Posted on November 30, 2017

The Talk Canada Needs: Are We Importing Inequality?

Margaret Wente, Globe and Mail, November 28, 2017

Earlier this month, the United Way of Toronto and York region issued a disturbing new report. The Greater Toronto area has become the inequality capital of Canada. Income inequality has leaped beyond the city to the surrounding regions. The problem is worst in Peel, a sprawling region northwest of the city. More than half of Peel residents are now considered low-income earners. Back in 1980, the number was just 2 per cent. “This kind of inequality blocks too many people from getting ahead – and threatens the values of fairness and opportunity that Canada is built on,” the report warns.

How did middle-class Peel suddenly become poor? Neither the United Way nor the stories by the Toronto Star and the CBC offered any explanation.

But to anyone who knows the place, it’s no mystery at all. At the centre of Peel is Brampton, which is growing at three times the rate of Canada. Brampton, now the ninth-largest city in Canada, is a magnet for new immigrants. Back in the 1980s, it was small and white. Today, it is large and brown. More than 44 per cent of the population is South Asian, and 73 per cent belong to visible minorities. (You’d never know this from the Star, which illustrated its piece on struggling Brampton with a white single mother.)

Just to be clear, this is not going to be an anti-immigration screed. The immigration story in Canada is a happy one. But if we want to keep it that way, we need to open the door to candid conversations about the downsides. The story of imported inequality is one example.

Many people will argue that low income among immigrants is due to discrimination against newcomers and fraying social safety nets. But it is also due to insufficient language skills, poorer credentials (even if they seem good on paper), and the lack of social networks and local knowledge of a culture that take years to establish. As the economy becomes increasingly knowledge-based, it takes immigrants a long time to catch up. Meanwhile, in the short term, a heavy influx of newcomers creates new demands for housing, schools and social services that are a strain on the system. But it’s not polite to say those things, and so people don’t.

The idea that more immigration is always better has taken firm root among the upper reaches of the liberal intelligentsia. In their view, much higher immigration rates are essential to drive prosperity, pay for the staggering cost of aging boomers, and provide the entrepreneurial vigour that Canadians seem to lack. Justin Trudeau’s brain trust (led by Dominic Barton, the global managing partner of McKinsey & Co.), thinks we should aim for a population of 100 million people by the end of the century. For the moment, the Liberals have settled on a more modest target of 340,000 a year by 2020 – still a big hike from previous levels.

Is that a good idea? I don’t know. What I do know is that more immigrants will bring more inequality. “Poverty is rising among immigrants at a time when poverty rates for native-born Canadians have been declining,” said a recent piece in Policy Options, co-authored by University of British Columbia economist W. Craig Riddell and two others. Their article is a balanced appraisal of the economic impacts of immigration.

Bottom line: there’s a lot we don’t know. But what we do know isn’t quite as rosy as the 100-million crowd would like us to believe.

For example, immigration can’t offset the problems of population aging, for the simple reason that immigrants get old too. Nor is there any clear evidence that immigrants either depress or boost overall prosperity. But there is plenty of evidence that increased immigration is costly, at least in the short run. “Second-generation immigrants do well,” the authors write, “… but the initial impact of a large increase in immigration should be expected to be an increase in taxes, a decrease in service, an increase in deficits, or some combination of the three.”

These writers aren’t anti-immigration. They’re just pro-evidence. They don’t even delve into the challenges of integration — a subject that liberals tend to think will go away if they repeat the word “diversity” enough. The trouble is, diversity tends to be divisive. That’s just human nature. If given their preference, people prefer to live in settled communities with other people who are a lot like them. “A too-rapid inflow of immigrants weakens bonds of solidarity, and, in the long run, erodes the affective ties required to sustain the welfare state,” the British political economist Robert Skidelsky writes. “Liberals’ anxiety not to appear racist hides these truths from them.”

Can we talk about these issues in Canada without appearing to be racist? I honestly don’t know. What I do know is that if we suppress them, other people will do the talking for us. And as we know from Europe, what they have to say could be very disagreeable indeed.