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Immigration: Social costs vs. economic benefits

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.

 

10 Comments
Robert G
September 29, 2024

Lower crime rates among immigrant communities ?
You must be reading and hearing different reports to those that I do.
Drug trade, gangland murders, firebombings etc etc etc
Get real !!!

TonyD
September 27, 2024

Using expressions like "floodgates" makes this suspect.

Australia would have remained an economic backwater without post WW2 migration, and the social benefits are evident everywhere.

david edwards
September 27, 2024

Lower crime rates amongst immigrant communities? I would like to see statistics for that one.

Tony D
September 27, 2024

Several studies and reports indicate immigrants in Australia have lower crime rates than the native-born population:

1. Australian Bureau of Statistics (ABS) data: ABS figures have consistently shown that overseas-born individuals are underrepresented in the prison population relative to their share of the general population.

2. Australian Institute of Criminology research: Multiple studies from this institute have found that neighborhoods with higher concentrations of immigrants often have lower crime rates.

3. New South Wales Bureau of Crime Statistics and Research: A 2017 report found no evidence that increased immigration led to higher crime rates, and in some cases, areas with more immigrants had lower rates of certain crimes.

4. Victorian studies: Research in Victoria has shown that most immigrant communities have lower rates of offending than the Australian-born population.

5. Queensland research: Studies in Queensland have found similar trends, with many immigrant groups having lower offending rates than Australian-born individuals.

Sources:

1. Wickes, R., & Sydes, M. (2015). Immigration and Crime. In The Routledge Handbook on Crime and International Migration. Routledge.

Found that neighborhoods with high concentrations of immigrants from East Asia and South Asia had lower crime rates compared to other areas.

2. Bhatia, K., & Goli, S. (2018). Migration and crime: A study of Indian communities in Australia. International Journal of Migration and Border Studies, 4(4), 370-388.

Focused on Indian immigrants in Australia and found they had lower crime rates compared to the general population.

3. Collins, J. (2005). Ethnic Minorities and Crime in Australia: Moral Panic or Meaningful Policy Responses. Office of Multicultural Interest, Western Australia.

Highlighted that many immigrant groups, including those from East Asia and Western Europe, had lower crime rates than Australian-born individuals.

4. Mukherjee, S. (1999). Ethnicity and crime: An Australian research study. Australian Institute of Criminology.

Found that immigrants from many countries, including the Philippines, had lower offending rates than the Australian-born population.

5. Yeong, S., & Poynton, S. (2017). Persons of interest to police: Analysis of the relationship between crime and immigration. NSW Bureau of Crime Statistics and Research.

Found no evidence that areas with higher immigrant populations had higher crime rates, and in some cases, these areas had lower crime rates.

6. Colic-Peisker, V., & Tilbury, F. (2008). Being black in Australia: A case study of intergroup relations. Race & Class, 49(4), 38-56.

This research focused on African immigrants in Australia and found that, contrary to some public perceptions, many African immigrant groups had lower crime rates than the general population.

Goronwy
September 29, 2024

Thank you, great comment.

Andrew Smith
September 29, 2024

Good post including rebuttal and counter supported by credible sources, as opposed dog whistles or opinions learnt from media that preclude analysis.

J Pracy
September 30, 2024

These statistics need to leave out the First Nations crime statistics within Australia and then compare.
Unfortunately, First Nations are over represented within crime statistics in Australia, for one reason or another and you need to remove their statistics to get a truer picture.
In other words, compare indigenous settlers and their descendants from 1788 with recent settlers who were born overseas and arrived in the last 20 years. That would be very difficult.
It's a much more complex problem and open to different analysis, depending on how you approach it.

Peter G
September 26, 2024

As a near 78 year old what astounds me is why politicians in the countries highlighted - Germany, USA, Canada, UK, Australia, Japan for example appear not to focus on why their birthrates are low (I think the statistics indicate reducing birthrates over time for eligible couples) and then apply resources and support over the long term to turn around that situation. News reports and gossip over the years suggest possible causes as - the desire of females increasingly for higher education and a career, the inadequacy of affordable child care in general for working mothers, the high costs in terms of food, clothing, housing, educating, entertaining etc children, the inadequacy of support for the child rearing mother (simply too much responsibility left on the shoulders of the individual mother) in the modern nuclear family environment for example. Then even on a social level, unintentionally perhaps, a decreasing valuation of children in society say versus the immediate post WW2 time period. In Australia Peter Costello's financial boost some years ago I believe resulted in a temporary birth rate boost. Would seem to suggest change is possible but effort needs to be more comprehensive and sustained for longer.

John
September 26, 2024

High skill migrants are a positive for productivity and GDP per capita. Unfortunately, Australia has been bringing in mostly low skill migrants in recent years pushing down both key economic measures.

This flows over into crime figures as well. High skill migrants pay lots of tax and commit little crime. The data on undocumented migrants to Germany and Sweden in the last decade shows they are committing crime at much higher rates than the general population.

All migrants require housing so there's a need to ensure population growth is not faster than the ability of the country to build infrastructure and housing. Australia and Canada have both made that mistake recently.

Summing up, choose quality not quantity.

Cam
September 26, 2024

Immigration to keep population growing and therefore GDP growth seems a bandaid solution. The issue of falling population affecting Europe, North America and Australia is also affecting China, Japan, etc. Currently we seem to have 2 choices, either bring in more migrants or suffer some economic decline. We can keep bringing in migrants from India, Africa, etc but that has a range of issues. Loss of young skilled people in the countries of origin, environmental issues with more housing needed in Australia, etc. When all countries fall into declining populations bringing in migrants becomes harder. Countries becoming mor prosperous makes people less likely to leave. The loss of culture, more relevant for European countries.
Is there an option C? Maybe technology reduces the need for more workers. Maybe call centres and back office work being done in India helps? Maybe manufacturing overseas helps?
It would be great to hear of other options from people informed. It would be great if leaders could take us on a journey to minimise social tensions.
Very thought provoking article.

 

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