Will a second Donald Trump administration be good for business? As far as I can tell, a lot of business executives are basing their hopes on the idea that he won’t really carry out his campaign promises regarding mass deportations and tariffs, which he said would be similar to his border wall, which he largely never built but claimed to have.
However, I think this kind of optimism is misguided. Trump has a long history of fixation with immigration and tariffs, so he is unlikely to take well to criticism that he has failed to implement his core policy proposals.
Even pessimists will underestimate the extent of the harm if he does not adjust his plans. A lack of workers for many hard manual professions that native-born Americans are reluctant to perform is hardly the only effect of hostility toward immigration. Additionally, it will erode American technological leadership.
As you may be aware, Trump has stated that he intends to declare a state of emergency and use the military to assist in the apprehension of a large number of illegal immigrants, initially relocating them to what his top immigration adviser Stephen Miller has described as enormous holding facilities.
Such acts would be a nightmare for civil liberties and humanitarianism. However, Trump is unlikely to be deterred by these factors. He would even enjoy a commotion since it would give him a strong, authoritative appearance.
Ugly or very ugly
The effect on the economy can be a different story. Industries like agriculture, meatpacking, and construction that employ a lot of immigrants without permanent legal status (as well as people who are legally here but could get caught in the dragnets) would see shortages and price increases as a result of mass deportations.
Sincerely, neither I nor anybody else knows how all of this would turn out. Would it seem unattractive? Or would it be incredibly unsightly?
Beyond these immediate repercussions, though, Trumpism is likely to have a more serious impact on American technical leadership, which hasn’t gotten much attention.
The wonder of the world is our technology sector. Around 1995, it appeared that the world’s most prosperous nations were all about the same in terms of technology and productivity; if Europe’s real GDP per capita was lower than ours, it was primarily because Europeans took more vacations than Americans, which caused them to work fewer hours.
However, as former European Central Bank president Mario Draghi noted in a recent report for the European Commission, America has regained its lead in recent decades. This U.S. increase is intriguing to me since it isn’t widely based; Europeans perform the majority of tasks roughly as well as we do. Rather, the focus is on America becoming the leader in digital technology.
Why is that success story happening? There are undoubtedly a number of reasons for it, not the least of which are the network externalities brought about by Silicon Valley’s technological cluster, which has extraordinarily high per capita revenue. However, it becomes clear that immigrants—often highly educated immigrants from South and East Asia—are also an important part of the tale when you spend time in America’s innovation areas.
You might argue it shouldn’t be a problem. MAGA’s hostility is directed against illegal immigrants in the US who work in blue-collar professions, not Indian IT experts, isn’t it?
False.
Targeting skilled labor
The first Trump administration was obviously anti-illegal blue-collar workers and highly educated, legal immigration. It made it far more difficult for highly qualified foreign workers, who are the primary source of employment here, to get or renew their visas. Many employees are also afraid that these restrictions may reappear, only harsher.
A 2016 exchange between Miller and Steve Bannon, a longstanding Trump loyalist who was freed from prison in time to campaign for Trump, is worth reading if you want an idea of what Trump’s inner circle likely thinks. Bannon blasted the billionaires for hiring foreigners to perform IT tasks that he feels should be performed by Americans, claiming that legal immigration is the true issue. “Well,” Miller said, “that was brilliantly stated.”
Will the fact that several of these oligarchs were strong Trump supporters—Elon Musk foremost among them—make a difference? Most likely less than they believe. In the past, oligarchs who believe they have gained the favor of an authoritarian ruler only to find out later that they are far more reliant on his kindness than he is on their wealth. I predict that Musk in particular will soon realize that he is more important to Trump than he is to him.
Therefore, I’ll be shocked if highly educated workers are spared from the backlash against immigrants. The openness of our society is one of the reasons America has been so successful in drawing in the best and brightest from around the world; maybe more than any other country, we have been a place where people from all backgrounds can feel accepted. It might be the end of that age.
The planned raids and detention centers would likely dominate the news for the next few years, and with good reason. However, ten years from now, we might also realize quite clearly that by targeting immigrants, we have weakened the technological industry, which is one of the things that truly makes America great.
Paul Krugman writes columns for the New York Times.
Note: Every piece of content is rigorously reviewed by our team of experienced writers and editors to ensure its accuracy. Our writers use credible sources and adhere to strict fact-checking protocols to verify all claims and data before publication. If an error is identified, we promptly correct it and strive for transparency in all updates, feel free to reach out to us via email. We appreciate your trust and support!
