The worlds of constitutional law and political science were rocked this week by Republican presidential hopeful Donald Trump’s campaign promise to block approximately thirty percent of the world’s non-US population from entering the United States on the grounds that they at least nominally adhere to Islam, the world’s second largest religious community. However, after some reflection, we at Mediolana believe that it is the domain of economics which could potentially be forever transformed by Trump’s deeply controversial initiative in at least three critical ways:
- Autarky. The idea of banning a significant segment of the planet from visiting your country is a clear indicator of the desire to follow an autarkic path, where international trade is shunned in favour of a purportedly self-contained economic unit. However, in modern times the theory has been rather more attractive than the practice: Nazi Germany, 1980s Romania and today’s North Korea have almost entirely discredited this model; it is unclear exactly how a Trumpian Juche would function.
- Contraction. With even established emerging market groupings such as the BRICS experiencing low growth and structural bottlenecks, economists have identified new sources of global prosperity. Arguably the most notable of these is MINT – like BRICS, an acronym popularised by Jim O’Neill of investment bank Goldman Sachs – which encompasses the economies of Mexico, Indonesia, Nigeria and Turkey. Given that Trump has gone out of his way to alienate both Mexicans and Muslims, American access to the MINT nations (as well as other blocs with large Islamic populations, such as ASEAN) is likely to be grudging at best under his hypothetical future presidency.
- Collapse. As previously discussed on this blog, the US economy suffers from perhaps one towering flaw above all others: the country’s infrastructure was designed for oil prices of US$10/barrel. Given both this and the fact that the true opportunity cost of a barrel of oil in the 2010s has been estimated by the respected American author Christopher Martenson at more than US$5,000.00 per barrel, the United States is substantially reliant on the willingness of its Middle Eastern allies to sell it petrol as cheaply as possible. Whether a President Trump would have it in him to keep this vital constituency onside is anyone’s guess – as are the consequences for not doing so.