The Canadian Question

What should the US do about Canadian decline?

Written by Arctotherium.

American-Canadian relations during the 20th century were very good. To Americans, Canada was a friendly, prosperous and stable neighbor to the north – closely related by blood, culture and history. Geopolitically, Canada was joined at the hip to the US, and both enjoyed a high standard of living. This was a mutually beneficial relationship: the US didn’t need to worry about its northern border, while Canada had access to the world’s largest economy and could free-ride on American military protection. Not for nothing do Canadians tout the US/Canadian border as the largest undefended land border in the world. Unfortunately, this status quo has been jeopardized by recent changes to Canadian immigration policy, which are on track to wreck a century-long partnership.

Immigration

It is difficult to overstate the disaster that is Canadian immigration policy. Since the 1980s, Canada has had higher immigration levels than the United States. Yet after taking office in 2015, Trudeau doubled this already high level to the extreme level of half a million per year. In a country with less than 40 million people, this is about four times the US immigration level. Then after COVID, Trudeau more than doubled Canadian immigration again, to 1.25 million per year (about ten times the US immigration levels).

Canadian net migration over time. Although it looks small compared to the post-COVID insanity, even Trudeau’s first four years saw a massive and unprecedented explosion in immigration. Source.

The composition of immigration into Canada has also changed dramatically over time. Before 1980, the overwhelming majority of immigrants were from Europe. They were people who looked and acted similar to ethnic Anglo- and French-Canadians (and were often from nearly-indistinguishable Britain and France). Thus they were easily assimilable. But since 1980, most immigration to Canada has been from Asia.

To avoid misinterpretations: this chart shows the total number of foreign-born people from each region within Canada at each time, not the number entering each year (the stock, not the flow). Source.

One country in particular stands out. A full third of all immigrants to Canada in 2021 were from India, four times more than from China, the next highest country. This sort of dominance of immigration by one country makes assimilation, which is already difficult in the best circumstances, impossible. For one thing, it becomes trivial to form ethnic enclaves. Avoiding such dominance is the reason country caps exist in the US immigration system.

Country of origin of immigrants to Canada in 2021. Source.

Unlike in the US or Europe, where most immigrants are either illegals, refugees or persons brought in through family reunification, Canadian immigration is designed to be selective. Most permanent Canadian immigrants are granted that status through employment, while the (supposedly) temporary immigrants comprise about one-third students. I say “supposedly” because this group makes up a full 7.3% of the entire population of Canada, and there’s no plan or real mechanism to remove them from the country. Note that Canada has birthright citizenship, giving “temporary” immigrants an easy path to permanent residency and citizenship through anchor babies.

Composition of permanent and temporary Canadian immigration in recent years, by route. Source.

Canadian immigration is intended to be selective, to vacuum up the world’s human capital. And it largely succeeds. Along with Australia, which follows a similar policy, Canada has some of the world’s smartest immigrants. Note, however, that the PISA tests 16 year-olds, which means the less-selective Trudeau wave is not getting picked up in these data.

PISA scores of natives, first-generation immigrants, and second-generation immigrants by OECD country. Natives outperform everywhere by a wide margin except the non-US Anglosphere, including Canada. Source.

So Canada has a (successfully-executed) policy of taking in gargantuan numbers of disproportionately Indian, skilled, legal immigrants. This approach has been explicitly endorsed by multiple pro-immigration intellectuals, such as Tyler Cowen, Alec Stapp, Noah Smith, and Matthew Yglesias, and is analogous to proposals to remove country caps on employment visas¹, grant more H1-B temporary visas, and staple green cards to college diplomas in the US. How has it worked out?

Because the two economies are so closely integrated², Canadian growth closely tracks American growth, or it did until 2015. Since Trudeau entered office and first doubled and then quintupled immigration, living standards in Canada, relative to the United States, have plummeted.

GDP per capita in Canada and the US over time, relative to 1995 (the US has been consistently ahead in absolute terms). The two series closely tracked until 2015, when they came apart. Source.

