This is an edited transcript of a video talk given by geopolitical strategist, Peter Zeihan, on the social and economic effects of immigration.
People always talk about the economic upside and the tax upside, but they rarely talk about the downside, things like crime and social identity. It's a reasonable question. And as we have more and more countries that are ageing, immigration is often brought up as one of the few if only possible patches or even solutions.
The economic case for immigration
Let's start by saying that Canada is a very special case. Canada knew that they were on a German style demographic implosion 30 years ago, and then under the Harper government and later into the Trudeau government, the decision was made to open the floodgates and become an immigrant country. And so, you've probably had – they don't count the statistics the same way as in the United States – you probably had three to four million immigrants coming and become Canadians in that time period, and most of them in their 20s and their 30s. They specifically were going after people who were younger as opposed to most of the migrants that they got before. And that's managed to stabilize the number, but only so long as they keep those inflows coming because native Canadians, to use a charged term, still have a very, very low birth rate. So, there's no replacement coming on and you have a very different social fabric developing.
The new migrants especially for under age 40 generate far more in tax in payments than they do in tax take over their lifetime. And it's definitely a net fiscal benefit. In terms of the jobs as a rule, the people who are doing the migration tend to be the more aggressive and the more skilled and the more educated of the countrymen from where they came from. And so, you tend to get a kick up in terms of labor productivity. Not everybody is an Elon Musk, but you get the idea.
The third is crime. Unequivocal data on this. In every country that collects this sort of data, crime committed by immigrants is significantly lower, typically at least a third lower than it is by the native-born population.
Fourth – there's something that people usually don't think about, and that's education. In the United States, it costs over US$150,000 to graduate a kid from high school. That's just the government cost for education. That doesn't take into account the societal cost of actually raising the kid from zero to 18 when healthcare can be an issue as well in terms of cost. One of the benefits of migrants is that they've already paid that in another country and you're just benefiting from their labour. So economically by the statistics it's a very, very, easy case to make.
Two things to keep in mind. Number one – not all migrants are the same. For example, if you think of the United Kingdom and Indian migrants and family reunification, basically the U.K. would bring in one person from India who might meet all of these numerical criteria that I just talked about. But then they bring in their extended family and all of a sudden, you've got 60 Indian Brits, half of whom are over 60. Different sort of math there. If you're bringing in near retirees, the cost of the society can be high. Also, for example in the German case, the migrants that came in from Syria, there were about a million of them and they were about 80% to 90% male. So, you're not getting too much of a demographic boost there because there weren't women to then have more children.
The social complexities from immigration
And that brings us to the second complicating factor that's social cohesion. If you have included immigration as part of your social fabric going back decades and preferably even centuries, then the difficulty of society absorbing a number of people from different places is relatively low. When you look at the seller states such as the United States, Australia and New Zealand and Canada, this is something that we have done in phases – we run hot and cold – for a long time. And, if you tell somebody that your parents are from a different country, most Americans aren't even going to blink because people in the United States assimilate quickly. But if you don't have that culture – like Germany does not have that culture – and you suddenly open the floodgates, then all of a sudden, you look very different.
The first real wave of migration into Germany happened with the Bosnian Wars in the 1990s. The Germans did the right thing for the right reason, took in a lot of refugees from that conflict, but it changed their social character. They now have done it again in the 2000s with Syrians, changing the social character. They're in the process of doing it again with Ukrainians, changing the social character. And if you wait too long, if you wait till you have more people in their 40s than their 30s than their 20s than their 10s than their 0s, then you will be a different place.
And this is the situation that the Canadians are facing not right now, but will in 20 or 30 years. They waited until it was very late in the day, and then they started bringing in millions of people. If this happens over a long enough period, society, the new society and the old society, can adapt. But in the German situation, it's happened so recently. And to keep it up, the Germans are going to have to bring in 2 million to 2.5 million people under age 30 every year for the next 20 years just to hold where they are demographically. Well, those people will be the majority of the country by then. That's a very different place. So, if you look at immigration as purely a math issue, a fiscal issue, an economic growth issue, it's a slam dunk case. But we don't live in that world. And you know what we call the gap between the ideal and reality? Politics.
Peter Zeihan, founder of Zeihan on Geopolitics, is a geopolitical strategist, speaker and author. This article is general information and does not consider the circumstances of any investor. This article is an edited transcript of Peter's video, Immigration: Social Costs vs. Economic Benefits, posted on 29 June 2023.