An Immigration Ponzi Scheme

Our Norwegian correspondent The Observer has translated a fascinating article about the inevitable failure of Norway’s immigration policies, despite the enormous reserves of oil money which are expected to keep the national welfare system afloat.

The translator includes this note:

This article is interesting not because of any ground-breaking content, but because the SSB has finally admitted that the current immigration/asylum system is unsustainable.

One of the first posts I published at my old blog dealt with a study published by NHO (Norwegian business organization) which warned the government that the country’s oil fortune could disappear if current immigration policies weren’t drastically overhauled.

That was six years ago, and the government didn’t heed that advice. Maybe they will this time?

But then again maybe not — after all we’re talking about the Norwegian authorities here.

The translated article from Dagens Næringsliv:

Compares immigration with a pyramid schemes

The head of research at SSB [Statistisk sentralbyrå, Norwegian Bureau of Statistics], Erling Holmøy, punches a hole in the myth that immigration can save Norwegian government finances when oil revenues begin to dwindle and the aging population means that more people are living on the pensions and in need of care, Dagens Næringsliv writes.

Together with senior advisor Birger Strøm, he has studied how immigration affects government budgets.

“Immigration bears certain similarities to a pyramid scheme,” Holmøy tells Dagens Næringsliv.

It generates increased revenues for the public coffers in the early years, but eventually the budget goes into the red, according to his calculations.

The research shows that immigrants from low-income countries receive more than they contribute both in the short and the long term. The main reason is that they have a lower rate of participation in the labor force, lower taxable income, and receive more public assistance than the rest of the population.

“They are pushing the problem in front of them”

More surprising is the fact that neither the traditional skilled immigrants from Western countries are not profitable in the long run, according to the researchers’ calculations.

The reason for this is that over time they become just like Norwegians.

If the politicians don’t do anything they’ll be forced to use the Oil Fund to pay for social security and welfare benefits in a few years, energy consultant, Hans Henrik Ramm says. In that case the oil fund will be depleted within fifty years.

“They push the problem in front of them when they constantly keep adding more people. In the short term the immigrant doesn’t pose a burden with childhood and old age costs, and therefore it appears that the immigrant can provide us with some more flexibility. But the immigrant will eventually have children and grow old. That means that the picture changes over time,” Holmøy tells Dagens Næringsliv.

Holmøy also points out that the average citizen in Norway contributes less than he or she receives in the form of welfare services and assistance. Oil revenues make it possible for the national budget to operate with higher outlays than what is generated in taxes and fees.

When the population increases as a result of immigration, the oil wealth will have to be shared among more people. Consequently immigration becomes an unsustainable enterprise in the long run.