It’s unsurprising, then, that even oil-rich Alberta has lower wages than every US state – even West Virginia with no major urban center, or the Deep South with its large black population.

Source.

Some of this is lack of capital. Capital per worker is one of the strongest predictors of productivity, and the enormous influx of workers without capital has predictably eroded Canadian labor productivity relative to the United States.

Per-worker investment in Canada and the United States over time. The two series closely tracked until Trudeau entered office. Since then, Canada has shifted towards a labor-intensive, capital-light economic model, with predictably disastrous consequences for Canadians. Source.

And the effect on standards of living is even worse³ because a colossal and sudden increase in demand for housing, concentrated in a handful of already-expensive urban centers⁴, has caused Canadian housing prices to explode. Real estate prices are counted as GDP, but for those Canadians who are not landlords or developers this is a cost, not a benefit.⁵

Thanks to extraordinary demand from the entirety of Asia, as well as low supply, Canada has some of the world’s most expensive real estate. Source.

Given Canada’s extraordinary housing costs and low wages, it’s not surprising that Canadians also suffer from incredibly high household debt.

Unlike in the US, Canadian household debt has just kept rising since the Financial Crisis. Australia is in a similar position. Source.

Canada isn’t just an economic disaster zone. It has managed to heavily skew the sex ratio among the young. Male-biased sex ratios are widely recognized as a huge problem in Asia, because they encourage women not to marry until later (by increasing optionality), reducing men’s bargaining power and ensuring many men remain alone, while also increasing crime. South Korea, China, and India all put themselves in this position through decades of sex-selective abortion, but the Canadian government has inflicted it upon itself through immigration.

Sex ratio among 20-29 year-olds in Canada over time. Source.

Both skewed sex ratios and high housing prices lower fertility on the margin, so it’s not surprising that Canadian fertility, for centuries among the highest in the West, has taken a sharp downward turn both absolutely and relative to peers.

Canadian and European fertility since 2010. Before 2012, Canada had a small but significant TFR advantage over Europe, as it has for as long as Canada has existed. Since 2012, Canada has been rapidly approaching East Asian levels of fertility. Source.

This is a big deal: the difference between a TFR of 1.6 (where Canada would be if it had retained its pre-2012 advantage over Europe) and a TFR of 1.24 is a factor of two in three generations. The first is bad, but can be dealt with with gradual adaptation and marginal improvements. The second is an existential crisis.

What makes this all particularly absurd is that Canada has the highest national IQ of any non-East Asian country, and one of the largest natural resource endowments in the world.

Productivity vs national IQ among developed, non-resource-rent-based nations. The United States falls where you would expect. Canada, which has the highest national IQ in the world outside of East Asia and until very recently was a northwestern European country, is far below it. Source.

Enormous resource rents, plus a tiny population, plus having sovereignty guaranteed by the United States, is an enviable position to occupy. With merely adequate government, Canada could easily have the highest standard of living in the world, an Anglo-French North American Norway or Qatar. But instead of leaning into this, the grand strategy of the Canadian state has been to specialize in low-skill labor-intensive services, real estate, and degree mills⁶ while legally penalizing resource extraction. (Britain has adopted a similar policy.)

The result of this catastrophe is that Canada is no longer the country of America’s imagination. Rather than America’s calmer, nicer, but slightly less prosperous cousin, Canada is quickly becoming a far poorer and worse place to live. Illegal immigration from Canada used to be nearly nonexistent: why take the risk when you’re already living in a perfectly nice First World country? But with falling standards of living and an enormous number of people with no real attachment to Canada, this has changed. Since 2020, nearly half a million illegals have been caught crossing the northern border.

Illegal immigration has long been a southern border issue, and was negligible across the northern border until 2020. Since then, it has become a major problem: with its laxer visa rules, Canada has become a stepping stone for many migrants trying to reach the US. Source.

