from a different country is irrational on the face of it. Making that hate dependent on whether or not such a person has an official permit from the government to be in the country is downright absurd.

What is termed xenophobia in South Africa, or racism in Europe and the US, has a perfectly rational economic basis.

The problem is this: Citizens believe that foreigners partake of services and opportunities to which citizens themselves are entitled. When citizens feel hard done by because their government is failing to deliver social services, they get angry. When faced with this anger, public officials who fail in their duty find it easy to deflect it by making scapegoats out of foreigners. Politics ends up contributing to xenophobia instead of leading communities away from hatred and violence, and there is little doubt that local politicians in South Africa are implicated in whipping up the mobs.

Xenophobia is an issue born of welfare-state policies. If the government is expected to provide social services of all kinds, citizens who feel themselves inadequately served by their government – or worse, are bitter because they paid taxes for those services – will naturally rebel against interlopers who claim a share of such benefits.

If foreigners who entered a country, be it legally or illegally, were not able to take advantage of these services, few citizens would have cause to resent their presence.

Once communities feel that foreigners leech off the state's limited ability to provide social services, it is not much of a stretch to begin disliking them for other reasons. They compete with local shopkeepers when they open shops. They compete with local labour for jobs. They have different customs, different languages and different religions. To compound the mistrust, a few among them will become involved in crime.

In a free economy, competition from foreigners would benefit society as a whole. This is a detail people easily overlook when they need someone to blame. If the foreigners in question were not able to sell products more cheaply than competitors, they wouldn't be in business. If they are in business, it stands to reason that customers – the broader society – feel they benefit from better quality and lower prices. If foreigners are not able to offer better labour and demand lower wages, or both, employers wouldn't hire them, and their customers – the broader society – would not benefit from having more goods and services produced at less cost.

In all manner of ways, immigration contributes to a society, and the better the society performs, the more it will attract immigration. Foreigners brings with them new ideas, fresh genes, more competition, a stronger consumer economy and more people who labour to produce things for everyone else. The most prosperous large state in the world, the US, was founded upon exactly this approach to immigration.

This is true, however, only if new arrivals are required to purchase or rent their own houses, have no option except to provide for their own welfare by working productive jobs and are required to pay via taxation for whatever social services are offered by the state.

When the expectation is that government should provide free social services, and even jobs, immigrants are viewed as threats rather than assets to society.

Besides welfare-state idealism that even the rich countries of Europe cannot afford, the most serious cause of xenophobia is an economic policy that results in high structural unemployment.

When production is heavily taxed, when restrictive licences are imposed on entire industry sectors, when bureaucracy heaps thick layers of cost and delay on economic activity and labour law makes hiring and firing very expensive, high unemployment is the result. In the absence of this unnecessary friction, an economy will naturally expand as labour is absorbed into the productive companies that successfully meet society's demand for goods and services. And when most everyone is employed, there is no need to feel resentment towards immigrants who fill jobs that locals cannot, or will not, do.

Besides the economic argument, there's a political philosophy point to be made about xenophobia. In our more high-minded moments, we declare that all people are equal and entitled to basic human rights. This means we should recognise that all people, no matter the accidents of their birth, are equally entitled to their own lives, their own liberty, their own property and the fruits of their own labour.

The modern, free, democratic state, founded on the principles of human rights, has no right to infringe on the freedom of movement of any class of individuals, any more than the apartheid government had the right to use the pass system to regulate the movement of migrant labour, or the Soviet Union had the right to build a wall to keep its citizens in  or the US has the right to build a wall to keep foreigners out.

If we believe in individual freedom, then we should believe in free markets and free immigration too.

To eradicate xenophobia, our government should address the economic problems that cause it. Lack of service delivery, the failure of taxation to pay for it and blaming foreigners for the failures of public officials is only the top layer. Below that there is the sense of entitlement that views economic goods such as housing and utilities as the unearned right of citizens, rather than property that anyone should rightfully earn through productive work. Underlying that is an even more troubling problem: That our own citizens are not prepared to compete with foreigners on an equal footing. Does our society deserve worse from its own people than what foreigners can deliver? Are we so inadequate that we really cannot compete with others in the global village? Is our only option to exclude them at the point of a gun or the blade of a panga?

Worldwide, in rich countries or poor, the evidence is that xenophobia is an unavoidable consequence of welfare state policies. Foreigners who leech off unearned benefits will, inevitably, be hated for it.

If we wish our fellow-citizens would welcome foreigners and treat them kindly, it is time we recognised that this will only happen if those foreigners, like us, are required to work for their own living instead of relying on the state for handouts.