This week, the Fraser Institute published a report called "Immigration and the Canadian Welfare State, 2011". After reviewing census data for immigrants arriving in Canada between 1987 and 2004, the authors conclude that in the fiscal year 2005-06, these immigrants on average received an excess of $6,051 in government benefits over the taxes they paid. The fiscal burden Canada suffers due to immigration is therefore estimated at somewhere between $16.3 billion and $23.6 billion for that year. To resolve this crisis, the Fraser Institute proposes that we end our current immigration system and replace it with a temporary, renewable two-year guest worker visa system for applicants with a valid offer of employment in Canada. Once they are here, loss of employment would result in deportation. After four years of continued employment, these workers would be eligible for permanent immigrant visas, but would never be allowed to sponsor relatives other than spouses and dependent children for immigration.
Here are three things about this report that will give you a good sense of what to expect. They begin with a quote from Milton Friedman from the World Libertarian Conference, one of the authors of the report was a Reform Party MP from 1993 to 1997, and one of the photos used in the cover is credited as "Happy Indian Ethnic" at the back of the report. That Indian ethnic on the cover is smiling because he is stealing your money, White Canada! The Fraser Institute publishes a steady stream of shockingly poorly reasoned reports that get broad and wholly uncritical Canadian media coverage. I wish that I was an immigration policy expert or economist so that I could really take this particular report apart. All I can offer instead are some non-expert thoughts.
Defining the Problem
The heart of the Fraser Institute's report can be found buried in a footnote: "...at the time the social contract guiding the welfare state provisions was adopted, the issue of including immigrants was moot because they had records of economic success that prevented their identification as a group needing net fiscal transfers. Therefore, their arrival and existence were not an issue...The situation is different now. Recently arrived immigrants are a distinct and large group of people who, according to government statistics, have low average incomes and other needs that are covered under the contract."
So given this situation, the Fraser Institute's response is not to ask "why are immigrant outcomes now worse than they were before?" or "How can we help improve immigrant outcomes" but "We must end immigration as we know it." (Entertainingly, the National Post was very critical of the Fraser Institute report and argued that the real way to resolve the issue was to end the welfare state as we know it).
But how can you develop serious policy proposals to resolve the problem you've identified (immigrants appear to now make too little and get too much) when you haven't considered why this is the case? Well, you can't. Because the current report doesn't discuss the seemingly critical question of what appears to have gone wrong in Canadian immigration policy, the reader has to reach back to older documents written by the authors for answers.
In 1991 one of the authors wrote a paper on Canadian immigration warning that "The information about the positive net benefits of non-traditional [non-white, non- European] immigration in Canada are based on sociological studies undertaken when levels were low. This fact gives rise to the problem that if net benefits turn out to be negative after non-traditional immigration has continued for some time, Canadian society has to pay these costs for a long time in the future. The residents causing these difficulties cannot be expelled and reversal of the policies brings benefits only after a long lag, even if the political process makes it possible to have such a reversal. Policies which maintain the traditional composition of immigrants, on the other hand, avoid the risk of having to face the longer run costs." (Grubel, The Economic and Social Effects of Immigration, p. 123)
Similarly, the Reform Party's platform may be useful because one of the authors, Herbert Grubel, was a key Reform Party MP in the early 90s. According to the 1991 Blue Sheet policy proposal, the Reform Party opposed "any immigration based on race or creed or designed to radically or suddenly alter the ethnic makeup of Canada, as it increasingly seems to be."
I wonder if the real purpose of this Fraser Institute report is to provide a scientific-sounding rationale for a return to a version of pre-1967 immigration policy. In 1967 (I think) the current points system went into effect with other immigration regulations which led to the elimination of discrimination based on nationality or race from all classes of immigration. The Fraser Institute proposal neatly side-steps these non-discrimination policies by proposing that this structure be eliminated completely and that the current government role in judging the eligibility of applicants be handed over to Canadian employers. Of course, as Statistics Canada reports, "in a randomized Canadian field experiment, Oreopolis (2008) did find that job applicants with English-sounding names and Canadian experience were much more likely to be called for an interview (all other job and personal characteristics identical) than applicants with Asian-sounding names and foreign experience.” This issue will likely be further exaggerated when non-white applicants aren't even in Canada as they apply to jobs. So, problem solved! The Reform Party Alumni Society and Fraser Institute successfully turn back the clock to a more racist immigration policy.
