The Sixth Estate

The Fraser Institute has, you may have heard, weighed into Canada’s immigration debate with the release of a new report claiming to calculate the “true cost” of immigration. Unsurprisingly, they think that immigrants are a burden on Canada’s social welfare system (to the tune of $23 billion a year), and despite the fact that they can usually be found arguing for the wholesale dismantling of that system, in this report they come out as its defenders. As usual, the cheerful coverage in the media is a strong indication that nobody has actually bothered to read the report. Even the National Post shied away from actually endorsing the report’s conclusions, although that didn’t stop them from publishing a positive article about the report.

Now, as usual, I need to begin my coverage of the Fraser Institute with a few disclaimers. Before you crack open a Fraser Institute report, it’s important to remember that this is a group funded by the same wealthy American backers as the American Tea Party, which has taken tobacco industry money to claim that cigarettes don’t cause lung cancer, and which has an editorial advisory board which supposedly vets papers like this week’s Immigration and the Canadian Welfare State, even though six of its members are dead (one of whom the Fraser Institute appears to believe is still alive, zombie-like), and a seventh just happens to be the co-author of this paper. I have warned the anti-immigration movement about jumping into bed with the Fraser Institute before.

The headline finding of the report is that the Fraser Institute says, after accounting for the taxes they pay in, our social welfare system pays out about $23 billion a year to cover the burden imposed by immigrants. Slightly less play has been given to their proposed solutions, aside from the headline proposal in that section, which is to refuse entry to anyone without a job offer in hand. Their second proposal is a hideous monstrosity that sounds like something we’d expect from the Soviet Union, not a supposedly libertarian think tank: they propose that the government set up a series of handsomely paid private companies to spy on all immigrants and produce a massive database of residence information, employment information, absence-from-work data, and just about everything else they can think of.

How does one go about calculating what immigrants pay into and take out of the public system? It’s actually surprisingly difficult to calculate. The reason for this is because the Fraser Institute is a private group and has to make approximations on the basis of limited public information (thanks to the fact that the government hasn’t yet decided to set up the institute’s proposed Operation Big Brother). At the end of the day, though, there’s one glaring problem in this whole report — which only becomes apparent if you actually bother to read it. According to the Fraser Institute, and even before trying to correct for their sloppy math (more on that in a minute), the Fraser Institute actually says that immigrants make fewer demands on the social safety net than other Canadians. The entire reason that they “cost money” is because, on average, they’re poorer.

If you read further, you discover that much of the basis for the rest of the fluff here, but especially the conclusion ($23 billion a year!), is an ad hoc, back-of-the-napkin series of estimates printed on p. 9, in which the Institute “assumes” the ratio of public services that immigrants receive compared to other Canadians. It rapidly becomes apparent that many of these numbers are probably bunk. For instance, the Institute claims that schooling immigrant children is 150% as expensive as schooling Canadian children, and that immigrants receive 72% as much benefit from the police and the courts as the average Canadian. Other costs pose similar problems. For instance, I would expect that new immigrants, being primarily adults with older children, are actually going to cost less in healthcare terms than the average Canadian, into which is built the first year of life (a high cost) and the last 10 to 20 years of life (the highest cost of all).

Their method of calculating how much taxes immigrants pay is a little better (since it requires fewer assumptions) but still occasionally dubious. The Fraser Institute says that immigrants hold just 41% of the average Canadian investment portfolio, but then they attribute to them only 20% or 30% of the corporate income tax profile, based on the unexplained “assumption” that immigrants don’t like to buy shares in corporations. I say 20% or 30% because their chapter says they counted 30%, but the math formula says they actually only used 20%. Plug it in, and you discover that’s a $650 million mistake right there. Sloppy work, Fraser Institute! That’s what happens when peer reviewers have been dead for 20 years!

Now, none of this would change the general point, which I happen to agree with, which is that poor people in general — and immigrants are more likely to be poor people — pay less into the government than rich people do. That’s how taxation works in a fair society. But it’s worth going over anyways in order to illustrate that the “$23 billion” figure is just a number picked out of thin air, on the basis of tenuous assumptions. If I tweak those assumptions just a bit, then the “real cost” of immigrants might turn out to be just $15 billion. Or it might be $30 billion. Or zero. Or $40 billion. At the end of the day they’re all just estimates. Who’s to say whose estimates are the best ones? We won’t know, until we create the Big Brother network the Fraser Institute wants to create. Which won’t be cheap, I can assure you.

There’s another point which goes unstated in all of this, which is that there are really not that many “average” Canadians out there. The same statistics which appear to make immigrants a burden on the social welfare system also make all lower-income people a burden on the social welfare system. It’s not surprising that a disproportionate number of immigrants start at the bottom of the income ladder and work their way upwards. That’s the way it’s always worked. Some people actually consider this a good thing. Immigrants are in trouble with the populists no matter how they get in: either they’re poor, uneducated, and a burden on our welfare system, or they’re affluent, well-educated, and they’re taking away all the good professional jobs that should be reserved for hard-working Canadian boys and girls. In this case, the Fraser Institute is immigrants for being poor.

So what? some people will say. And they may have a point. But all of this is coming from an institute which is normally an ardent supporter of the elimination of borders… at least where money, trade, and rich investors are concerned. It’s worth asking exactly why the Fraser Institute thinks that our money, our goods, and our wealthy corporate executives should be allowed to float around the world at will while actual populations of citizens remain trapped behind the borders that the Institute claims are a serious detriment to human development. Of course, basic economic theory says that in any given system, the balance of power rests with the mobile people — they have to be offered at least enough that they don’t just pick up stakes and leave. So the upshot of a system that allows the free movement of corporations but not the free movement of poor people is precisely what we’re now seeing in Canada and elsewhere around the world: a frantic race to the bottom in terms of environmental regulations and taxes on the rich, all of which is ultimately paid for by the removal of services from our own poor people.

It’s also worth pointing out that the immigration system “helps” Canadians in other ways that don’t show up in these statistics. For instance, the government uses a variety of unskilled foreign resident and immigration programs to subsidize corporations and affluent Canadians through wage-slavery. The unfortunate Filipino woman who will likely be filling this position, for instance, will apparently be expected to work a minimum of 50 hours per week taking care of five kids and housework, all at minimum wage (there is no mention of overtime), out of which will be deducted the cost of food, a bedroom, and a bathroom “shared with the kids,” all at unspecified cost.

I say all this despite being perfectly happy to admit that in the short term immigration probably really is a net cost to society. We allow it to happen anyways because in the long run we believe it is a net benefit. That was the same policy which was in force when my various European ancestors came to this country in search of such things as artificially inexpensive farmland (most of which turned out be junk after all… oops!) and a ticket away from military conscription. All of this they did not only without a passport but without moving through a points-based assessment. That’s a good thing, because they had three things that would have been serious strikes against them: they weren’t British subjects, they weren’t literate, and they weren’t even fluent in either official language. How things have changed, eh?