Canada is quickly becoming Mexico II. The Mexican border is a disaster: not only is it a huge source of drugs and illegals, but the security measures in place to prevent these add more friction to licit movements of goods and people. Allowing the northern border to turn into a much larger clone, which it is on track to become within a generation, would be a colossal failure of American statesmanship. Right now, this can still be stopped. But the window will soon close.

Geopolitics

Immigration hasn’t just destroyed the Canadian standard of living. It has also changed Canada’s geopolitical stance from reliable American ally to (aspirational) independent great power and (actual) base for foreign influence on the North American continent.

Canada’s status as an effective American protectorate benefits both parties, but some of Canada’s elite aspire to independent great power status and see immigration as a path to it. The logic is that with a tenth of America’s population, Canada must accommodate its larger southern neighbor, but with a quarter or a third would have much more leverage to act against US interests. This is wrong because people are not interchangeable. Canada with the population, prosperity, and stability of Mexico can harm the USA but not oppose it. In any case, the aspiration alone is a hostile act against the United States and should be treated as such.

More importantly, the Canadian government is riddled with foreign agents, to the point where the ruling party refuses to release the names of parliament members working for foreign powers (probably because they would all be immigrants).⁷ Unsurprisingly, immigrants do not generally give up their foreign allegiances unless forced to, leading to absurdities such as the Sikh foreign minister directing Canadian troops to evacuate his coethnics in Afghanistan, rather than prioritize Canadians. The explicitly post-national Canadian state has no intention of making immigrants shed these allegiances.

India and China, the two largest sources of immigration to Canada, both use their diasporas as a tool of foreign policy, and Canada’s descent into a playground for foreign interests benefits them most of all. The US political consensus on China is that it is an adversary we must compete with, which is not compatible with Chinese influence in Canada. American relations with India⁸ are less adversarial, but, as in the Cold War, India is still a broadly neutral independent power, rather than a friendly one (especially given Indian support for Russia in the Ukraine war).

Allowing Canada to become an independent geopolitical actor (the goal of Canadian immigration policy), or the tool of India and China within North America (what is actually happening) would turn back America’s geopolitical position a century – from unchallenged domination of our near-abroad to once again locked in a contest for North America. This can be stopped, but not for long.

What is to be done?

The supreme function of statesmanship is to provide against preventable evils. The United States should act quickly to prevent Canada’s decline into a Third World playground for foreign powers before it’s too late. There are a number of options available: allowing the status quo to continue; demanding major concessions and locking them into law or treaty; breaking up the confederation; or annexation.

Status Quo. The easiest path for the United States is to do nothing or demand symbolic action on border security. This is attractive because it will stop the collateral damage of Canadian immigration on the length of an election cycle, and doesn’t require rocking the boat. Yet, crucially, it doesn’t solve the problem of Canada’s slow descent into a hostile Third World country. And any such actions will be rolled back by the next administration; it’s not a permanent or even long-term solution.

Concessions. Fortunately, Donald Trump has repeatedly proven that he doesn’t mind rocking the boat. If he’s willing to threaten 25% tariffs over cross-border fentanyl alone, he should be willing to threaten them over much more important questions like Canada’s long-term status. The United States government can use its power to demand concessions on immigration. A good target would be requiring that Canada reduce immigration levels by 90% or more to bring them in line with per-capita US levels or lower, sealed by Canadian law or treaty (perhaps with automatic mechanisms to restore the tariffs if the Canadians renege).

To make this less straightforwardly coercive, it could be accompanied by a carrot such as freedom of movement between the United States and Canada. Demanding Canadian immigration restriction as a prerequisite for freedom of movement makes sense: the Schengen zone in Europe shows both the benefits of freedom of movement between First World countries and why it requires harmonization of immigration policies. Without harmonization, the least restrictive member decides policy for the bloc as a whole. Freedom of movement without Canadian immigration restriction would be a disaster, as millions flood into Canada’s extremely lenient system as a stepping stone to the wealthier US.

