Grubel: Canadians are right to worry about immigration levels 

While I disagree with Grubel on many of his points and overall approach, he is right on the negative impacts and externalities of current and projected high levels of immigration.

His proposed solution, essentially only admitting economic class immigrants with a job offer is completely unrealistic (what government would stop family reunification, given the impact in ridings with large numbers of immigrants, or completely stop refugees, which is practically and legally impossible). While sidestepping the numbers questions, a column a few years back referenced 50,000 if I recall correctly.

And Leger is only one poll and its question phrasing, as it often is, was designed to elicit this response:

Canadians are increasingly worried about immigration. A recent Leger Poll found that 49 per cent of us think the federal government’s new target of 500,000 immigrants a year is too many, while fully 75 per cent are concerned the plan will result in excessive demand for housing and social services. For his part, the immigration minister, Sean Fraser, tells us we need not worry: immigrants themselves will provide the labour needed to build the housing stock they’ll need.

The majority of Canadians have always welcomed immigrants and believe they benefit the economy and themselves. What worries them today is the prospect of mass immigration that they believe the housing market cannot absorb without much higher prices. They know the minister’s soothing reassurance is not supported by experience. Past immigration did increase the labour force but did not prevent high housing costs. Excessive regulations and rent control are the main reasons housing is so expensive, not a shortage of labour.

Immigrants not only add to the demand for housing, they also increase congestion for a wide range of public services: doctors, hospitals, schools, universities, parks, retirement homes, and roads and bridges, as well as the utilities that supply water, electricity and sewers. In theory, the supply of all these things could be expanded reasonably rapidly. In practice, expansion is slow. But the main reasons for that are, not a shortage of labour, but inadequate planning, insufficient financial resources and, as a result, construction that lags demand.

The case for keeping annual immigration at traditional or even somewhat lower levels rests on more than the effect on house prices and public services, however. Immigration also depresses the wages of low-income workers, which results in greater income-equalizing transfers and the higher taxes required to pay for them. It also reduces employers’ incentives to adopt labour-saving technology, an important source of growth in labour productivity and wages, and it allows employers to avoid the cost of operating apprenticeship programs to train skilled workers.

Japan’s widespread success in using robots to deal with labour shortages caused by its aging population illustrates what could be done in Canada. In Germany employers operate apprenticeship programs to train skilled workers in the numbers industry needs. In this country, such programs could relieve the shortage of skilled labour while benefiting people already here, rather than new immigrants brought in specially to take highly paid skilled jobs currently going asking.

Despite the Leger numbers suggesting many Canadians have concerns about big increases in the rate of immigration, the debate about it tends to be one-sided. We hear from the many groups that benefit from mass immigration: employers, immigration lawyers and consultants, real estate developers, political parties that traditionally do well in immigrant communities, idealists who want us to “imagine there’s no countries” and so on.

On the other side, the Leger numbers suggest, is a majority that is not at all opposed to immigration in principle but begins to inform itself on the subject and maybe even become politically active only when the costs become so large they can’t be ignored any longer.

In Switzerland during the 1970s an economic boom led to labour shortages and immigration was liberalized. It turned out that the need to produce housing infrastructure and public services for these immigrants actually worsened the labour shortage. The silent majority of Swiss citizens organized and took advantage of the opportunity to get government policy changed by demanding a public referendum that ultimately ended the liberal immigration policy.

In Canada, changes in policies come through Parliament and the election of politicians. Numbers like those in the Leger poll may begin to suggest to politicians that they can increase their election chances by catering to the majority who would prefer somewhat reduced immigration but also a fundamental reform of the system currently used to determine the number and characteristics of immigrants.

Such a reform would put greater emphasis on market forces rather than politicians and bureaucrats in setting immigration levels. Immigrants would be admitted only if they possessed a formal offer of employment in Canada that paid at least the average earned by workers in the region where they would be employed.

