New Delhi, Sept. 23 -- US President Donald Trump's dramatic H-1B visa fee increase to $100,000 isn't just a political statement; it's a profoundly flawed economic manoeuvre. While it may seem like a straightforward way to 'protect' American jobs, a dive into the principles of production and labour economics reveals it to be a misplaced policy that risks hurting the very economy it aims to help. The problem with it is that it only considers the price of labour, completely ignoring its productivity.

For a business, an optimal production strategy is determined by two key factors: the cost of inputs and their respective productivity. This is captured by the economic principle that a firm is at its most efficient when the 'marginal rate of te...