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!
Rebel-A :
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!
fred_j :
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.
Loon-A-Tick :
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 .
KarstForm :
“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.
I’m Alex
“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.
Snowrunner
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.
Economics for public policy 
I knew it – you are anti Canadian ….
Sent from my iPhone
Lest there be any doubt in the mind of some readers, my esteemed colleague—whose office is directly across the hall from mine—is being sarcastic.
Your unbalanced view of government and market roles in our society was a reminder to fellows economists that in spite of your attention-drawing progressive views on equality, you still proudly belong to the most dangerous profession of modern times.
I used to follow your writings, and I must thank you for having so easily freed some of my reading time.
Wow. I am sorry to lose you. But I find economics to be a very valuable toolkit to understand reality, and if one approaches it in the spirit of scientific thought a method that helps one to see the world as it is before making judgments on how it should be.
I’d be happy to continue this conversation with you if you like, but can appreciate that you may not.
Hi Miles:
I do enjoy your work and read it regularly:)
But “the world as it is”? C’mon, you know full well that science does not give us access to the world “as it is”; nor does it purport to (if it knows what it’s doing).
PS: An aside! Personally, I find that my own critical thinking skills are bolstered when I am attacked with straw men arguments and other fallacies. I’ll bet the same is true of you; and many others besides. On that note, I’m look’g fwd to reading your G&M piece. Sounds like it was quite a dust-up!
Also, I would really appreciate the opportunity to hear a little bit from you (and others of course) about what has come of federal attempts to stimulate job creation and regional econ. development since, say, ’72? There must be a brief narrative on these issues that you could lay down right now, in a few paragraphs, based simply on what’s in your head at present. In any event, I am very interested in this topic.
Thank you.
Mike Goodwin (Trent, Carleton, McMaster, Ottawa U., ’82-’95)
College Station, TX
Thanks Mike.
Why do you feel that science does not purport to give us access to the world “as it is”?
It is certainly true that economics is not a perfect science, and that since it studies human interactions it is more challenging to see the line between analyst and advocate. But my view is that it is very important to strive to keep that line as clear as possible. I’d be interested to hear in more detail why you might think otherwise.
I teach an introductory economics course to graduate students who have not been exposed to economics as undergraduates, and this is always a sticking point. So perhaps in some fundamental way I am just missing something, or not articulating what I understand to be the first and most important lesson of economic theory: the distinction between the positive and normative.
best, m.
Hi just so you know I have used “JL” as a pseudonym commenting on your site before. and I still follow you and this comment is not from me…
Do some of the commentators cited above really know ANYTHING about what is going on? I’ll bet they don’t know anything about the number of potential workers / factors of production tax revenue / who are unemployed in Canada in practical terms – but artificially “categorized out of existence”. This has been happening for decades because of media reports concerning people who have allegedly “..dropped out of the labour force…” or “…given up looking for work…”., based on some of Statistics Canada reports that have appeared. There seems to me to be a big problem here with the underlying specifications – originating from industry and other government departments – that govern the information collected about Canadian unemployment, and how it is analysed and reported. On top of that, we have a big “under-employment” problem aggravated by inadequate access to retraining for people out of work, which also gets far too little attention. See my web site at http://www.unempgeninfo com and the “Ottawa’s Hidden Workforce” report of Fall 1998. Dealing with this properly is about dealing with the real world – as opposed to dealing with it based on incorrect analysis and incorrect/ pejorative description of most of the people affected, supported by popular disinformation and stereotypes.
Actually, you didn’t go wrong. You would have experienced something very different if this was published on an economic site, or even in the Financial Post. Too many people in Canada now see with political-coloured and/or populist-shaded glasses because they now choose to read only the “news” opinions targeting them. Granted, this is not yet like the gulf created by Fox News / MSNBC in the US, but it’s getting there. Others cannot seemingly read past 160 characters (SMS) or 140 (Twitter); they have what we used to call a short attention span. Others read without understanding. Others respond just to respond. Yet others, well, in scientific terms, beat the hell out of me.
Perhaps if the Globe and Mail put up a paywall for all readers online, that might weed some of these people out (but I wouldn’t hold your breath on that one).
Part of the problem is potentially due to the increasing polarity of opinions in Canada. The political middle ground is disappearing, as it did south of the border a decade ago. Nuanced opinions are disappearing along with that. Finally, not everyone researches even a little bit what they write (or even how they vote), or considers other opinions or even silly things like “facts,” not by a long shot.
I certainly qualify as an “ordinary reader” of the news, but I think I understood the point you were making because I had recently read “The travels of a tshirt in the global economy”, which does a very good job of explaining all the different protectionist forces at work in the production of a tshirt with a particular focus on how cotton growers and manufacturers avoided participation in the labour market.
