Increase Immigration – Increase Prosperity

Commentary, Immigration, Matthew Lau

One of the big policy issues for the federal government this year, as well as in the Conservative leadership race, is immigration. By a margin of 63 percent to 7 percent, according to a recent Leger poll, Conservative voters want their new leader to decrease rather than increase immigration to Canada (the other 30 percent were indifferent or didn’t know).

The calls for more restrictions on immigration, however, should be rejected in favour of a more open policy that allows for greater personal and economic freedom. Given the consensus view of good economists that free trade is eminently desirable and a main driver of the economic progress achieved around the world for the past two centuries, it follows that the free movement of labour across borders is also a good thing.

Indeed, having a more open immigration policy is one of the easiest ways the federal government can increase economic freedom, improve economic growth, and cut poverty. The main economic effect of a more open immigration system would be to allow labour to move to where it is most productive and to make available to Canadians more opportunities and options in their economic dealings.

Some people have argued that immigration is economically harmful because immigrants “steal” jobs from domestic workers and drive down wages, but this is nonsense. (If immigrants are economically harmful because they take jobs away from domestic workers, then by the same logic, grocery stores are economically harmful because grocery stores take work away from families by eliminating their need to grow their own food).

A more serious economic objection to immigration is the potential fiscal cost: immigrants might represent a significant burden to taxpayers if they consume more government services than they pay for through taxes. This concern, while often exaggerated by opponents of immigration, is a valid one. However, it does not justify a more restrictive immigration policy.

One solution to the fiscal costs issue, proposed by Gary Becker, is that if immigrants represent a net cost to taxpayers, then the government should simply sell the right to immigrate (while still allowing some “free” immigration for humanitarian purposes).

The current system or a more restrictive one, which outright denies many people the right to immigrate, effectively charges a cost of infinity to many people who want to move to Canada. But if an immigrant is expected to cost taxpayers, say, $20,000, then selling the right to immigrate for $20,000 is surely much more reasonable than setting the price at infinity.

A yet better solution is to reduce the fiscal burden on taxpayers by curtailing the government programs creating the burden. Some people have argued, for example, that Canada’s public health care system would be unable to handle the extra demand created by immigration unless much more money is raised through tax hikes. However, this is really a health care spending problem, not an immigration problem.

Canada’s health care system – a government monopoly – lacks competition, prices, costs to consumers, and a normal labour market. Because of this, it is doomed to inefficiency, excessive costs, and a substandard level of service regardless of how much immigration there is.

The problem of too much government control in health care (and other areas) should not and cannot be solved by having more government control of immigration.

If the goal is to reduce poverty and strengthen the economy, we should want less government control and more economic freedom – and that includes allowing more immigration. 

Matthew Lau is a research associate with the Frontier Centre for Public Policy.