A group of four migrants (presumably a family, but unconfirmed) arrive at the unofficial border crossing point at Roxham Road in Quebec, on Feb. 24, 2023.Roger Lemoyne/The Globe and Mail
I see we are having one of our periodic panic attacks over immigration again.
Admittedly there is some entertainment value in it, notably the sight of Liberal cabinet ministers professing themselves shocked, shocked at the state of immigration policy in this country.
“It’s really a system that has gotten out of control,” Immigration Minister Marc Miller has charged. Somebody should really look at capping the number of international students entering the country, he feels, as “that volume is disconcerting.”
For his part, former immigration minister and now-Housing Minister Sean Fraser has endorsed the idea of linking the number of immigrants admitted each year to the number of housing starts. If only he had some contacts inside the government.
If Liberal ministers have lately become critics of Liberal immigration policy, it may be because they now agree with those who blame current levels of immigration for everything from high housing prices to falling per capita GDP to health care wait times to inflation.
Or it may be because blaming immigration deflects attention from the contribution other government policies have made to high housing prices, low productivity, etc. Unravelling the many ways federal, provincial and municipal governments have tied housing construction in knots, or discouraged capital investment, is hard work, and wins you no friends. Whereas all it takes to get out in front of the “too many people” parade is a certain absence of shame.
Is the problem too many people? Or is it too little housing or investment? Immigration of permanent residents, we should note, is not particularly high: even at next year’s target of 500,000, it implies population growth of 1.5 per cent. That’s about our post-1945 average.
On the other hand there are legitimate issues surrounding the influx of temporary workers and international students. The numbers are far greater – in excess of 800,000 last year – and seem to have rather taken the government by surprise. Their tenuous status makes both groups vulnerable to exploitation; students, moreover, have housing needs that are not easily filled by the market.
But the broader proposition – that high housing prices or low productivity can be blamed on the number of people coming into the country – is too simple. Yes, other things being equal, more people equals more demand for housing equals higher prices, just as, other things being equal, more workers equals less capital per worker equals lower productivity. But other things are not necessarily equal.
The notion, in particular, that we are in a “population trap,” as an inflammatory new report by two economists at the National Bank of Canada claims, in which “no increase in living standards is possible, because population is growing so fast that all available savings are needed to maintain the existing capital-labour ratio,” requires that we believe the supply of savings and therefore investment is essentially fixed: “all available.”
This is neo-Malthusian nonsense. Even if the level of domestic savings were fixed, which it is not, it can always be supplemented by foreign savings. The willingness to save and invest is not set in stone; it responds, among other things, to changes in policy. Canada has for many years done everything it can to penalize, obstruct and otherwise discourage investment, from high marginal tax rates to intrusive regulation to arbitrary and capricious foreign investment controls.
The OECD tracks investment – gross fixed capital formation – across its 38 member states plus nine others. From 2011 to 2015, Canada’s performance was merely awful: 37th out of the 47. From 2015 to 2023, it was appalling: 44th, ahead of only South Africa, Mexico and Japan. That’s not in per-capita terms. That’s total investment.
If, therefore, per-capita growth has been similarly lagging, it has much more to do with a shortage of capital than a surplus of labour. The problem isn’t that our population is growing at 1.5 per cent per annum. The problem is that our economy won’t grow any faster than that.
Ah, but perhaps the increase in population caused the collapse in business investment. Instead of investing in new plants and equipment, businesses simply took on more labour, what with there being so much of it standing about and all.
But again this ignores the policy environment. Whether a firm decides to add capital or labour is not governed only by the supply of each, but by their relative costs and benefits. Governments have done much to make it costlier to hire labour over the years, in the form of mandated benefits, severance laws and the like. If businesses still prefer to make new hires than invest, it may be because the cost of capital has become similarly prohibitive.
All that rapid population growth has done is to make the cost of bad investment and housing policies more explicit. Slowing immigration is a band-aid response. The solution is to stop the bleeding.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
