The Opportunity Cost of Trump
A simple, economic, and nonpartisan argument against Trumpism.
I don’t think Trump is the next Hitler. He’s probably not even the worst president in US history. But he is fundamentally threatening the future of our country.
For literally centuries, America has been the place that people from all over the world have flocked to. Dreamers in all corners of the globe have wanted to send their kids to study in America and start businesses here. In short, they’ve wanted to live the American dream. This has been very good for the American economy, because in our current economic system (i.e., capitalism), growth triumphs almost everything. Things will basically be good for any country whose economy is growing, and bad for countries whose economies are shrinking. Look at the horror stories from Europe (e.g., Greece, Spain) and in those cases you’ll find a stagnant (or shrinking) economy underneath it all. For examples even closer to home, just look at the state of US cities that have stopped growing (e.g., Detroit, Cleveland).
So what are the most predictable (and most important) sources of real growth for an economy? Birth, immigration, and increased labor force participation.¹ While our LFP rose throughout much of the 20th century (thanks mostly to feminism), it has actually been declining since 2000. Furthermore, economic prosperity is the number one most effective form of birth control worldwide. As countries develop, their birth rates unilaterally drop and, in America, our domestic birth rate has been below replacement levels since 1972.
So that leaves us with one horse in the race: immigration. For the past 50 years, immigration has been on a tear and, correspondingly, a huge driver of economic growth. In 1970, less than 10 million people in the US (4.7%) were foreign born; in 2015 that number was more than 43 million (13.4%) [Wikipedia]. Furthermore, this 13.4% actually has a disproportionate impact on our economy. That’s because the people who have the ambition and wherewithal to move their families to the other side of the world tend to be more educated and more productive than your average joe. The data speak for themselves on this: 40% of Fortune 500 companies were founded by immigrants or the children of immigrants.
Aside: Some of you might counter by saying you are totally fine with legal immigration, but just don’t like “illegals”. That’s a perfectly principled stance to take, but there are two things to consider before rounding up all of the undocumented immigrants and sending them home. One is that illegal immigration has been shown empirically to have either a positive or null effect on local economies. And, second, the way we treat illegal immigrants has a huge impact for how we are perceived abroad and big implications for our rates of legal immigration. Especially given that illegal migration has been net negative for 10 years and that illegal immigrants are more likely to pay taxes than use public services, there is no imminent threat that needs to be addressed here — and certainly not one that outweighs the costs of being perceived as unfriendly towards immigration generally.
(Update: Trump is also seeking to limit legal immigration. This makes the arguments in this article even more pressing, as legal immigration is a huge factor in America’s economic prosperity.)
America is still the greatest country on earth… right?
While it will take several years to fully measure how Trump is affecting immigration patterns in the US, early indicators aren’t looking good. In the mere seven months since Trump’s election, Trump has already had a measurable impact on America’s international standing. Top engineering schools in the US received 10%-30% fewer applications from international students this year. And this isn’t just a random blip: as a graduate student myself with many international colleagues, I have heard them say explicitly that their friends at home are not applying to US schools because of uncertainty around Trump and our immigration policies moving forward. Furthermore, international tourism to the US is already significantly depressed from last year, after a consistent run of growth in the previous years.
International tourism to the U.S. down by double digits, likely impacting retail sales and employmentmedium.com
This is why in the big picture, it really doesn’t matter whether Trump is actually a racist, enables racists, merely tolerates racists, or is literally “the least racist person ever” (as he likes to say). Leaving racism out of the discussion entirely, what matters for immigration — and as I have argued, the fundamental prosperity of our economy — is whether the US is perceived as friendly or hostile to foreigners. Trump’s personality, policies (if you can call them that), and public image are demonstrably threatening our position as Leader of the Free World. So whether or not Trump truly merits the screams of agony and anxious fears of the left, conservatives have no reason to be gloating. At the end of the day, we should all care about the future of our country and, as it stands, the image that Trump has portrayed is a major threat to our economic prospects.
This is what upsets me most about Trump. The way potential immigrants perceive the US is what drives their decisions. At the same time, public perception — which requires no drafting of legislation, whipping of votes, or the other hard work of politicking — is among the most manipulable instruments politicians have at their disposal. Everyone who complains that the “MSM” doesn’t treat Trump fairly and interprets everything he does in bad faith is just making excuses. Part of being a politician is managing your public image and if Trump doesn’t like how he looks in the media, he’s simply not doing a good job — it’s his own damn fault.
Opportunity costs are all the counterfactual benefits that you don’t receive by making an irreversible decision. They are hard to quantify and perceive because they aren’t as tangible as what’s on the evening news — which, in the age of Fox News and Breitbart, consists of fearmongering about drugs, violence, and freeloading among immigrant communities. But even though they aren’t given any attention in the media, immigration-related opportunity costs are not only real, but pose an existential threat to the US economy.
The problem isn’t that the Trump administration is ruining everything about our economy and the American way of life — the labor, housing, and stock markets all seem to be just fine. But while the downsides of Trump may be containable, it’s the hidden and forgone upsides of having a forward-looking president that will harm us the most. If Trump were president when Steve Jobs’ Syrian father or Sergey Brin’s Russian parents were planning to emigrate, Apple and Google might not be American companies, but perhaps German or Canadian. As modern migrants start viewing America unfavorably because of Trump, we will start to miss out on the upside of being home to the world’s refugees and brightest minds.
As the economy becomes more digital and global, other countries will continue to develop and rival the US in terms of size and dynamism. However, the 20th century has given us a proven model for reaping an outsized portion of global economic productivity: by being enthusiastically open and welcoming to migrant communities. I say we stop quibbling about meanings behind Trump’s unintelligible tweets and start seriously considering the cost of the unforeseen potential and economic prosperity that Trump is squandering before our eyes.