I think what confuses people, and this idea was certainly an eye-opener for me, is that they are constantly told in the media that business is a great booster of free markets. The idea that businesses are actually avoiding the market through temporary foreign workers programs is actually an argument that is rarely heard in the media. People also associate free trade with jobs being shipped overseas where people are willing to work for less, and they just see the temporary foreign workers program as an extension of this phenomenon, on their own soil.
it’s hard for people to see that something that has destroyed their livelihoods and their towns can actually work to their benefit. It is very important for economists to confront openly and compassionately that even if the free market in aggregate is beneficial, in particular instances it can be devastating to peoples’ lives. When you talk about “capital moving elsewhere” you really need to say that the factory or the mill shut down and the town just might die because of it. I think people can actually deal with reality pretty well. Mark Thoma recently wrote a piece about the need for social security that hit all the right notes on this topic. For the past thirty years I’ve heard very little except boosterism about free markets, and it was extremely refreshing to read someone who was being honest about their benefits while acknowledging how destructive they can be of peoples’ lives.
Anyway, I understood, and appreciated, what you were trying to say.
Jane thank you so much for such an eloquent and careful reply. Are you able to share the link to the “travels of a tshirt” article with us?
If people’s livelihoods are being destroyed wholesale by the operation of the labour market in practice, then you are destroying people’s capacity to (a) perform as factors of production and as buyers of others’ goods and services, and (b) perform as factors of production tax revenues to help pay for essential government services. If this is happening then clearly the labour market is not working properly. It seems to me that the business community is not capable – or not interested – in this, or both, even when popular present-day practices designed to procure cheap labour and cheapen people might undermine the businesses’ own customer bases.
I did see the original column and followed the comments. I did have to (sadly) laugh at the notion that achieving and maintain a university appointment is not competitive.
Overall, the comments are a typical selection of on-line commentary. First, the trolls. Angry frustrated people who can only find validation and power by insulting the author regardless of substance. Second, the Harper “core” (often hard to distinguish from the trolls). They are poised to defend any decision by the current government and their typical weapon of attack is the insult. Third, the headline readers. This extremely large group tends to comment on the headline and sub-title by-line without actually reading the article. Fourth, the fast readers. Those that superficially read the column in hast and miss the argument, such that they are often supporting your point while arguing against it. Lastly, the rest.
I know you have written columns for the Globe before and certainly have been exposed to this type of audience. In my memory (which tends to suffer the selection bias of focusing on the most highly rated comments) your column received considerable support. What has surprised me is that this issue seems to have actually eaten into some of the Harper “core” – sometimes on grounds of bigotry and racism, but more often because they actually see the problem which explains why the government jumped so quickly to administer a response (inappropriate as it might be).
Your column gave those seeking to understand an informed perspective to build on their gut instinctive notions. But I think you recognize that one of the most powerful determinants of economic illiteracy is economists themselves; those that align economics with ideology and economic interests rather than social science and critical thinking.
Thanks for this feedback Ron. A nice taxonomy that I find helpful. To be clear, I certainly agree with your last point and I suspect that many of my colleagues would as well.
Economic illiteracy of the many aside, it is interesting that my first notions of a problem with the Temporary Foreign Worker program came from Globe commentators. Before that, the only solid media evidence was The Tyee story on Chinese miners.
The Globe has been running a number of articles supporting the idea that there is a significant labour shortage (some by economists!). A very active campaign of creating a ‘popular economic image’ of skills shortages.
In response, one on-line participant provided an anecdotal example of his son who had completed welding but did not have the Red Seal so could not relocate to Alberta. This same participant then noted that the TFW was importing welders from the Philippines who lacked the Red Seal yet were hired (and whose Philippine training was subsidized by the Can. government). Soon a few commentators popped up explaining what was happening at Tim Hortons and some other fast food restaurants. It was from the anecdotal examples from commentators that sent up my red flag such that I was not surprised when the list of TFW employers emerged.
I guess I just want to start the weekend on the positive image of the economic awareness of the few/many (?) rather than the economic illiteracy of the many/few (?).
Thanks. Yes that certainly makes sense … that anecdote can be a powerful spotlight on issues that are based in the fundamentals (but sometimes also just the opposite—like the skill shortages story). That is why it is important to bring a conceptual framework to the analysis of issues that is grounded in appreciation of the overall numbers. On this basis my sense from the very start was that it was a mistake to expand the Temporary Foreign Worker program from its original narrow basis.