Under this system, employers’ self-interest would ensure that workers would have the skills and personal characteristics required for success on the job. The requirement for minimum pay would prevent floods of immigrants competing with Canada’s low-wage workers and ensure that those who did come had the income needed for a life free from the need for public subsidies.

Worrying about immigration is not enough. Only the election of politicians committed to this kind of reform will restore mental peace.

Herbert Grubel, himself an immigrant to Canada, is an emeritus professor of economics at Simon Fraser University and a senior fellow at the Fraser Institute.

Source: Opinion: Canadians are right to worry about immigration levels 

Herbert Grubel: Canada should not open its doors to the world

The contrary view to Corcoran (Terence Corcoran: Open our doors to the world). The Grady/Grubel study he refers to have been effectively countered by Pendakur (Fiscal Effects of Immigrants in Canada, Fiscal Effects of Immigrants in Canada):

Fifth, the most important difference between modern Canada and when previous waves of immigrants entered this country is the existence of the welfare state. In the absence of its universal social benefits in the past, only healthy immigrants with strong work ethics, drive and skills came to Canada. Under present conditions, potentially many immigrants would not possess these qualities and impose heavy fiscal burdens on our welfare programs and ultimately bankrupt them. It is for this reason that Milton Friedman, one of the world’s most ardent advocates for human and economic freedom concluded that, “The welfare state and free immigration are incompatible.”

The problem identified by Friedman has been quantified in a study by myself and Patrick Grady, in which we found that the average incomes and tax payments of recent immigrants (documented by Statistics Canada) are much lower than those of the average Canadian and that the immigrants consume roughly the same amount of government services as the average Canadian. The difference between the taxes paid and services consumed by the average recent immigrant equals about $6,000 annually. Given the total number of these immigrants, the annual fiscal burden on Canadian taxpayers comes to about $30 billion.

Sixth, immigrants in large numbers cause a substantial redistribution of income, decreasing the incomes of workers and increasing the income of employers. Drawing on the basic results of a study of the redistribution effect in the United States by Harvard University Professor of Economics George Borjas, in Canada the decrease of the annual income of labour is $40 billion and the gain of employers is $43.5 billion, resulting in a net gain of $3.5 billion for the latter. This gain is called the immigration effect and is due to increased opportunities to trade.

Advocates for free immigration make much of this gain but the data show that it is very small relative to the redistribution of income. These advocates also laud the increase in Canada’s aggregate national income resulting from the immigrants’ economic activities. However, all of this increase accrues to the immigrants in the form of wages, lowers per capita incomes and is accompanied by greater congestion and pollution in metropolitan areas. Increased demand for and cost of housing reduces the ability of young Canadians to own homes and start families, creating frictions between generations.

The economic and social costs just discussed do not make the case against all immigration but make the case for the selection of immigrants with prospects for economic success that are high enough to eliminate the fiscal burden and the admission of immigrants in numbers small enough to prevent the risk of creating the substantial redistribution of income, the establishment of ethnic enclaves, the threat of jihadist terror and the problems associated with substantial and rapid population increases.

In the context of the current debate over policies for the admission of refugees from the Middle East, it is important for all Canadians that these considerations are given proper weight in the selection of immigrants and decisions about their numbers.

Source: Herbert Grubel: Canada should not open its doors to the world

Critics say Fraser Institute letter highlights ‘enormous lack of clarity’ in charity-audit rules | Toronto Star

How the Fraser Institute can maintain this kind of letter by former Ontario Premier Harris is non-partisan defies credibility and common sense:

A fundraising letter written by Fraser Institute senior fellow and former premier Mike Harris criticizing the Ontario government highlights a double standard in the way the Canada Revenue Agency audits charities, critics charge.

The letter takes swipes at the province for lacking a “credible plan” to balance the provincial budget within two years, and goes on to criticize Ontario’s debt and the province’s unemployment rate.

