Canada's 'Human Stimulus': Inward Migration

Tired of being treated like #$%^ because you aren't white? Then go to Canada, not Trump's America.

Bloomberg has an interesting report about how Canada is taking the opposite tack to what the United States is doing under Donald Trump. The current US president knows what got him elected: spewing barely-concealed hatred against everyone except white so-called 'Christian' males like him. You name it: women, people of color, people of different faiths, people of different sexual orientations have been singled out for Making America Worse Right Now compared to some fantastical golden age when white 'Christian' males ruled and all these inferiors knew their subordinate place in the US of A. As you would expect, restricting the inward migration of all these people--legal or otherwise--has become a Trump administration policy priority.

Fortunately, the United States' northern neighbors are not practicing discrimination to such an extent. Both are generally in the same boat since they have below replacement total fertility rates which imply population declines going forward absent further migration. That is, where will all the workers come from to replace those retiring...like all those aging white 'Christian' male Trump voters? Canada is way more open to migrants right now, and that's helping it hike interest rates to follow those of the United States:

The U.S. has its fiscal stimulus. The Canadian economy? Well, it has its human stimulus. The biggest population increase in six decades, driven by international migration, is one reason the Bank of Canada has been able to match the Federal Reserve hike-for-hike since June 2017 -- making the two easily the most hawkish central banks in the Group of Seven. In its latest increase Wednesday, the Ottawa-based central bank highlighted how the surge has bolstered consumption and housing activity.

“Labor income is being boosted by the larger population,” the Bank of Canada said in a report Wednesday that accompanied its decision to increase borrowing costs for a third time this year, keeping pace with the Fed’s three moves.

Under Prime Minister Justin Trudeau, Canada’s population has jumped by 1.4 percent over the past year, double the U.S. pace, driven by a surge in non-permanent residents like students and higher immigration levels. “We’ve called it the ‘human stimulus,’” Brett House, deputy chief economist at the Bank of Nova Scotia, said in a phone interview.

The larger point is that monetary stimulus--like Trump's tax cuts--boosts growth mostly in the short run. Say, two to three years in a significant way at most. How about human stimulus? In contrast, that should last closer to the working yeaers of the person brought into the country to stay for good. That these are young, well-educated folks helps too:

Stefane Marion, chief economist at National Bank of Canada, said it’s not just the sheer number of people entering Canada, but also the quality of immigrants the country has been able to attract: younger, more educated people who help drive household formation and contribute to the economy’s resiliency.

“Of all the OECD economies, Canada has the most aggressive immigration policy that brings in work-ready immigrants,’’ he said. “We didn’t get fiscal stimulus on the same scale, but we’re still benefiting from the multiplier effect of the type of people we’re able to get from overseas.’’

I am more sanguine on the future of Canada than that of the United States. Unsustainable budget deficits don't strike me as a long-term growth strategy, while bringing in young folks who can get the job done and enliven the economy in the process can.