Why do most Economists oppose Trump’s Nationalism? – Part Two

This second section to my essay addresses why the majority of economist’s oppose nationalism, and how this is reflected in their views of migration and labour mobility.

Economic Nationalism is further viewed cynically by economists due to its implications for international labour mobility. The basis of economic nationalism is its prioritisation of domestic socioeconomic interests over foreign interests. To this extent, increased regulation of inward immigration to a country is under the umbrella of economic nationalist policy. However, most economists view this branch of economic nationalism to again be harmful to the country’s overall development. Theoretically, as labour is a factor of production, increasing its supply would increase the country’s productive potential, therefore allowing for more short term economic growth with reduced threat of demand-pull inflationary pressures. On the reverse, reducing a country’s immigration would mean a reduction in labour supply and the labour market skill pool. The country equally loses out on potential entrepreneurial individuals, who could have been greatly advantageous to the economy in the long run.


Another economic nationalist argument supporting immigration restriction would be that increased immigrant density within an area pushes down wages, as labour supply increases relative to labour demand. However, counterintuitively, Professor Jonathan Wadsworth of Royal Holloway found “no distinct correlation between local average wage growth and share of immigrants in a local workforce.” This suggests that inward immigration does not impact local wage growth, but rather positively contributes to the labour skill set and entrepreneurial value of the area.

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Populists may claim that nationalist economic policies solve the problems of globalisation, however these so called problems can be solved through other means that are mutually beneficial to other economies also. For instance, in order to increase employment from jobs that are lost to more efficient foreign producers, rather than increasing import tariffs to protect infant industries and create jobs, the policy makers can instead subsidise research and development for infant industries so that they develop more efficiently and become internationally competitive, without increasing import tariffs and  threatening protectionist retaliation.

In summary, in order to deviate from the negative connotations of “nationalism”, certain enthusiasts of the populist policy have opted instead to call it “economic rationalism”. However, the majority of economists would agree that the counterproductive nature of anti-globalisation and anti-migration policies should deem the practice to be “economic irrationalism.” The devolution of globalism towards isolationism disregards the importance of specialisation within economies, which can lead to maximisation of output, competition and consumer choice when combined with free trade. The consequent retaliation of foreign markets to economic nationalism is in itself detrimental to export led growth. In terms of migration, expansion of the labour market is fundamental to improving labour skills and productivity, whilst having no recorded negative impact on local wages.

Ultimately, Economic Nationalism is a branch of political Populism that is not grounded by economic theory, but rather intended to appeal to the “ordinary person,” parallel to the intended demographic of Populism. However the majority of economists understand that, contrary to the flawed basis of economic nationalism, modern economies are intertwined such that creating inclusively beneficial policies that generate international prosperity, such as free trade and movement of people, does not come at the trade off of sacrificing your own nations welfare.

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