Building an Argument
Okay, that was too quick and sort of character-assassinationy. Let's take the premise of this report at face value. Let's say that we know that immigrants are struggling, that they are a burden on society, and that the only question worth asking is "how much of a burden are they?" because we don’t actually want to help them at all or tweak the system to fix the problems. To answer this question, the Fraser Institute constructs a simple research study. Figure out how much immigrants get in government services, then subtract the amount they pay in taxes. The resulting number ($6,051 per immigrant or $16.3 to $23.6 billion) is how much of a drain immigrants are on Canadian society.
Unfortunately, we don’t have solid data on either of these two points. So, in the absence of meaningful data, the authors make wild guesses. Of course it is no surprise that the Fraser Institute and Reform Party alumni just skew their guesses to confirm their pre-conceived anti-immigrant conclusion.
(If you don’t realize that the authors are anti-immigrant when you begin reading the report, they helpfully mention on the first page of the introduction that “...the reader should be warned that this paper has a very specific focus and does not analyze a wide range of social and security problems surrounding Canada’s present immigration and refugee policies.” Really, what else is there to say about immigrants other than that they are a financial drain, social disaster and security risk?)
There are a seemingly endless series of baseless assumptions made in the report. The authors assume that immigrants pay only 72% of the general sales taxes of all Canadians because consumer spending is related to average income, which is lower among immigrants. Is this true? Who knows. Do immigrants pay more gas taxes because they are poor and have to travel farther to work? Do they pay more customs duties and air travel taxes because they travel to their country of origin more? Do they pay more user fees for municipal services? We don’t know. Instead of getting into the details, the authors make a broad guess.
[The authors also make lots of other assumptions in this section and I wish someone who was better at this would review these numbers because they make no sense to me. Immigrants seem to pay only 20% of corporate income taxes or 30% depending on what part of the page you are reading. Amounts paid as “property and related taxes” is described as related to total income (72% of those paid by all Canadians) but listed as 41%.]
Guessing how much money immigrants pay in taxes is fun, but guessing how much they receive in benefits is way more entertaining. Right off the bat, the authors exclude debt service payments from the calculations because they “do not provide current services for Canadians”. But the average Canadian that we are comparing immigrants to are the beneficiaries of the services that debt bought (health, education, etc) while immigrants are stuck paying for it without receiving much benefit. So I’m going to add it back in and say that the benefit received by immigrants is 5% that of all Canadians.
The authors assume that immigrants get 100% of the benefits from recreation, culture, and the environment. But this makes no sense if you have ever met an immigrant before. Statistics Canada says that immigrants are less likely to be active in their leisure time and that regardless, the poor are less likely to be physically active during leisure time anyway. And I assume that the poor have much less leisure time because they are working ten jobs simultaneously and forcing their kids to get more degrees than the average Canadian. And immigrants don’t go camping or hiking in Canadian parks, which has Parks Canada freaked out. So I’m going to say that immigrants get about 10% of the benefits from these things than all Canadians.
Protection of persons and property? The Fraser Institute guesses 72% because these things are strictly related to income. But visible minorities evaluate the police services they receive much lower than white Canadians. And (based on this 2004 article) visible minorites are grossly underrepresented within the Toronto police force (and likely police forces across the country). And in fact, Canada’s crime rate is decreasing as non-white immigration increases. So I’m going to say that immigrants get about 2 or 3% of the benefits for police protection than all Canadians and are personally responsible for the declining need for police services.
The Fraser Institute says that immigrants get 100% of the benefits of social services spending, but this includes veterans benefits and pension payments to the retired, neither of which seem to have anything to do with current immigrants. So I’ll revise that number to about 25%. (Hey, I wonder if those veterans were responsible for bombing our immigrant’s home country and forcing her to leave in the first place?)
