The Long-Term Economic Wreckage of Trump’s Travel Ban

After weeks of silence, U.S. business leaders have become increasingly critical of President Donald Trump’s announced ban on refugees and immigrants from seven Muslim-majority countries.

“Trump’s actions… are so un-American it pains us all,” wrote Netflix CEO Reed Hastings in a Facebook post earlier this week, while Flickr co-founder Stewart Butterfield pronounced the ban “…gratuitously evil” in a Tweet. At the normally staid Goldman Sachs, CEO Lloyd Blankfein told employees in a voicemail that “[t]his is not a policy we support.”

Corporate America has good reason to condemn Trump’s travel ban – it is a humanitarian travesty and an affront to American values. Moreover, its long-term impacts could wreak incalculable damage to the American economy.

Much of the innovative energy in the United States that’s led to new jobs and economic growth has come from its immigrants.  According to the 2016 Silicon Valley Index by the think tank Joint Venture, 37% of Silicon Valley residents are foreign born, including 50% of workers ages 25-44. Many of the tech world’s most prominent entrepreneurs are also immigrants, including South African-born Elon Musk, founder of Tesla and SpaceX; Google’s Sergey Brin; and Israeli-born Safra Catz, now CEO of Oracle. In fact, finds the Kauffman Foundation, more than 40 percent of Fortune 500 companies in 2010 were founded by immigrants or the child of an immigrant.

Yet Trump’s travel ban sends a broadly anti-immigrant signal to the rest of the world just as other nations are vying for – and winning –  the best and brightest minds in the increasingly global market for talent. Already, the United States is slipping in its ability to attract and retain the world’s top workers. A 2015 report by the Business Roundtable, for instance, ranked the United States ninth out of tenth – after Germany, Australia, Singapore and other nations – in the friendliness of its policies toward high-skilled immigration.

Trump’s continued lurch toward insularity, which includes his plans for a border wall as well as his ban on refugees, will only accelerate the flight of top-tier global talent to friendlier shores – a phenomenon that urban theorist Richard Florida noted as early as 2004 in an especially prescient piece for the Washington Monthly:

Cities from Sydney to Brussels to Dublin to Vancouver are fast becoming creative-class centers to rival Boston, Seattle, and Austin. They’re doing it through a variety of means—from government-subsidized labs to partnerships between top local universities and industry. Most of all, they’re luring foreign creative talent, including our own. The result is that the sort of high- end, high-margin creative industries that used to be the United States’ province and a crucial source of our prosperity have begun to move overseas. The most advanced cell phones are being made in Salo, Finland, not Chicago. The world’s leading airplanes are being designed and built in Toulouse and Hamburg, not Seattle.

Florida noted a deficit, even then, in the political and policy landscape that was making America less attractive for foreigners as a place to settle. Most instructively, he also saw the early signs of Trumpism: the resentment bred by the geographic and cultural polarization between those who were benefitting from the new knowledge economy – educated and largely urban –  and those who were not.

President George W. Bush was the champion of these early dispossessed, Florida argued, a man who disdained the “hip but pro-growth, open- minded and … ambitious” spirit of his predecessor, Bill Clinton, and brought to Washington a distinctly old-economy perspective to his economic and domestic policy. Vice President Dick Cheney made his fortune in oil, while Treasury Secretary John Snow was in railroads. Bush’s economic and fiscal policies, Florida wrote, were “designed to provide life support for…aging red-state industries” such as logging, mining, coal and natural gas.

In that way, Trump is very much Bush’s heir. Trump, too, has made promises to coal country and shown favor toward oil and natural gas. His nominee for Secretary of State, Rex Tillerson, was the CEO of Exxon-Mobil; his pick for U.S. Trade Representative, lawyer Robert Lighthizer, made his name aggressively protecting the U.S. steel industry from “dumping” by foreign competitors.

So perhaps it is inevitable that the policies set in motion by the GOP more than a decade ago should culminate in the destructive policies of its current leader.

Trump’s administration has recently signaled that it also plans to take on reform of the H-1B visa program for high-skilled workers as part of immigration reform. Though the details of what will be proposed are unclear, it’s hard to imagine that Trump will adopt the reforms that are actually needed – a dramatic increase in the number of high-skilled immigrants who can come to America and stay. Even if he does adopt a more liberal policy, it will not erase the stain of xenophobia and hostility that have marked his campaign and early days in office.

Trump has repeatedly decried the flight of jobs from America to other countries. He needs to realize that his policies are what’s having that effect.

Anne Kim

Anne Kim is Senior Writer at the Washington Monthly.