Once committed to pressuring Canada to change immigration policy, we should also take the opportunity to demand Canada eliminate its extreme and tyrannical censorship regime and affirmative action policies. These policies are bad for Canadians (as well as Americans) and, because ideas easily cross borders, strengthen the establishment left across the Anglosphere.⁹

This course of action would be a win-win for both the United States and Canada. I believe Canada is locked in a bad equilibrium in which decision makers recognize how disastrous Canadian immigration policy is for the country as a whole, but are unable to do anything because the special interests that benefit from it (degree mills, cheap labor service industries like Tim Horton’s, real estate interests, and various ethnic lobbies) are too powerful. (44% of Canadian residents were immigrants or the children of immigrants in 2021, and that number is now significantly higher.) Public US pressure would give the incoming Poilievre administration cover to massively restrict immigration without alienating these groups.

This is the minimum viable plan for restoring the 20th century status quo, would benefit both parties, and could be done without permanently burning bridges with Canada. The Trump administration should take this as the default course of action.

Fragmenting Canada. If pressuring the Canadian government off their present course fails, another option is to minimize the damage. The Canadian confederation has always been a fragile and unwieldy union (there was no equivalent to the US Civil War to meld the provinces together). Economically, geographically, and culturally, Canada is far less united than the United States, and fragmentation is a real possibility (the only trans-Canadian railroad is regularly cut by activists). If Canada cannot be stopped from pursuing its present path, the US can limit the damage by doing the following:

1. Offering US statehood to Alberta. Alberta is the most right-wing and pro-American Canadian province, with enormous oil wealth, and funds the rest of Canada via equalization payments. Alberta would benefit by no longer having to subsidize a much poorer country, while rump Canada would be gravely weakened financially and geographically disconnected.

2. Offering US territory status for Canada’s sparsely populated northern territories (Yukon, Nunavut, and the Northwest Territory). Alternatively, they could be annexed to Alaska. The argument here is the same as the one for Greenland: these territories are empty and economically worthless but militarily valuable (with the potential to become much more so depending on the impacts of global warming on Arctic sea ice). This would also help encircle rump Canada.

3. Support independence for Quebec and Newfoundland (the most pro-independence provinces) with carrots such as immediate recognition, replacing Canadian equalization payments (which be cheap for the United States) and free-trade and security agreements.

The benefits would be additional territory and natural resources for the United States, an end to Canadian aspirations of geopolitical independence, and a much easier time pressuring multiple smaller and more dependent North American states. If it could be done, this would be better than the previous option because it would greatly limit future Canadian governments’ freedom of action to renege on immigration deals.

The problem is that the success of this approach is entirely dependent on internal provincial political dynamics and fomenting separatism is a hostile act. The US taking a pro-separatist stance would torch what’s left of relations with Canada¹⁰ to potentially no benefit if provincial leaders decide to keep the confederation together, or if independence or annexation referendums fail. I believe that it’s worth unofficial, plausibly-deniable behind-the-scenes overtures to the leaders of the above-mentioned provinces, but that the US government’s public stance should not be to encourage separatism until there’s no other choice.

Annexation. Trump has also floated the idea of annexing Canada wholesale. This idea has circulated in American elite circles since the failed invasion during the revolutionary war. And the benefits to America are obvious: unrestricted access to the entire northern third of the continent, with enormous and sparsely-populated tracts of land and natural resources, plus the elimination of remaining trade and political barriers (such as tariffs on US agricultural goods). More importantly, it would permanently solve Canadian decline: the Canadian government would disappear and cease to be able to demographically vandalize North America.

I also believe this would be good for the welfare of individual Canadians, who suffer under an unusually dysfunctional government and would benefit from American rule, plus it would open the door for many to migrate southwards. It would be one thing if the Canadian government was using its sovereignty to benefit its citizens through exploitation of natural resource rents or better policy, but it is doing the opposite.

That being said, the problems with annexation are huge and glaring. Neither the Canadian government nor Canadians as a whole want to be part of the United States, and Canadians do not like America. Annexation of Canada as a whole would probably require war, which is not worth it. Open political systems are not well suited to conquering foreign peoples¹¹, as they give the conquered power over the conqueror, and it’s not worth rolling the dice to see if Canadians are foreign enough to qualify.¹²

And even if it could be done peacefully, Canadians are extremely left-wing relative to Americans. I think full exposure to the US media ecosystem and political environment (and the destruction of the Canadian censorship apparatus) would change this eventually, in much the same way that Britons and northwestern Europeans in the US are right-wing relative to their cousins in Europe. But it could take a generation. A generation of left-wing dominance in the United States would wipe out the benefits of Canadian annexation (economically and demographically) many times over; rather than us spreading our system to them, we would get convergence.

Conclusion

American policy towards Canada should focus on keeping Canada stable, prosperous and allied. Present Canadian immigration policy undermines all three. Dealing with this is well within the power of the United States government, but it won’t be forever. If Canada declines to the level of Mexico, there will be no recovering the situation. President Trump should act to stop the Canadian government from completing their national suicide, or failing that, limit the damage by breaking up the confederation.

A slightly different version of this article was originally published at Not With A Bang.

Arctotherium is an anonymous writer interested in demographics and the future of civilization. You can find more of his writings at his blog Not With A Bang or at his Twitter.

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1. This would lead to total Indian dominance of this route because Indians are ~60% of the backlog. It would not only increase the Indian number but crowd out every other group since there is a fixed number of visas.

2. Economic integration does not imply full convergence, but it does imply that growth should be similar between countries, because otherwise capital will flow into the country with higher growth opportunities until the marginal investment in both is the same.

3. It’s not surprising that the Canadian Liberals, like the British Tories who pursued a similar policy after Brexit, are on track to get completely wiped out at the next election. Republicans take note.

4. One argument I’ve seen when discussing Canadian immigration, both in real life and online, is that it’s a good thing because Canada is extremely sparsely populated. This ignores the fact that immigrants today are not hardy Swedish farmers out to settle the frontier; they’re moving straight to the biggest urban centers like everyone else. It’s not the 19th century.

5. This is obvious for renters and anyone paying mortgages, but it applies to homeowners too: even if your house appreciates, you need to sell it and live somewhere else to actually gain from that, which means you’re only getting rich if your house differentially appreciates.

6. This is very similar to Britain, and it’s not an accident that, despite Canada having the cheapest energy in the OECD, both countries have been economic disaster zones in the past decade.

7. Americans can’t be smug about this, given the presence of politicians like Ilhan Omar, who’s here to represent Somalia. But it’s a matter of degree.

8. There’s also the fact that the Indian diaspora is very heavily Sikh and Canada has become the world center of the Khalistani movement. This has led to multiple assassinations on Canadian soil (by the Indian government, with attendant diplomatic incidents) and a number of terror attacks. As a result, Canadian relations with India, rather than being friendly or neutral, are actually hostile, for reasons that have nothing to do with the Canadian national interest. This complicates the picture, but doesn’t change the main point. By virtue of being a close American ally, Canadian hostility or friendliness towards India as a result of diaspora influence is bad for the United States.

9. With this in mind, pressure over immigration should be a cornerstone of US policy towards Australia, Britain and New Zealand as well. These countries are less critical to American safety, but their status as heavily-censored extremely left-wing redoubts in the Anglosphere still threatens the long-run interests of the United States.

10. Well, probably. The British government is remarkably tolerant of outsiders supporting Scottish independence or the annexation of British overseas territories by Argentina and Mauritius. But anti-Americanism is core to what’s left of Canadian identity. I think stances the Canadian government would be happy to accept from China or India or Nigeria would draw a sharp and hostile reaction if they came from the United States.

11. Historically, US acquisition of sparsely-populated territories which are then peopled by the demographic expansion of ethnic Americans, as in the Lower 48 and Alaska, has gone well. Conquest of other peoples, such as in the Philippines and Puerto Rico, has been either a waste or a disaster.

12. Annexation attempts can easily backfire by catalyzing differences that were minor before, as Putin discovered in Ukraine.