This said, I hope my post is not interpreted as suggesting that I was critical of commentators for their knowledge of economics. Rather what I was trying to do was to understand the barriers—as a teacher/instructor—of reaching out and trying to give readers the tools appropriate for understanding the bigger picture, rather than just resonating with anecdote.
Have a good weekend!
Agreed Miles. Conceptual framework provides the rigor – the structured idea against which to weigh the empirical evidence and which can suggest direction to the results.
Do not be shy of being critical of some commentators including their glaring ignorance; after all, many even take pride in their ignorance. There are psychological models that can predict or explain them. 🙂
Take care
I think the biggest reason for these off-the-mark comments is that people didn’t take the time to understand your point. Most of them also seemed to assume you support race-to-the-bottom, robber-baron capitalism – like many free market proponents seem to do. They probably thought you were arguing to keep TFWs, but get rid of government requirements, forms, minimum wage, etc.
Thanks. I wonder if some of my wording could have been clearer. But you and others seem to have appreciated the point. best, m.
Hi Miles:
I had too much breakfast blend this AM! Please accept my sincere apologies for my use of the expression “you know full well” (that science does not see the world as it is). “You know full well” sounds very aggressive:( And I do not like to be that way. I got too … excited! Sorry.
Oh goodness, it is all good. There is nothing to apologize for. I know only too well the perils of a good coffee. But if you have time to think this through a bit more it would be interesting to hear the underlying reasons for your opinion. best m.
I am most impressed by your desire to try to better reach your audience. A few thoughts:
1. I believe Wray is correct about commenters (one could add to his list ranters, insulters, self-appointed know-it-alls, and all those very angry people who hate professors). There are more and more studies on the lack of civility and genuine debate in the blogosphere, so your wish to garner understanding from all your readers is likely quixotic. That’s OK. Likewise, some of your students no doubt flunk your courses in spite of all your efforts.
2. The opening paragraphs of your article sound a bit like a Kevin O’Leary ‘markets-are-always-perfect-and-right’ rant. I know your thinking is more subtle than that, but most readers do not read your blog. Most of us read articles quickly, and it sounds like some of the comments are in fact reacting to an argument you did not make, but on quick reading, sounds like you were making. I think your point, that there is no market distortion and therefore no need to intervene, was somewhat lost. You say it much more clearly here.
3. I cannot help but react to your “Temporary Food program” quip. I do not see why “Im Alex” is in your list of ridicule, except for using an outrageous rhetorical trick abused so often in online comments (“only a fool would know …”). TFPs have indeed existed in times of crisis, through food rationing in times of war, or food aid in countries undergoing disasters; perhaps food stamps in the US could even qualify as a TFP, no?
Thanks for your blog. Even when I disagree, I always learn!
Thank you for your coments. “Even when I disagree, I always learn!” … I like that one a good deal! Miles
Hello Miles,
Have you noticed that almost all those who commented here on your site did so under their real names (or so it seems, at least), and commented helpfully, whereas almost all those who commented foolishly or viciously on your Globe piece did so under pseudonyms? That tells its own story….
Yes. Also I gather that some sites are actively moderated, I believe that the NY Times is, and others are not.
Businesses can increase wages, but they can also hire more legitimate immigrants. Either way, wages would adjust. I have no problem with businesses hiring foreign workers, who come to Canada seeking a better life, and generally work hard. But the TFWP is, as you say, a subsidy to business.
TFWP has destroyed my income since 2008. Rent has doubled, inflation is out of hand with food going up nearly 4% every year. I made more money in 2006-07 than I do now. My wages have not budge for 8 years. This is the real facts of Alberta woes. Last job I was at workers were all Mexicans only 3 Canadians working out of the whole outfit. Abuse of the program is rampid.
Eye openers, Western Canadians will not be voting PC this election. We ousted them here in Alberta we will oust them there in Ottawa.
The boom here in Alberta is just about done. By 2016 I will probably be going to the food bank for my meals, just like in the 90’s we overbuilt new homes, we are over building again in 2015.
Now all these businesses that reaped the rewards with pockets full of cash must pay the piper when minimum wages are to go up to $15 an hour. I will not be eating out, things are to expensive as they are ATM.
WHY ARE Businesses shocked when everything has doubled in 10 years, f give your heads a shake.
BOC needs to raise interest rates to 4-5% and mortgages need to be adjusted to 20% down payment. That should curb the stupidness of this Country./ end rant simple economics 1 0 1.
This is what you call a “fake boom”. As a construction worker I have not got ahead in 8 years.
Low interest rates creates cheap money. Many are living the “wealth effect” New home new car new camping trailer, “Look my house value should always go up – WAYYYYY UP.” fools. I lived through 2 busts here in Alberta, the next one is gonna be a gooder.