What is Trump's travel ban
President Donald J. Trump’s threat to ban Muslims from entering the United States was actualized on 27th January 2017 barely a week after he was sworn in as the 45th president of the world’s most powerful country. The ban came with Trump’s signing of an executive order that was meant to indefinitely halt the relocation of Syrian refugees to the U.S.A. The order also banned individuals from ‘terror-prone’ countries from being admitted to the U.S.A. According to John Wasik, a Forbes contributor, the ban will have a detrimental effect on the United States economy in a number of ways. First, it will decrease the productivity of large U.S. corporations which trade globally and derive their profits overseas. Second, countries affected by the ban can increase import fees on U.S. goods or refuse to consume goods originating from the United States. It also prevents the most talented technologists and other professionals from moving to the United States. Moreover, the ban will discourage businessmen who would have liked to start businesses in the U.S. from relocating to the States (Wasik). I agree with the author’s points on the effects of the ban on the U.S. economy. The U.S. economy will be hurt through decreased productivity of U.S. companies, higher prices of U.S. goods and services in global markets, failure to attract businessmen from the affected countries, and failure to attract the world’s most technologically gifted people.
There is a high likelihood that the labor productivity, the amount of goods and services manufactured by employees in one hour of labor, of United State’s firms and corporations will be affected by the Muslim ban. Being global, these companies and corporations recruit and move skilled employees from one country to another. Their productivity is largely affected by the ability to invest in employees’ skills through training and their ability to retain a workforce with relevant skills. If these corporations are not allowed to move skilled workers where they need them, for instance from Iran to the U.S., their productivity will be decreased. The reduction in productivity will be because of skilled labor shortages which increase the hiring cost per skilled worker, making corporations to go for less productive semi-skilled and unskilled workers (Haskel and Martin). The shortages of the skilled workforce may also make employees demand easy pace at work thus reducing their output. Additionally, skilled labor shortages may inhibit workplace learning. Reduced productivity will decrease the profitability of the corporations leading to a reduction in taxes and duties remitted to the U.S. government, thus weakening its economy.
Trump’s travel ban and its effects on economy
Another negative consequence of the ban is increased prices of U.S. goods and services in global markets. It is estimated that the United States trade with Muslim countries is worth $220 billion. Even though the ban affects only seven Muslim countries, it has a potential to damage U.S. interests in countries where Islam is the main religion. The affected countries may retaliate by increasing the taxes ad tariffs on U.S. imports. Other Muslim countries may also increase taxes on U.S products in a show of solidarity with the affected with the banned countries and its people. Increased taxes and tariffs will increase the prices of U.S. goods and services being sold in Muslim countries thus making them less competitive leading to low sales and decreased profits, which may result in layoffs to cut costs and try to make the company profitable. There have also been calls for a boycott of US goods following the signing of the order. Boycotts may also result in a reduction of import demand and deterioration of trade between the U.S. and Muslim countries.
If the ban becomes successful, few businessmen from the affected countries and other Muslim countries will be willing to set up their small businesses in the United States. This is because the ban undermines the reputation of the United States as a good place to run a business. The fears generated by Muslim ban, in the affected countries is likely to hurt the ability of corporations to attract and retain talent as many corporations will discredit the U.S. as a place to start a business or pursue investment opportunities. Failure to attract new businesses will lead to a slowdown in job growth and a rise in unemployment rates. Long-term unemployment is associated with deterioration of skills among the unemployed making them less attractive to the employers over time.
Supreme court rules on travel ban
Furthermore, the ban will have a huge negative impact on the U.S. technological firms and technological advancement. Silicon Valley, the home to most of the world’s giant technological corporations, imports the world’s best talent irrespective of their country of origin or religion (Wadhwa). The talent and diversity of its employees have helped placed the United States among the world’s best nations in innovation and technology. These talents have also helped spur the growth of information communication technology industries, one of the fastest growing sectors of the U.S. economy responsible for employing millions of people. It is projected that ICT jobs will grow by 22% up to 2020. Apart from direct employment, technological firms contribute to GDP growth through e-commerce and increased broadband penetration. However, this job growth and GDP growth is likely to be dampened by Muslim ban which may lock out the most talented individuals in technology from emigrating to the U.S. For instance, the current Muslims population of about 250, 000 living in Bay Area and working for huge technological companies like Google and Microsoft may be affected by the executive order with adverse consequences to the companies’s productivity and country’s economy (Fung and Tracy). If the United States is unable to attract a diverse group of people, its competitors such as Canada will attract the talent and boost their economy.
President Trump’s executive order banning the entry of Muslims from seven countries to the United States is expected to negatively affect the country’s economic future in many ways. The question is: Does the president know the economic consequences of his executive order? If yes, why does he want to expose the country to economically uncertain future? Some of the potential adverse consequences of the ban include decreased productivity of large U.S. global companies trading with affected countries, increased import fees on U.S. goods or boycott of U.S. goods by the affected countries, a reduction in the number of businessmen willing to set up new businesses in the U.S., and failure to attract the most talented technologists to the country. Because the adverse effects of the ban outweigh the positive impacts, there is a need to reverse this order as it is likely to affect the livelihoods of the U.S. citizens negatively.
Fung, Brian, and Tracy Jan. "Tech firms recall employees to U.S., denounce Trump’s ban on refugees from Muslim countries." The Washington Post. WP Company, 28 Jan. 2017. Web. 19 Feb. 2017.
Haskel, Jonathan, and Christopher Martin. "Do skill shortages reduce productivity? Theory and evidence from the United Kingdom." The Economic Journal 103.417 (1993): 386-394.
Wadhwa, Vivek. "Opinion | Why Trump’s travel ban is so harmful to the tech economy." The Washington Post. WP Company, 30 Jan. 2017. Web. 19 Feb. 2017.
Wasik, John. "Here's How Trump Muslim Ban Will Slam U.S. Economy." Forbes. Forbes Magazine, 01 Feb. 2017. Web. 19 Feb. 2017.
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