Donald Trump was elected to the presidency on a promise to revive the economies of struggling regions. He drew strength from small cities and towns in the Midwest and the South. But the administration’s hasty, poorly-thought-out policies toward immigrants and foreign students are putting many of those places in grave danger. Trump and his advisers seem to be unaware of the degree to which local economies in the heartland depend on universities — and of how much those universities rely on foreign students.
The president’s first executive order on immigration restricted travel and denied re-entry by visa holders from several majority-Muslim countries. That is already affecting students at a number of American universities. Circulated drafts of the next executive order contain a provision severely limiting foreign students’ ability to work while in the United States.
But the direct effect of these restrictions pales in comparison to the climate of fear they create among foreign students. Often, the tone and attitude of a policy can have a stronger effect than the letter of the law — and the Trump administration seems to be broadcasting a clear message that international students are persona non grata in the U.S. That could choke off the flows of overseas tuition dollars and research funding that now power many local economies in the Midwest and South.
First, the economics. In the old days, companies were the anchors of small cities and towns — an auto-parts factory, a meat-processing plant. Those companies would buy materials, electricity and services from other businesses nearby. Their workers would eat in local restaurants, buy from local furniture stores, purchase homes from local builders and so on. Add all this up, and you had a thriving local economy.
There are still lots of towns like that. But nowadays, many thriving places are based around a university. I’m not just talking about cities with flagship colleges, like Pittsburgh or Madison, Wisconsin. I’m talking about towns like Hays, Kansas, with a population of about 21,000. Hays is the home of Fort Hays State University, which has about 13,000 students. Fort Hays State is the linchpin of the town’s economy, and Hays is the key to the regional economy of Ellis County. The country is 96 percent white, settled mostly by German immigrants in the 1870s and 1880s. It’s exactly the kind of place that provided President Trump’s base of support — he carried the county in 2016 with more than 71 percent of the vote.
It’s places like Ellis County that the new executive orders are putting in danger. Almost a third of those 13,000 students are international. Unlike local students, the international kids usually pay full sticker price — about $13,000 in 2014, compared with an in-state price of about $4,500. That means foreign students aren’t taking away spots from the locals; they’re actually subsidizing their education, by tens of millions of dollars a year. Rich parents in places such as China and India, anxious for their kids to get an American degree, pay big bucks to send them to places like Fort Hays State. That money helps local Kansas kids get a good education for much less than they otherwise would. Most of those overseas students eventually go home, and the Kansas kids get a lifetime earnings boost.
And even more importantly, the local economy gains. It benefits from the dollars that those international students spend on meals, clothes and movies. It benefits from all the services the university buys from electricians, plumbers and construction companies. That’s why places where the U.S. government established land grant universities long ago have a big economic advantage today.
As economist Adam Ozimek points out, educating international students is an export industry that brings in tens of billions of dollars a year. Want to decrease the U.S. trade deficit? Recruit more international students for U.S. colleges. Want to save the economies of places in the Rust Belt, and boost the growth of small cities and towns outside the thriving coasts? Attract international students. Want to help Trump’s small-town working-class voter base? Get more international students.
But the executive orders now being issued by the administration will not do the job. They will do the opposite. If high-paying foreign students and their billions in tuition dollars are frightened away, the economies of places like Hays, Kansas, could be absolutely gouged. It’s as if an oceanfront resort town were to pour toxic sludge all over its beaches — a totally unforced error.
For the sake of the working- and middle-class people who voted him into office, Trump should modify these executive orders or issue new ones, in order to retain this critical export industry and regional economic anchor. The U.S. is the education capital of the world. Don’t flush that advantage down the drain.
Noah Smith is a Bloomberg View columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.