Immigrants are considered by the authors to receive 100% of the benefits of health services of other Canadians. But that makes no sense either. According to Statistics Canada, the problem with immigrants is that they tend not to seek out health care because of fears related to costs, the ability to communicate, cultural and religious reasons. Also, recent immigrants are in much better health than average Canadians. (Their health gets much worse after a few years, clearly Canada’s fault!). And the majority of the cost of health care comes in the last years of life, but immigrants tend to be much younger than the rest of the population. So a better guess would be 30% of health benefits.
Education is listed as 109%? But more than twice as many recent immigrants already have university degrees compared to most Canadians. They don’t need your stupid education. I’m going with 2% instead.
So the Fraser Institute and Reform Party made up a whole lot of numbers and added them up to argue that immigrants on average receive $6,051 in benefits over taxes paid. That sounds very scientific. It must be based on rigorous analysis. But my more rigorous analysis above has conclusively shown that immigrants on average pay $37,253 more in taxes than they receive in benefits. (Okay, I admit that I made that number up instead of actually doing the math, but I think I’ve shown that the Fraser Institute numbers are completely arbitrary or at least as arbitrary as mine).
Policy Implications
What are the policy implications of this report? There are none.
While the author have an interesting starting point (the recent decline in immigrant earnings) they fail to ask the most basic questions about their topic even given their own absurd premise. Are female immigrants more of a drain on us then men? Are the Chinese worse than the Tamils? Are doctors more leech-like than engineers? Are francophones immigrant ripping us off more than anglophone immigrants? Are phd layabouts worse than the rest? Do immigrants who move west screw us more than those who go east? Are younger freeloaders better than older freeloaders? How am I supposed to know who to hate? And wouldn’t examining some of these questions allow us to actually understand what is happening and develop a meaningful policy in response? Apparently the Fraser Institute isn’t interested in that.
Nowhere do the authors mention that the federal government announced in December that it was cutting $53 million in immigrant settlement funding. Isn’t that relevant to a report about immigration and the welfare state?
Instead, using totally selective guestimation presented as rigorous data, the Fraser Institute proposes a new immigration policy that would create a new, vulnerable and isolated class of immigrants with no way to report abusive bosses (for fear of being deported), with severely restricted avenues to actual immigration and citizenship, and with far fewer rights than other people living in Canada because the Fraser Institute suggests removing their Charter Rights of full legal appeal. Doesn’t the Canadian government have a responsibility to protect workers in Canada from this kind of exploitation?
There is currently fierce international competition for highly skilled professionals including massive amounts of nurses. Telling them that when they arrive in Canada they won’t have basic Charter rights might make us less competitive on the global market. During recruitment negotiations, how helpful would it be to mention the Fraser Institute's argument that their plan will help maintain traditional families abroad because parents, grandparents and other family members won’t ever be allowed to come to Canada with the immigrating relative?
And more importantly, how does the Fraser Institute propose to deal with Canada’s ageing population, (arguably) unfunded social programs and specific labour shortages? The Canada West Foundation just published a report arguing for massive increases in immigration to deal with these problems. I actually gasped and then laughed out loud when I read the Fraser Institute’s analysis and suggestion.
“The most obvious solution to the problem lies in an increase in the fertility rate of Canadians to the level of 2.1 children per women, which is required for long-run stability of the population. Past attempts by governments to increase fertility rates have not been successful, but it is interesting to speculate whether reduced immigration rates would do so. Consider that Canadians of child-bearing age weigh many factors when they decide on the number of children they wish to have. Two of these factors undoubtedly are the cost of housing and concerns about the environment. As noted above, both of these factors are increased by the mass immigration that results from present policies over many years. Therefore, it is possible that reduced immigration would raise the fertility rate of Canadians, and that could lower or even solve the country’s problem of unfunded liabilities of social programs.”
Conclusion
Why is it that all Fraser Institute publications are reported by the mainstream Canadian media as if they are serious policy documents instead of laughable bullshit? Is it a result of what David Simon in the HBO show the Wire seems to describe as the death of serious journalism through financial ruin, media consolidation and a tragic focus on superficiality? Does Canada not have journalists who will sit down and read these reports and think about them before writing about them? Is it just easier to rework news releases into articles instead of reading the entire report critically? Are these reports so ridiculous that they aren’t worth the time of serious journalists?