“As my fellow Ontarian you must be outraged — that is why I am writing to you today to help us educate Ontarians about the severity of Ontario’s problems and the potential solutions,” Harris writes.

The letter asks the reader to “join in the pursuit of policies that will re-establish Ontario as the envy of Canada” by financially supporting the Fraser Institute’s new research program.

Ontario Premier Kathleen Wynne and her Liberal government aren’t mentioned in the letter, a copy of which was obtained by the Star.

The letter is drawing criticism because while charities are permitted to engage in political activities as long as they don’t spend more than 10 per cent of their funds doing so, the Fraser Institute claims the Harris letter isn’t political, and that the group doesn’t engage in any political activities.

Critics argue the letter cuts to the heart of the problem they see in the way the Canada Revenue Agency audits charities.

“This is a great example of the enormous lack of clarity in the rules governing charities and inconsistency in the application by the CRA of those rules,” says NDP MP Murray Rankin, his party’s Canada Revenue critic.

“I just want a level playing field where other charities that may not be aligned with the Conservative government are subject to the same rules,” he said, adding the CRA’s rules are “all over the place.’’

Since Jan. 1, 2012, the CRA’s Charities Directorate has completed roughly 2,000 audits of charities through its regular audit program, and identified more than 50 charities for “political activities” audits.

The government budgets $13 million a year for these political “super audits,” as some people refer to them.

Critics charge that charities espousing views that run counter to Prime Minister Stephen Harper’s Conservative government — including some environmental groups — have been unfairly and disproportionately targeted for the political activity audits.

Charities that have been subjected to these audits say having to pull together the paperwork for the inspections is a daunting process. Several groups have voiced concerns the audits are intended to silence them.

The president of the Fraser Institute, a right-leaning think-tank and registered charity, says “in no way” is the Harris letter political.

“It’s written by a long time senior fellow of the Fraser Institute, Mike Harris. All of the data in the letter is based on Fraser Institute research,” says president Niels Veldhuis, who adds that his organization is non-partisan.

Veldhuis says his organization has been audited by the CRA three times — the last time being in the late 1990s.

Groups that have been audited since 2012, however, say it’s a stretch to say there’s nothing political about Harris’ fundraising letter.

“We would not have it signed by an ex-politician especially with that level of profile as a Conservative politician,” says Bruce Campbell, executive director of the Canadian Centre for Policy Alternatives, a non-partisan research body devoted to social, economic and environmental justice issues.

In order to address the critics, the Government needs to be more transparent on the criteria used and needs a few high profile examples of right-leaning organizations that are being audited.

Given the last time the Fraser Institute was audited was in the late 1990s, perhaps it could volunteer for an audit?

Critics say Fraser Institute letter highlights ‘enormous lack of clarity’ in charity-audit rules | Toronto Star.

PM’s charity audits look for ‘bias, one-sidedness’

The more information that comes out, the more it smells of bias in the choice of charities it audits:

The CRA says it will do 60 audits, and there are 86,000 charities in Canada. So that’s a one-in-1,400 chance of being audited by random selection. Only it’s not random. The CRA admits it’s looking for red flags, including “bias.”

“Audit selection occurs after a substantial screening process,” the CRA said in an email. “This may include considering issues such as ‘point of view,’ ‘bias,’ or ‘one-sidedness.'”

In Dying With Dignity’s case, its offending activities apparently included attempts to change public opinion.

“It is not legally charitable to engage in pressure tactics on governments such as swaying public opinion, promoting an attitude of mind, creating a climate of opinion,” the CRA’s auditor wrote to Dying With Dignity.

Still, there is a whole class of charities, known as think tanks whose major purpose is creating a climate of opinion or promoting an attitude of mind, activities that fall under the general category of “research as a charitable activity.”

“Think tanks make it very clear from the beginning that their objective is to shape public opinion, and public policy,” says Western University political science professor Donald Abelson. He has spent two decades studying think tanks in Canada and the U.S. and he’s currently writing a book about them.

