Globe and Mail columnist Andrew Coyne observed this week that “we are having one of our periodic panic attacks over immigration again.” 

By “we,” I assume he meant “us.” He could have been referring specifically to the Globe, which published one news article, one editorial and three separate columns (including Coyne’s) on the same piece of immigration research in the span of four days. 

What caused the panic in the Globe’s opinion section? A provocative suggestion by National Bank economists Stéfane Marion and Alexandra Ducharme that Canada is caught in a “population trap,” a condition typically associated with developing nations. The consensus opinion of Coyne’s colleagues (although not Coyne himself) was that Prime Minister Justin Trudeau must overhaul immigration policy immediately. 

A population trap occurs when a country’s population growth exceeds its ability to save enough money to maintain its standard of living. It typically applies to places where birth rates are high and investment is low. Canada’s population increased by some 1.2 million people in 2023, a 3.2 per cent increase that was five times larger than the average of the 38 rich countries that make up the OECD, according to Marion and Ducharme. 

The gain is mostly because of relatively liberal immigration targets rather than births, which were only marginally higher than deaths last year. As a result, the value of the country’s capital stock per person declined by 1.5 per cent, based on Marion and Ducharme’s calculations. That shouldn’t happen in a rich, sophisticated economy like Canada’s.  

“We currently lack the infrastructure and capital stock in this country to adequately absorb current population growth and improve our standard of living,” Marion and Ducharme wrote.    

If you ignore the news, you are now up to date. If you are a frequent consumer of news, you probably knew this already. The Financial Post, Global News and the Daily Hive all wrote about the National Bank report, as did the Hindustan Times and Jen Gerson, co-editor of The Line. “Population trap” is the biggest arcane economic concept turned mainstream hit since “quantitative easing” entered the lexicon.  

Saturation of that degree means we’re in dangerous territory, because this is where mistakes are made. 

The economist and philosopher Thomas Sowell writes in Intellectuals and Society that the intelligentsia has the power to dictate policy by creating a “climate of opinion” that makes it politically impossible to do what policymakers think should be done. Sowell published that book in 2009, so maybe the influence of the press is no longer what it was. But as Gerson wrote in her take on the National Bank report, you can see attitudes about immigration shifting amid a drumbeat of commentary linking higher shelter costs to Canada’s stunning immigration numbers. Polls suggest a significant majority of Canadians think the country is accepting too many newcomers. Elected officials have taken note. 

Last March, when Sean Fraser was still immigration minister, he shared a rare example of Canadian exceptionalism at an event in Toronto. “My counterparts when I travel internationally are stunned when we go around and share what our biggest challenges are, that mine routinely is that we can’t process applications quickly enough to satisfy the demand of communities,” he said. 

Indeed, Canada’s tolerance for accepting newcomers is a comparative advantage at a time when the populations of most advanced economies and China are in decline because of aging. However, the message out of Ottawa is slightly different now. Fraser, who was appointed to lead the housing department in July, and Marc Miller, the new immigration minister, emphasized earlier this month that they are working to stabilize the number of new entrants, after The Canadian Press reported that public servants had warned two years ago that more immigrants could further strain housing markets and public services. 

Opposition Leader Pierre Poilievre went further, saying this month that he would tie immigration to housing construction, a pledge that would significantly reduce immigration numbers. Canada completed about 220,000 new homes in 2022.  

Sowell calls rushed conclusions of the type that are now being made about immigration policy “one-day-at-a-time rationalism.” The thought process works like this: the acute problem is shelter costs, especially rent; housing supply already is constrained, so it’s clearly madness to invite more demand; therefore, any rational person can see that the immigration funnel must be narrowed. 

A throttling might be necessary. Marion and Ducharme estimate that Canada’s current capital stock can support population growth of between 300,000 and 500,000 new people per year. But we should be wary of overreacting. Did the Trudeau government miscalibrate its immigration targets? It would seem so. Newcomers tend to rent before they buy, and Bank of Canada research shows we had too little supply to handle such a surge in demand. That miscalculation is keeping upward pressure on inflation and could delay interest-rate cuts. 

But we need to think strategically. There’s a silver lining here. The housing crisis was years—maybe even decades—in the making. For the first time since real estate prices soared after the Great Recession, governments are actively trying to boost construction, and sadly it seems to take a crisis to get things done in contemporary democratic politics. Coyne argues that the bigger problem is a lack of investment, not immigration, and that Canada’s capital stock isn’t fixed. Indeed, Blackstone, one of the world’s biggest alternative asset managers, set up a real estate office in Toronto last year, highlighting Canada’s population growth as one of the reasons the country was an attractive place to invest.  

Policymakers must ensure the housing crisis doesn’t become an immigration crisis. In an interview, Marion, National Bank’s chief economist, said the federal government should create a council of independent advisers to help it get out its current trap and to avoid stumbling into new ones. “I want to de-politicize this thing,” he said. 

It’s an excellent idea. The stakes are too high for policy to be guided by inexpert opinion. 

Kevin Carmichael is The Logic’s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief.