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Europe Is Entering a Death Spiral: How Immigrants Can Save It

Or why Europe needs immigrants for its survival.

Maxime Desalle
Maxime Desalle
4 min read

The extreme right is currently gaining a lot of grounds in Western countries. Marine Le Pen received 1/3 of the votes during France's presidential election in 2017. Donald Trump became president in the US. UK politician Nigel Farage got Brexit to take place.

There are countless more examples.

But the truth, however, is that the more a country dislikes immigrants, the more immigrants it actually needs. This isn't true for every single country, but has proven in my experience to be true for most of them.

Note: I used Europe as an example in this blog post, but the need for immigration applies to nearly every Western country.

Competitivity

Europe has a median age of 44 years, while India's median age is 28 years. And India has nearly twice as more citizens than Europe has (1.4B vs 750M). The world's median age is 31 years.

So Europe is facing a major competitive problem, as its population is significantly older and at the same time significantly smaller than a developing country like India, for example.

Pensions

Europe's population is actually shrinking while it's ageing. This means the European workforce is decreasing, while the pension and healthcare costs are rising.

And this is all happening while the European Union's debt is the highest it's ever been.

The worst part about a shrinking workforce and increasing pension and healthcare costs are that the incentives to have children significantly decrease. It's a death spiral.

When you are a young worker, and you have to give up half of your income to the state to support the ageing population while at the same time being supposed to save up to buy a house, you really have no economic reason to have the required 2.1 children to keep the population stable.

To summarize: European countries have a decreasing tax income because of their shrinking workforce, have increasing pension and healthcare costs because of their ageing population, have a massive debt burden rising significantly every year and are losing all of their competitive edge to young and highly populated countries like India.

The consequence is that the more a country's population shrinks the more it will shrink, as the bigger the economic disincentives become to have children. And the smaller a generation, the smaller its future generation assuming the birth rate remains the same.

Without younger generations to make use of homes, schools, hospitals, offices, restaurants, hotels, malls, museums, hotels, stadiums, and other facilities, many countries risk permanent deflation-both demographic and economic.

- Parag Khanna

Stealing jobs

An argument often used to argue against immigration is the belief that immigrants steal the jobs from the local population. This may be true in some cases, but what generally happens is that immigrants increase the output of companies and the economy in general as they are more inclined to take jobs which are in high demand.

What's the easiest as an immigrant?

  • Try to compete with local workers who have a ton of advantages like their ease with the nation's language, their social graph, previous work experience in known companies in the region...
  • Or do the jobs that no one else isn't doing, that are in high demand?

The latter is significantly easier, which is why the "immigrants steal our jobs" argument simply isn't true.

Canada

Canada is probably the only Western country open to mass immigration. It's accepting 350K immigrants every year (pre-pandemic), which corresponds to a nearly 1% population growth rate (Canada has 38M citizens).

Through the "Century Initiative", Canada is attempting to grow its population up to 100 million citizens by the end of the century. And because Canada is pretty much the only country doing so, it's able to be incredibly selective about who can enter the country.

To immigrate to Canada under the Express Entry program for example, you have to ideally be under 35, have a PhD, have a decade of work experience, speak English and French perfectly, have a family member already over there, and a job offer from a Canadian company.

Europe should use Canada as an example of the right approach to immigration.

Economic growth

The arrival of new blood in a country increases the available workforce, increases consumption, which in turn increases production, which eventually results in a higher GDP. A higher GDP doesn't mean the living conditions are better, but it's still probably best to live in a growing economy than to live in a shrinking economy.

Immigrants are not averse to starting over. They are, by definition, risk takers. A nation of immigrants is a nation of entrepreneurs.

- Gidi Grinstein

Immigrants are also risk takers, which explains why so many successful companies were created by immigrants. Israel, a country with a completely open immigration system for anyone who can prove Jewish ethnicity, has the most companies in the NASDAQ after the US and China. What's so remarkable about that is that Israel is only made of 9M citizens, whereas the US has 334M citizens and China has 1.45B citizens.

Immigration isn't the only reason why Israel is doing so well, there are other reasons including conscription, its unity, the fact that it has a mission...

Conclusion

In Europe, mass immigration would help lowering the debt burden, pay the rising pension and healthcare costs, contribute to the creation of companies... But most importantly, mass immigration would solve the current demographic death spiral Europe is entering into with its shrinking and ageing population.

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