Debunking The “Immigrants Will Pay For Our Pensions” Myth
The Democrats used to be the party of the working class: they supported trade unions and believed in the welfare state. Their goal was to soften capitalism’s rougher edges, to humanize modern industrialism, and to give the common man a fair shake.
One may disagree with their methods, but their goals were laudable and their beliefs sincere.
Fast forward to 2018. The Democrats are the party of the elites. Their new mantra is “open trade and open borders,” as Hillary Clinton told Wall Street bankers in a private speech. Remember, it was the Democrats who supported President Obama’s Trans-Pacific Partnership, a “free trade” deal that would’ve gutted American industries. And it is Democrats who currently oppose President Trump’s attempts to stop illegal immigration, which hurts America’s poor.
The Democrats don’t care about America. They care about winning elections.
At this point the chorus of “progressive” rhetoric reaches fever pitch: ” but we need immigrants to support the welfare state,” they say—”we need immigrants to pay for our pensions and healthcare!” But saying does not make it so.
In truth, immigration is destroying the welfare state, in America and throughout the West.
the hand that feeds
The primary reason that mass immigration destroys the welfare state because immigrants receive more in benefits than they pay in taxes.
This is not true for every immigrant—some never collect government handouts—but it is true for the overall immigrant population. Studies from across the Western world prove this point.
A recent, and comprehensive study from the National Academies of Sciences, Engineering, and Medicine found that although immigration is (theoretically) revenue-neutral in America, not all immigrants are created equal. Half of all immigrants actually receive more in government assistance than they pay in taxes, but thankfully they are balanced out by the other half. Specifically, immigrants who came to America for family reasons, or arrived as refugees, cost a net present value of $170,000.
Net present value is how much money the government would need to invest today, at a yield of inflation plus three percent, to pay for said immigrant’s tax deficit over the course of their expected lifetime. Of course, the government does not do this—it spends only as it receives. Therefore, looking at net present value creates artificially low expectations.
According to the Heritage Foundation, each non-economic immigrant more realistically costs a net of $476,000 in welfare payouts. And of course this does not account for any increases in government programs. Applying this more realistic figure to the original study means that immigrants consume far more in government services than they pay for. In fact, if immigration levels remain unchanged, those arriving over the next decade will cost American taxpayers a net of $1.9 trillion over their lifetimes.
The welfare state is already struggling: immigration will make a bad problem worse.
Another important study, conducted by Denmark’s Ministry of Finance, found that immigrants were a net drain on the nation’s welfare state. In fact, non-EU immigrants, and their descendants, consumed 59 percent of the tax surplus collected from native Danes. This is not surprising, since some 84 percent of all welfare recipients in Denmark are immigrants, or their descendants. The bottom line: immigration is a net burden on Denmark:
Likewise, a study conducted by Canada’s Fraser Institute, a think tank, found that mass immigration costs Canadian taxpayers some $24 billion per year—and this was using data from nearly a decade ago. The number has since increased significantly, as Canada has one of the highest immigration rates in the world.
Finally, a study from the University College of London found that immigrants consumed far more in welfare than they paid in taxes. Specifically, the study looked at the Labour government’s mass immigration push between 1995 and 2011. They found that immigrants from the European Economic Area made a small, but positive net contribution to the British economy of £4.4 billion during the period. However, during the same period non-European immigrants (primarily from South Asia, the Middle East, and Africa) cost the British economy a net £120 billion.
The origin-based economic differences are actually exacerbated by the UK’s generous welfare state: while European immigrants often left their extended families at home, to be cared for by their respective government, immigrants from the Third World generally brought their families with them, knowing that British taxpayers would care for them. From the immigrant’s perspective, this is a rational choice, but does it make sense for British taxpayers? No.
Together, these studies show that mass immigration won’t save the welfare state, instead it will hasten its insolvency. In the end, immigrants won’t pay for our pensions, we’ll pay for theirs.
Perhaps the most important antecedent condition for a successful welfare state is the existence of social capital and trust—the welfare state only works in an altruistic, cohesive societies.
Social cohesion is why large, but homogeneous countries like Japan and Germany have been able to administer large welfare state without the systemic abuse present in more diverse countries, like America. This keeps costs down, and quality up. High levels of societal trust are more important than large revenues when it comes to running the welfare state.
Immigration throws a wrench in the machine. Why? Because the influx of ethnic, cultural, religious, and linguistic diversity caused by immigration reduces social cohesion, degrading societal trust—diversity kills social capital.
This makes evolutionary sense: altruism evolved in tandem with kin-selection. That is, groups of organisms that don’t compete as ferociously with their relatives, and instead share the success, out-compete those that do compete. This is why ethnocentrism (ie. altruism with an in-group preference) is the norm in the natural, and human world—it’s what works best.
Consider the below animation. It shows that given enough time, ethnocentric cooperation will inevitably out-compete humanitarian cooperation (altruism without an in-group preference) in the long run. The below animation is taken from a study conducted by researchers at Canada’s McGill University illustrates their findings:
The simulation’s results plotted as a graph:
As you can see, altruism contingent upon an in-group preference is the winning formula. It’s why families, tribes, and nations evolved. Furthermore, ethnocentrism is so powerful that it’s also been found to exist in plants and bacteria, not just animals and people. It is the fundamental building-block of society—morality.
Bringing our discussion back to human society: Robert Putnam, who wrote the landmark book Bowling Alone, found that immigration resulted in decreased social cohesion and altruism in American life. It’s why, for example, that charitable donations decrease in areas with high immigrant ratios, and why there’s been a marked decrease in social gatherings. But most importantly, Putnam found that diversity decreased community trust. This manifests in many ways, but for our purposes the big issue is that it’s led to widespread welfare abuse, and the degradation of government services.
The idea is that once people lose their sense of connection to their local government, and the services it provides, they become consumers rather than stewards—concerned with getting their share, rather than ensuring its long-term viability. It’s the same psychological shift that exists in the difference between home owners and tenants: if you have a personal interest in something, you’re more likely to care for it. This decline in social cohesion is what truly kills the welfare state.
There’s ample evidence for this. In Austria, for example, some 90 percent of all recent migrants collect welfare, whether or not they need it.
Meanwhile in Britain, only 20 percent of Muslims work full-time jobs—the rest are content to collect government handouts, despite being able-bodied and relatively well-educated. Many are second or third-generation immigrants. Paradoxically, these same people are loath to accept money from others within the Muslim community. The paradox is reconciled only when you recognize the difference between in and out-groups. The Muslim community has no interest in impoverishing their own community (other Muslims), but have no compunction about collecting money from non-Muslim Britons (who support the welfare state).
The same story is repeated in Denmark, where non-European immigrants collect so much in welfare that they’d push the nation into deficit territory, were their taxes not balanced out by native Danes. And we can’t forget about Sweden, where some 86 percent of all “child refugees” are actually adults (based on their dental records and testosterone levels) who lie to collect more welfare—they don’t care about Swedes. Their in-group loyalty rests with their fellow migrants.
Higher levels of immigration are undermining the vitality of Europe’s welfare states, which was previously underpinned by their cultural, ethnic, religious, and linguistic homogeneity.
the Democrat’s dilemma
For decades, Democrats campaigned on promises of cradle-to-grave care for low-income Americans, while at the same time they’ve allowed millions of immigrants to come to America and collect welfare—without ever having contributed a dime to the public purse. This is not only unfair, it’s unsustainable. The welfare state is collapsing under its own weight, and mass immigration is only making this bad problem worse.
It’s time we forced the Democrats to choose between the welfare state and mass immigration.