I guess it doesn’t really matter at this point. The Fraser Institute has already received wall to wall uncritical coverage. Canadians have probably now accepted as a given that immigrants are using too many benefits and not paying enough taxes. This post is more of a long lament than anything else.
I feel better. Thanks for listening. I’m going to go eat some ice cream now.
Here are three things about this report that will give you a good sense of what to expect. They begin with a quote from Milton Friedman from the World Libertarian Conference, one of the authors of the report was a Reform Party MP from 1993 to 1997, and one of the photos used in the cover is credited as "Happy Indian Ethnic" at the back of the report. That Indian ethnic on the cover is smiling because he is stealing your money, White Canada! The Fraser Institute publishes a steady stream of shockingly poorly reasoned reports that get broad and wholly uncritical Canadian media coverage. I wish that I was an immigration policy expert or economist so that I could really take this particular report apart. All I can offer instead are some non-expert thoughts.
Defining the Problem
The heart of the Fraser Institute's report can be found buried in a footnote: "...at the time the social contract guiding the welfare state provisions was adopted, the issue of including immigrants was moot because they had records of economic success that prevented their identification as a group needing net fiscal transfers. Therefore, their arrival and existence were not an issue...The situation is different now. Recently arrived immigrants are a distinct and large group of people who, according to government statistics, have low average incomes and other needs that are covered under the contract."
So given this situation, the Fraser Institute's response is not to ask "why are immigrant outcomes now worse than they were before?" or "How can we help improve immigrant outcomes" but "We must end immigration as we know it." (Entertainingly, the National Post was very critical of the Fraser Institute report and argued that the real way to resolve the issue was to end the welfare state as we know it).
But how can you develop serious policy proposals to resolve the problem you've identified (immigrants appear to now make too little and get too much) when you haven't considered why this is the case? Well, you can't. Because the current report doesn't discuss the seemingly critical question of what appears to have gone wrong in Canadian immigration policy, the reader has to reach back to older documents written by the authors for answers.
In 1991 one of the authors wrote a paper on Canadian immigration warning that "The information about the positive net benefits of non-traditional [non-white, non- European] immigration in Canada are based on sociological studies undertaken when levels were low. This fact gives rise to the problem that if net benefits turn out to be negative after non-traditional immigration has continued for some time, Canadian society has to pay these costs for a long time in the future. The residents causing these difficulties cannot be expelled and reversal of the policies brings benefits only after a long lag, even if the political process makes it possible to have such a reversal. Policies which maintain the traditional composition of immigrants, on the other hand, avoid the risk of having to face the longer run costs." (Grubel, The Economic and Social Effects of Immigration, p. 123)
Similarly, the Reform Party's platform may be useful because one of the authors, Herbert Grubel, was a key Reform Party MP in the early 90s. According to the 1991 Blue Sheet policy proposal, the Reform Party opposed "any immigration based on race or creed or designed to radically or suddenly alter the ethnic makeup of Canada, as it increasingly seems to be."
I wonder if the real purpose of this Fraser Institute report is to provide a scientific-sounding rationale for a return to a version of pre-1967 immigration policy. In 1967 (I think) the current points system went into effect with other immigration regulations which led to the elimination of discrimination based on nationality or race from all classes of immigration. The Fraser Institute proposal neatly side-steps these non-discrimination policies by proposing that this structure be eliminated completely and that the current government role in judging the eligibility of applicants be handed over to Canadian employers. Of course, as Statistics Canada reports, "in a randomized Canadian field experiment, Oreopolis (2008) did find that job applicants with English-sounding names and Canadian experience were much more likely to be called for an interview (all other job and personal characteristics identical) than applicants with Asian-sounding names and foreign experience.” This issue will likely be further exaggerated when non-white applicants aren't even in Canada as they apply to jobs. So, problem solved! The Reform Party Alumni Society and Fraser Institute successfully turn back the clock to a more racist immigration policy.
