Can welfare societies survive mass migration?

May 14, 2016

By Douglas Todd, Vancouver Sun |

Immigration debates can produce bizarre bedfellows, politically and economically.

The traditional polarities of the right and left frequently don’t line up when it comes to immigration. Contradictions abound. Often the self-interest of big business ends up leading to the same positions on immigration as those of left-wing humanitarians.

For much different reasons, the right and left often endorse high immigration rates, even “open borders.” Businesses, particularly real-estate developers and the retail sector, want more new arrivals so their customer pool will grow, and wages will be pressed down.

Many on the left, meanwhile, endorse large-scale immigration because they see themselves as sticking up for those who aren’t fortunate to be born in a country like Canada, which still has some semblance of a social safety net. They also don’t mind that a country’s GDP usually goes up as more people arrive.

Until recently, when Canadians began realizing that the federal government’s policy favouring rich migrants was adding to housing unaffordability in Metro Vancouver and Toronto, most on the liberal-left viewed any criticism of the country’s high immigration policies as xenophobic.

Some of the research from Vancouver’s Fraser Institute, which has a reputation as a free-market-think tank, adds to the ideological head-scratching that can occur when the subject turns to mass migration.

The Fraser Institute has published research papers that find fault with high immigration rates, even while such criticisms have gone against the profit-making strategies of many of the think-tank’s business backers.

One of the Fraser Institute’s most oft-quoted research projects states that the “fiscal burden” of recent immigrants on Canadian taxpayers is $27 billion to $35 billion a year.

The original version of the Fraser Institute study by SFU economist Herb Grubel and Patrick Grady, who has worked as an economist for the federal government, was released in 2011.

The duo updated their study in 2015, with a higher estimate of the “fiscal burden,” which the authors say is caused by “the lower average incomes of recent immigrants, the low taxes they pay and the government services they absorb.”

The Fraser Institute study explores Milton Friedman’s troubling observation that “free” (or “open”) immigration is incompatible with welfare societies, the latter of which are prized more by the left than the right.

Friedman, an adviser to Ronald Reagan and Margaret Thatcher, was not alone in his prediction, however. And it’s now playing out in the mostly Western countries that formally welcome immigrants and refugees.

Friedman’s warning has been especially relevant to generous welfare societies such as those in Britain and the Nordic countries, where many are increasingly resistant to spending tax dollars on providing education, housing, income supplements and medical care to low-earning arrivals from foreign lands.

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