The Brain Drain Is Real, But How Real Are The Solutions?

©BY ILANA MERCER
  The North Shore News
  April 23, 1999 

In a 1998 editorial, Seth Klein, director of the Canadian Center for Policy Alternatives (CCPA), claimed to be nonplussed about the “Brain Drain hype,” as he put it. Using the kind of facile reasoning we have come to expect from the CCPA, Klein blamed the “small net outflow of university educated people” from Canada to the U.S. on tax cuts, of all things. According to his editorial, tax cuts, and in particular cuts causing the shrinkage of the public sector, are exacerbating the insignificant brain drain.

The CCPA, which seems to equate prosperity with growing the government and the public sector, likes to think of government patronage as a catalyst for innovation. The organization can pretend not to understand that most innovation happens in the private sector, but the CCPA and its director Mr. Klein, can no longer pretend the brain drain doesn’t exist.

The facts have been known for some time now. “The brain drain is real and costly,” say Simon Fraser University economists Don DeVortez and Samuel Layrea in a 73-page study for the Center for Research on Immigration and Integration in the Metropolis. Between the years 1982 and 1996, 54,755 highly trained Canadians emigrated to the US. And although Canada had, during that period, gained more skilled immigrants than it lost, immigrants weighed heavily on the economy.

For one, there was a marked decline in the quality of immigrants in the post 1980s years, a decline that has exacerbated the effects of the outflow to the US. Then there were the administrative and settlement costs Canada incurred in processing immigrants. And finally, skilled newcomers take a decade or more to catch up to those who leave in terms of earning potential.

DeVortez and Layrea put the cost to the Canadian economy of the outflow for the period spanning 1982-1962 at $12.6 billion dollars. The study concludes that, on average, skilled immigrants were no match for Canadian-trained emigrants in terms of the losses to the Canadian economy.

But could the movement of skilled workers to the U.S. be nothing more than a temporary to-and-fro to be expected between two countries joined at the hip by NAFTA? Can we not expect movers who leave on a temporary work permit to return to Canada? Not likely, say the authors. The North American Free Trade Agreement has made conversion of temporary work permits to permanent residency an easy and streamlined process. Temporary movers to the U.S. are thus making their stay a permanent one with very few bureaucratic hitches.

Notwithstanding the cost of the brain drain to the Canadian economy, I would ask readers to pay careful attention to the reasons DeVortez and Layrea give for the brain drain, and their attendant proposals to staunch the flow. Why? Because the thinking behind it is about punishing Canadians for wanting to make a better life for themselves away from Canada.

In explaining why skilled Canadians are leaving for the U.S., Don DeVortez and Samuel Layrea keep fingering “the size of the educational subsidy received by Canadian graduates that is tax payer financed”. The logic is strange: The typical Canadian-born professional “would not be motivated to move if there existed no educational subsidy”. The Authors do not want to stop educational subsidies; after all, the Americans subsidize their students. Rather, they propose a forgivable loan scheme. Under this scheme, a graduate would have to stay in Canada until she has paid taxes equal to the principal of her loan.

If the individual leaves prior to that, the authors propose to force him to repay the residual of the educational loan. In other words, if you stay you are okay—if you leave you pay! At the same time, the authors propose to refine immigration practices so as to make immigrants compensate better for the exodus of Canadian talent, even going so far as to propose giving skilled immigrants an income tax rebate.

While any tax rebate is a good thing, one that is predicated on membership in an interest group is less commendable. Worse still is the punitive spiteful stance adopted towards prospective Canadian defectors. Why are suggestions for improving what Canada can do for skilled immigrants not balanced with suggestions to improve things for skilled Canadians so that they don’t flee? What we have here amounts to a further devaluation of talented, upwardly mobile Canadians.

My guess is that such schemes are doomed because they fail to consider the real complexion of human ambition and motivation. Do the authors think that individuals intent on leaving because they envisage a better life for themselves will be stopped in their tracks by the foreclosure of a student loan? The UBC Alumni has posted a brain drain questionnaire on its web page in which it invites comments from people who have left. If anything, these anecdotes flesh out the skeletal thesis DeVortez and Layrea offer as to why graduates are leaving.

The reasons cited by the alumni for migrating to the U.S. are countless: from the prospects of doubling take-home pay due to low taxes, to job opportunities, fewer unions, fewer strikes and the high premium placed on rewarding merit. The overriding theme is one of escaping the sludge of socialism. The words of one expatriate are particularly poignant: “Countries that are on the forefront of innovation want to keep their brains”. Canada, wrote this exile, is looking merely to balance immigrants with emigrants.

This brainy expatriate seems to have captured the thrust of the policy recommendations in the DeVoretz and Layrea paper.