Building an Argument
Okay, that was too quick and sort of character-assassinationy. Let's take the premise of this report at face value. Let's say that we know that immigrants are struggling, that they are a burden on society, and that the only question worth asking is "how much of a burden are they?" because we don’t actually want to help them at all or tweak the system to fix the problems. To answer this question, the Fraser Institute constructs a simple research study. Figure out how much immigrants get in government services, then subtract the amount they pay in taxes. The resulting number ($6,051 per immigrant or $16.3 to $23.6 billion) is how much of a drain immigrants are on Canadian society.
Unfortunately, we don’t have solid data on either of these two points. So, in the absence of meaningful data, the authors make wild guesses. Of course it is no surprise that the Fraser Institute and Reform Party alumni just skew their guesses to confirm their pre-conceived anti-immigrant conclusion.
(If you don’t realize that the authors are anti-immigrant when you begin reading the report, they helpfully mention on the first page of the introduction that “...the reader should be warned that this paper has a very specific focus and does not analyze a wide range of social and security problems surrounding Canada’s present immigration and refugee policies.” Really, what else is there to say about immigrants other than that they are a financial drain, social disaster and security risk?)
There are a seemingly endless series of baseless assumptions made in the report. The authors assume that immigrants pay only 72% of the general sales taxes of all Canadians because consumer spending is related to average income, which is lower among immigrants. Is this true? Who knows. Do immigrants pay more gas taxes because they are poor and have to travel farther to work? Do they pay more customs duties and air travel taxes because they travel to their country of origin more? Do they pay more user fees for municipal services? We don’t know. Instead of getting into the details, the authors make a broad guess.
[The authors also make lots of other assumptions in this section and I wish someone who was better at this would review these numbers because they make no sense to me. Immigrants seem to pay only 20% of corporate income taxes or 30% depending on what part of the page you are reading. Amounts paid as “property and related taxes” is described as related to total income (72% of those paid by all Canadians) but listed as 41%.]
Guessing how much money immigrants pay in taxes is fun, but guessing how much they receive in benefits is way more entertaining. Right off the bat, the authors exclude debt service payments from the calculations because they “do not provide current services for Canadians”. But the average Canadian that we are comparing immigrants to are the beneficiaries of the services that debt bought (health, education, etc) while immigrants are stuck paying for it without receiving much benefit. So I’m going to add it back in and say that the benefit received by immigrants is 5% that of all Canadians.
The authors assume that immigrants get 100% of the benefits from recreation, culture, and the environment. But this makes no sense if you have ever met an immigrant before. Statistics Canada says that immigrants are less likely to be active in their leisure time and that regardless, the poor are less likely to be physically active during leisure time anyway. And I assume that the poor have much less leisure time because they are working ten jobs simultaneously and forcing their kids to get more degrees than the average Canadian. And immigrants don’t go camping or hiking in Canadian parks, which has Parks Canada freaked out. So I’m going to say that immigrants get about 10% of the benefits from these things than all Canadians.
Protection of persons and property? The Fraser Institute guesses 72% because these things are strictly related to income. But visible minorities evaluate the police services they receive much lower than white Canadians. And (based on this 2004 article) visible minorites are grossly underrepresented within the Toronto police force (and likely police forces across the country). And in fact, Canada’s crime rate is decreasing as non-white immigration increases. So I’m going to say that immigrants get about 2 or 3% of the benefits for police protection than all Canadians and are personally responsible for the declining need for police services.
The Fraser Institute says that immigrants get 100% of the benefits of social services spending, but this includes veterans benefits and pension payments to the retired, neither of which seem to have anything to do with current immigrants. So I’ll revise that number to about 25%. (Hey, I wonder if those veterans were responsible for bombing our immigrant’s home country and forcing her to leave in the first place?)
Immigrants are considered by the authors to receive 100% of the benefits of health services of other Canadians. But that makes no sense either. According to Statistics Canada, the problem with immigrants is that they tend not to seek out health care because of fears related to costs, the ability to communicate, cultural and religious reasons. Also, recent immigrants are in much better health than average Canadians. (Their health gets much worse after a few years, clearly Canada’s fault!). And the majority of the cost of health care comes in the last years of life, but immigrants tend to be much younger than the rest of the population. So a better guess would be 30% of health benefits.
Education is listed as 109%? But more than twice as many recent immigrants already have university degrees compared to most Canadians. They don’t need your stupid education. I’m going with 2% instead.
So the Fraser Institute and Reform Party made up a whole lot of numbers and added them up to argue that immigrants on average receive $6,051 in benefits over taxes paid. That sounds very scientific. It must be based on rigorous analysis. But my more rigorous analysis above has conclusively shown that immigrants on average pay $37,253 more in taxes than they receive in benefits. (Okay, I admit that I made that number up instead of actually doing the math, but I think I’ve shown that the Fraser Institute numbers are completely arbitrary or at least as arbitrary as mine).
Policy Implications
What are the policy implications of this report? There are none.
While the author have an interesting starting point (the recent decline in immigrant earnings) they fail to ask the most basic questions about their topic even given their own absurd premise. Are female immigrants more of a drain on us then men? Are the Chinese worse than the Tamils? Are doctors more leech-like than engineers? Are francophones immigrant ripping us off more than anglophone immigrants? Are phd layabouts worse than the rest? Do immigrants who move west screw us more than those who go east? Are younger freeloaders better than older freeloaders? How am I supposed to know who to hate? And wouldn’t examining some of these questions allow us to actually understand what is happening and develop a meaningful policy in response? Apparently the Fraser Institute isn’t interested in that.
Nowhere do the authors mention that the federal government announced in December that it was cutting $53 million in immigrant settlement funding. Isn’t that relevant to a report about immigration and the welfare state?
Instead, using totally selective guestimation presented as rigorous data, the Fraser Institute proposes a new immigration policy that would create a new, vulnerable and isolated class of immigrants with no way to report abusive bosses (for fear of being deported), with severely restricted avenues to actual immigration and citizenship, and with far fewer rights than other people living in Canada because the Fraser Institute suggests removing their Charter Rights of full legal appeal. Doesn’t the Canadian government have a responsibility to protect workers in Canada from this kind of exploitation?
There is currently fierce international competition for highly skilled professionals including massive amounts of nurses. Telling them that when they arrive in Canada they won’t have basic Charter rights might make us less competitive on the global market. During recruitment negotiations, how helpful would it be to mention the Fraser Institute's argument that their plan will help maintain traditional families abroad because parents, grandparents and other family members won’t ever be allowed to come to Canada with the immigrating relative?
And more importantly, how does the Fraser Institute propose to deal with Canada’s ageing population, (arguably) unfunded social programs and specific labour shortages? The Canada West Foundation just published a report arguing for massive increases in immigration to deal with these problems. I actually gasped and then laughed out loud when I read the Fraser Institute’s analysis and suggestion.
“The most obvious solution to the problem lies in an increase in the fertility rate of Canadians to the level of 2.1 children per women, which is required for long-run stability of the population. Past attempts by governments to increase fertility rates have not been successful, but it is interesting to speculate whether reduced immigration rates would do so. Consider that Canadians of child-bearing age weigh many factors when they decide on the number of children they wish to have. Two of these factors undoubtedly are the cost of housing and concerns about the environment. As noted above, both of these factors are increased by the mass immigration that results from present policies over many years. Therefore, it is possible that reduced immigration would raise the fertility rate of Canadians, and that could lower or even solve the country’s problem of unfunded liabilities of social programs.”
Conclusion
Why is it that all Fraser Institute publications are reported by the mainstream Canadian media as if they are serious policy documents instead of laughable bullshit? Is it a result of what David Simon in the HBO show the Wire seems to describe as the death of serious journalism through financial ruin, media consolidation and a tragic focus on superficiality? Does Canada not have journalists who will sit down and read these reports and think about them before writing about them? Is it just easier to rework news releases into articles instead of reading the entire report critically? Are these reports so ridiculous that they aren’t worth the time of serious journalists?
I guess it doesn’t really matter at this point. The Fraser Institute has already received wall to wall uncritical coverage. Canadians have probably now accepted as a given that immigrants are using too many benefits and not paying enough taxes. This post is more of a long lament than anything else.
I feel better. Thanks for listening. I’m going to go eat some ice cream now.
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