Historic but not without precedent

We are living through a historic moment but it is not without historical precedents that offer lessons for recovery. To be more specific, mistakes made after the 1918-1919 Spanish Flu pandemic contributed directly to the depth and length of the Great Depression. Quite disturbingly, some of those mistakes appear to be repeating themselves amid the COVID-19 crisis. This pattern has long-term implications for multinational companies that executives should begin considering well before the world emerges from the lock-down.

Since 1990 and the collapse of the Soviet Union and Warsaw Pact most Western Countries embraced open borders. International tourism soared as did cross-border hiring. In that period, international tourist arrivals went from 400 million to 1.4 billion. International migration jumped from 153 million to 272 million last year. The steady economic growth through this period both spurred and benefitted from this travel. Businesses benefitted because they could hire talent without being overly concerned about nationality. While many assume that once the pandemic eases, the world will return to “normal” travel patterns, this assumption may not be realistic.

We have seen something similar before. Following recovery from the Spanish Flu, the world saw rising barriers to the movement of people. The reasons were both varied and complicated. The Communist Revolution in Russia was followed by bombings, strikes, and labor unrest in Western Europe and the United States. Many countries instituted strict immigration controls. The U.S., Congress passed sweeping immigration restrictions. Canada, Australia, and others also limited immigration from Europe, including for Jews fleeing Hitler’s regime.

Today, just as some controls are easing, there is evidence that political pressures are again driving restrictions. Fears of terrorism since 9/11 have resulted in many restrictions. Migrants fleeing droughts, wars and violence in Central America, Sub-Saharan Africa and the Levant have been unwelcome in Europe and the United States. Concerns over economic competition from migrants contributed to the “leave” vote and Britain’s exit from the European Union. And then came the new coronavirus. With this as background, it is reasonable to predict stricter border controls become the rule, with entry permitted only for those deemed “safe,” which, at least for now, includes Americans hoping to visit Europe.

The Trump administration using the pandemic as an opportunity to block foreigners from entering the United States, by closing borders, terminating immigration services at overseas consulates, and suspending the issuance of green cards. To the dismay of many companies, it announced a moratorium on most temporary work visas until the end of 2020. President Trump, 1930s-style, that high unemployment caused by the shutdown means the government must “protect unemployed Americans from the threat of competition for scarce jobs.” Such beggar-thy-neighbor thinking contributed directly to the economic crisis of the 1930s.

Notwithstanding the President’s optimistic promise, medical professionals are warning that it could well be a year or more before a vaccine for COVID-19 is widely available. We can only conclude that health-related border restrictions will remain for some time. The question is whether countries adopt a sensible risk management approach to the problem, or instead allow fear to erect borders. We can hope that the fears over the coronavirus do not produce barriers to immigration and travel similar to those that predated the Great Depression.

Open borders exist in a world where optimism triumphs over fear. Open borders facilitate economic growth and prosperity. But open borders are not guaranteed. U.S. companies must advocate policies that facilitate the cross border movement of talent. They should also recognize that, if that should fail, they will be forced to accommodate a more restricted talent pool and reduced access to international markets.

Richard Holwill

July 12, 2020

References:

1. Border crossings:

https://ourworldindata.org/tourism

2. Migration:

https://www.un.org/en/development/desa/population/migration/publications/migrationreport/docs/InternationalMigration2019_Report.pdf

3. Border Closures:

https://www.aljazeera.com/news/2020/03/coronavirus-travel-restrictions-border-shutdowns-country-200318091505922.html

4. U.S. visa policy:

https://www.nytimes.com/2020/06/22/us/politics/trump-h1b-work-visas.html

5. Presidential announcement on U.S. visa restrictions: https://www.whitehouse.gov/presidential-actions/proclamation-suspending-entry-aliens-present-risk-u-s-labor-market-following-coronavirus-outbreak/


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Richard Holwill  |  +1-202-285-3570  |  rnh@holwillandcompany.com

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