How hostility towards immigrants could harm America's technology sector

By Paul Krugman  Will business prosper under a second Donald Trump presidency? As far as I can tell, many business leaders are pinning their hopes on the belief that he won’t actually follow through on his campaign pledges on tariffs and mass deportation — that they’ll be like his border wall, which, for the most part, he never built but claimed he had.

 

But I believe that such optimism is misplaced. Mr Trump’s obsessions with tariffs and immigration go way back, and he probably won’t respond well if people ridicule him for not delivering on his signature policy ideas.

 

If he does not moderate his policies, the damage will be considerable — bigger than even pessimists realise. Hostility to immigrants won’t just create labour shortages for many gruelling manual jobs that native-born Americans are reluctant to do. It will also undermine American leadership in technology.

 

 

As you may know, Mr Trump has declared his intention to declare a national emergency and deploy the military to help round up huge numbers of undocumented immigrants, initially placing them in what Stephen Miller, one of his top immigration advisers, has called “vast holding facilities.”

 

Such actions would be a humanitarian and civil liberties nightmare. But these considerations probably won’t deter Mr Trump. If anything, he may welcome an uproar because it would make him look strong and decisive.

 

The economic impact may be another matter. Mass deportations would create shortages and raise prices in industries that employ large numbers of undocumented immigrants (plus workers legally here who might be caught up in the dragnets), including agriculture, meatpacking and construction.

 

I honestly don’t know how all this would play out, and I doubt that anyone does. Beyond these near-term effects, however, there’s a likely consequence of Trumpism that hasn’t received a lot of attention: The threat that it will pose to American technological leadership.

 

Our technology sector is the wonder of the world. Circa 1995, the world’s major wealthy economies all seemed to be on roughly the same technological level, with similar levels of productivity; if Europe had lower levels of real gross domestic product per capita, one of the main reasons was that Europeans work fewer hours, because unlike us, they take real vacations.

 

But as a recent report for the European Commission by Mario Draghi, a former president of the European Central Bank, points out, America has pulled ahead again in recent decades. What I find interesting about this US surge is that it isn’t broadly based: Europeans do most things about as well as we do. Instead, it’s all about America taking the lead in digital technology.

 

What’s driving that success story? No doubt it has multiple causes, not least the network externalities created by the technology cluster in Silicon Valley, which has incredibly high per capita income. But spend time in America’s tech hubs, and it becomes obvious that immigrants — often highly educated immigrants from South Asia and East Asia — are also a key part of the story.

 

Well, you may say, that shouldn’t be an issue. MAGA’s antipathy is aimed at undocumented immigrants taking blue-collar jobs, not tech wizards from India, right? Wrong.

 

The first Trump administration was clearly hostile to legal, highly educated immigrants as well as undocumented blue-collar workers. It made getting or renewing visas significantly harder for high-skilled foreigners, which is the main way they can work here.

 

If you want a sense of what Mr Trump’s inner circle probably believes, it’s worth looking at a 2016 conversation between Mr Miller and Steve Bannon, a longtime Trump ally who was released from prison in time to campaign for Trump. Mr Bannon declared that legal immigration is the real problem, denouncing the “oligarchs” bringing in foreigners to do IT jobs he believes should go to Americans. “Well, that was brilliantly stated,” replied Mr Miller.

 

I’ll be very surprised if the turn against immigrants spares highly educated workers. Specific policies aside, one reason America has been so successful at attracting the world’s best and brightest is the openness of our society; more, perhaps, than any other nation, we have been a place where people from different cultures can feel welcome. That era may come to an end.

 

For the next couple of years, the proposed raids and detention facilities would probably dominate the news, and rightly so. But a decade from now we may also be acutely aware that by turning on immigrants, we undermined the technology sector, one of the things that actually makes America great.

 

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The author won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography.