As one of us wrote back in the spring of 2024, democratic erosion has extraordinarily large and negative economic consequences. The ascent of populist leaders, who tend to undermine institutions, makes a country’s GDP per capita about 10 percent lower over 15 years than it would have been otherwise. Democracies have higher economic growth, economists suggest, because they are better than autocracies at guiding the economy, investing in public goods, and channeling political disagreements in ways that avoid violence. Democracy is not just a moral good; it is also better for a nation’s bottom line.
Within months of returning to power, Trump issued a series of executive orders targeting law firms for their litigation positions, their employment of lawyers disfavored by the administration, and the political affiliation of their clients. The administration attempted to prevent agencies from contracting with the firms and hiring their lawyers. It also attempted to limit the firms’ access to federal buildings, presumably including federal courthouses. Some law firms, viewing the administration as an existential threat to their businesses, acquiesced to this pressure and negotiated risky deals, with some pledging hundreds of millions of dollars in pro bono work to the administration’s preferred causes.
Reliable government data is one of the most significant, though often underappreciated, public goods, and the quality of that data can decline rapidly in authoritarian nations. The Trump administration attempted to remove climate data that farmers rely upon and has directed NASA employees to create atypical plans for ending satellite missions that help forecast crop yields and drought. And, of course, after the Bureau of Labor Statistics published a weak jobs report, Trump fired the Bureau’s Commissioner and picked a controversial political ally as her replacement. Such an action is deeply dangerous; as our colleague Aaron Klein has noted, “If American savers and businesses lose confidence in the accuracy of data around banks and the financial system, it could result in a financial crisis.”
Unilateral decisions by the president to impose tariffs and regulatory changes have disrupted businesses’ ability to plan. Economic policy uncertainty spiked in April and remains elevated. In the pharmaceutical and biotechnology industries, business deals have stalled because of tariffs, concerns about the ability of the FDA to be a predictable regulator after workforce cuts, and major funding cuts to research. The tumultuous imposition of the tariffs also disrupted the business planning of companies reliant on imports.
Scientists are increasingly looking for jobs outside of the United States because of the Trump administration’s research funding cuts. Universities have limited the number of graduate students they admit in reaction to funding uncertainty. And the administration’s hostility to immigrants and international students threatens foreign-born doctoral degree holders who make up a sizeable portion – in some sectors, a majority – of the science and engineering workforce. As our colleagues Judy Wang and Nicol Turner Lee note, this hostility threatens the United States’ tech industries. While the effects may not be immediately visible, companies depending on these highly educated workers may face labor shortages.
Scientists are increasingly looking for jobs outside of the United States because of the Trump administration’s research funding cuts. Universities have limited the number of graduate students they admit in reaction to funding uncertainty. And the administration’s hostility to immigrants and international students threatens foreign-born doctoral degree holders who make up a sizeable portion – in some sectors, a majority – of the science and engineering workforce. As our colleagues Judy Wang and Nicol Turner Lee note, this hostility threatens the United States’ tech industries. While the effects may not be immediately visible, companies depending on these highly educated workers may face labor shortages.
Read the full article by Vanessa Williamson and Ellis Chen / Brookings
