Some comments on an article I published in The Globe and Mail about Canadian immigration policy, Canada’s version of the guest worker programs used in some European countries, are just astounding.
My analysis is based on nothing more than a simple demand and supply model of the labour market to argue that this program amounts to a wage subsidy. Since it does not seem to address any clear market failure it likely promotes both inefficiency and inequity.
I did not mention the ethics of the program at all, but it involves a form of indentured servitude in which individuals who come to Canada through this “Temporary Foreign Worker” program are tied to a particular employer, not being able to enter into contracts to sell their services to any one else.
Delphine Nakache and Paula Kinoshita document the kind of abuse this leads to in a 2010 study published by the IRPP, and the whole issue is given a lot more attention in a book my colleagues at the University of Ottawa, Patti Lenard and Christine Straehle, recently published.
But the comments on my article make clear that simple demand and supply analysis of the labour is enough to elicit strong judgements.
Read the article here. Most of those who commented got the point, and presumably understand economics at the most basic level. I write to, in a small way, help increase economic literacy on public policy issues. But try to make sense of the following comments, and tell me where I went wrong!
Gee… I wonder who funds this professor’s research activities… for him to come up with these ideas in support of driving wages down…
I ask..,”Do corporations have a responsibility to improve the standard of living in the countries where they earn their income?”
Dale Reinke :
What sand pile does this guy have his head in? His articlr is absurd!
The United States and Western Europe have been following Professor Corak’s vacant policy prescription for years. The total absence of any true regulatory oversight in eurozone migrant labour markets has been an unmitigated disaster, but especially for the Americans, our closest neighbour and biggest trading partner. It has resulted in decimation of the US labour force in manufacturing (the intensity of which has been far greater there than here) to name but one sector, massive redeployment of capital overseas as costs have risen domestically in any number of other sectors, and a tsunami of illegal immigration accompanied by the complete loss of sovereignty and control over its southern border. Does the good Professor think the social tensions inside Germany, Holland, England and France with migrant (and now unemployed but still resident) workers are a better thing than Canada’s TFW programs? Are wages and productivity higher than they would have been otherwise? Does the Professor really think Canada can simply go back to the good old days of pulling up the drawbridge in hopes of protecting ourselves from the rest of the world inside a little enclave of high paying low skilled jobs while denying what is happening elsewhere? Total nonsense. It’s never been our schtick. Guess we could have done without the railways, huh? Canada as a so-called immigrant friendly, but EI loving and socially benevolent Switzerland on the St. Lawrence? Give your head a shake. Professor Corak’s libertarian ideal of a government policy surrender to the vagaries of a truly closed labour market hasn’t worked elsewhere in North America or Europe. To re-coin an oft used political (para)phrase and without denigrating the Professor’s obvious genuine academic credentials, it’s about the real world, stupid.
Arthur Burton :
Well this is easy.
I’m sure Mr. Miles Corak would be happy to import (on a temporary basis of course) a foreign professor (whom he would train) who would be happy to supply Capitalist arguments for much lower wages. Just like the ‘market’ would like.
The second option is even simpler: You don’t hire Canadians? I don’t buy your product or use your services. And I tell you so. Snail mail. More people read it when it arrives and it’s harder to ignore.
You lost me in the first paragraph.
Since when is the Canadian Labour Market free when you can let foriegners in to do our work. When we go to war it is Canadians who defend Canada …not Foreigners. Ther has got to be some benefit to be a Canadian. If you give all our jobs away to people who think 9$ an hour is a living wage.
No ! Letting in Labour from other countries who do not need to defend the country in war time is not free market. Rather it is subsidizing the Corporations with cheap labour who will leave when the going gets tough.
Your argument fails in the first paragraph. I didn’t need to read any more. You are anti Canadian.
And this is not against people who come here to become citizens by applying for it .
“You don’t have to be a libertarian to sense that this is a victory of bureaucracy over free markets, a victory based on the notion that government somehow knows better.”
A little confused?
Free markets would dictate that employers pay employee’s free market fair value in Canada, not free market value for China. A third world TFW can send money back home to their family which could live just fine on a minimum amount, a Canadian would need to live in a cardboard box on the same amount.
Government bureaucracy know best with this decision? Really!
The cost to government for the TFW’s are as follow, immigration screening, border services for deportation, medical. That doesn’t even get into the cost to private sector workers, more EI, welfare, youth unemployment. Yet at the same time those private sector employee’s working are paying for 3rd world competition which suppresses their own wages and opportunities.
Lastly, ever heard of economics. For ever 1 billion TFW’s send out of this country, say goodbye to 4 billion in economic activity in Canada.
But think of all the big business profits and all the extra government employee’s needed to operate this scam.
I doubt anyone who calls themselves a libertarian would support this crap; please use other groups who have in the past, like say, both Canada’s political left and right.
“What happens if there is a shortage? Well, there certainly is no need for a Temporary Food Program!”
Only a fool fortunate enough never to have faced a real food shortage — when crops fail or food stores are destroyed by war — would say such an inane thing.
Always amusing to hear someone who lives on the Government dole (University of Ottawa), declare the value of the free market.
Hey Mr. Economist and International Relations. If the Government is so horrible, why aren’t you competing in the “Free Market” and how the rest how it’s done? Yeah, that would probably mean many more hours in the day for probably less benefits. But that shouldn’t concern you, because as a belieber in the free market you will surely rise to the top.