Just read the annual reports from some of Canada’s leading think tanks to find proud claims of “shaping the national discourse”, “prodding governments, opinion leaders and the general public,” “changing the minds of decision makers,” yet none of that activity apparently trips the wire between political and charitable activity.

“We’re in kind of a grey area, particularly over the last several years, where the lines between policy research and political advocacy have become increasingly blurred,” Abelson said.

Which circles back to the prickly question of how to define “political activities.”

Why the Canadian Centre for Policy Alternatives and not the Fraser Institute? Why Dying with Dignity and not the Justice Centre for Constitutional Freedoms or the Canadian Constitution Foundation?

PM’s charity audits look for ‘bias, one-sidedness’ – Health – CBC News.

Jason Kenney and a guy at the Fraser Institute trade blows in Twitter cat fight | Press Progress

A great example of how to use Twitter to debate, and another demonstration of why Jason Kenney is such a strong minister (his series of tweets with Bob Rae is another example Jason Kenney Blasts Bob Rae’s ‘Obscene’ Temporary Foreign Workers Tweet).

Kenney  engages equally with those on the right as with those on the centre and left:

Jason Kenney and a guy at the Fraser Institute trade blows in Twitter cat fight | Press Progress.

Canadians pay 42% of income in tax — more than they spend on food, shelter, clothing combined | National Post

Unfortunately, all too typical of shallow economic analysis, aligned with ideology.

Of course, one can and should always question value for money with respect to taxation, as well as reviewing the need for government intervention and programs.

But an increase in the share of taxation from 33.5 percent in 1961 (pre-medicare) to 41.8 percent in 2013 without a corresponding analysis of the change in government services is the kind of sloppy “stop the gravy train” Rob Ford unsubstantiated bumper sticker.

A more serious approach would be to compare the increase in program spending with the increase in programs and services, and focus the discussion on whether or not the existing policy rationales and needs are still appropriate:

“Telling people that almost 42% of their income goes on taxes, that’s the first important takeaway. Then people can say, ‘Hold on, that’s one area that can be scaled back.’ We want to start that conversation and this is the data to do that,” he said.

Given that incomes have increased substantially since 1961, it’s inevitable taxes would also rise in terms of the amounts paid, but tax rates have increased because governments provide a wider range of services.

Since 1961, the average family’s tax bill rose by 1,832%, dwarfing increases in the costs of housing, clothing and food.Last year, the average family earned $77,381 and paid $32,369 in total taxes, or 41.8%. Food, shelter and clothing ate up another 36.1%.

For 1961, the numbers were $5,000 in income, $1,675 on taxes (33.5%) and food, shelter and clothing 56.5%.

Canadians pay 42% of income in tax — more than they spend on food, shelter, clothing combined | National Post.

‘ Family Class’ immigration reforms a good first step but taxpayers still face significant costs from sponsorship of parents and grandparents

Most recent paper by Martin Collacott of the Fraser Institute on family class immigration and in particular, the Parent and Grandparent family class reforms, advocating further tightening and greater cost recovery. As always, easier for these studies to quantify costs to governments (OAS, healthcare etc) and harder to quantify benefits (e.g., value of childcare and other family-related services), and a costs-benefits comparison with the Live-In Caregiver program would be interesting.

But given the current economic focus of our immigration program, bringing in older family members has fewer economic benefits than younger ones, and the paper argues for a greater financial contribution to cover the additional costs to governments.

Worth reading – haven’t seen much comment on this paper yet.

‘ Family Class’ immigration reforms a good first step but taxpayers still face significant costs from sponsorship of parents and grandparents | Fraser Institute.

Think-tank calls for immigration reform

To vary things up, another study from the Fraser Institute regarding costs of immigration. Other studies show lower costs, and there are differences between short-term costs and longer-term benefits. And of course, some communities integrate better and faster than others.

Think-tank calls for immigration reform.