Last year, I did a post discussing the US’s ability to attract global talent in our high-tech industries. In April, I did a post discussing how immigration can affect the US’s per capita GDP that is somewhat higher than in other developed economies. Recently, I came across a few other articles related to a different US problem—this time about the wealth of the stock market.
Although the US per capita GDP is slightly higher than in Europe, Canada and Japan, our stock market capitalization is much higher than our population, or our GDP. Here’s an overview of the AI:
As of June 2024, the US stock market represents 61% of the world’s stock market capitalization, its highest level since the 1960s. This is a significant increase over the past decade and a half, and is especially remarkable considering that the US accounts for only about a quarter of the world’s GDP. The US stock market is also about 10 times larger than its closest competitor, Japan.
Not surprisingly, the same source suggests that high technology is the cause of this uneven distribution of global stock market wealth:
However, some say this level of concentration can mean an unbalanced economy. For example, the concentration of the US stock market itself is remarkable, with only three companies—Apple, Microsoft, and Nvidia—accounting for 10% of the world’s stock market value.
Of the 18 Asian Americans in the House of Representatives, five are Indian Americans. Ten years ago, only one member of Congress was Indian American. The Democratic nominee for US President in 2024, Kamala Devi Harris, has an Indian mother, while the Republican Vice Presidential nominee JD Vance is married to an Indian American, Usha (née Chilukuri) Vance. Last fall, two Indian Americans, Nimrata Nikki Haley (née Randhawa) and Vivek Ramaswamy, were both prominently competing for the nomination of the President of the Republic. . .
This is in contrast to other Asian American groups, such as Chinese Americans, the largest minority group in America (5.2 million compared to 4.9 million American Indians). Differences in representation at the highest level have been observed in domains such as the technology sector; far more people of Indian origin than Chinese rise above technology to senior management positions.
Of second postKahn points out that Indian immigrants come disproportionately from successful groups within the Indian population:
In India itself, 28% of Hindus are “general caste,” meaning they are ineligible for any affirmative action, unlike Dalits (“untouchables”), indigenous tribes or the adivasis and “Other Backward Classes” (OBCs). The Indian-American Hindu survey reports that here instead 83% are General Category, 16% OBCs (vs. 35% Indian Hindus) and 1% Dalits or adivasi origin (vs. 35% of Indian Hindus). A private survey showed that 25% of Indian Americans are Brahmin, as opposed to 5%, mainly, Indians.
But caste tells only part of the story. The most notable characteristic of Indian immigrants is their relatively high level of education, which correlates with (but does not fully explain) their unusually high incomes earned in the US:
About 80% of Indian immigrants in America over the age of 25 have a bachelor’s degree. This compares to 33% of the general American population. They have a higher labor force participation rate than the general public, 72% compared to 67%. More than 75% of Indian immigrants work in management, business and science (compared to 41% of the general population). Not surprisingly, however, the income of an Indian-immigrant family is significantly higher than that of Americans as a whole, ($132,000 vs. $66,000 in 2019).
Note that $132,000 is even higher than the median income for a college graduate.
Here it may be useful to consider three races, Chinese-Americans, Indian-Americans, and Jewish-Americans, each numbering about 5 or 6 million. Both Chinese and Indian immigrants come from a country of more than 1.4 billion people, and each group tends to have above-average education. That makes Jewish-Americans seem like outsiders. But Kahn makes a compelling case that at least in some ways (not all) Jewish-Americans are the closest comparison to the Indian immigration experience.
For example, India has a complex set of ethnic groups, many of which have been genetically and/or culturally isolated for a long time. Kahn points out that although intermarriage is now common among both Jews and Indian-Americans, these groups were very segregated during their early history.
Of course, many people have low marriage rates outside of their ethnic groups. But what makes the Jewish people and the upper class Indians different is that for centuries they avoided intermarriage despite being alive. among other very large communities. Consider that the number of Jews in the world is estimated at 15 million, while all Western countries (as they are defined by including Europe, the Americas and Australia) have 1.82 billion people. Similarly, Brahmins form only about five percent of India’s 1.44 billion people. In contrast, China’s most prosperous group (Han) comprises more than 90% of its population.
Today, about 40 percent of the world’s Jewish population lives in America. The number rises to almost 50% if you look only at Ashkenazi Jews, the most successful part of the Jewish population. Based on the evidence provided in Kahn’s post, you could argue that the large wave of Indian immigration to the US of 1980-2020 had economics an impact equivalent to doubling the number of our Jewish people. In other words, we have added millions of educated and highly productive people to the land of their ancestors.
Now let’s think about the fact that US companies comprise 61% of global market wealth, a number that has grown significantly in recent decades. Obviously many factors led to this result. But one thing that may be important is the US’s ability to attract a disproportionate share of global talent that is good at:
1. To create new innovative products.
2. Having the financial and management skills to turn those products into successful businesses.
The 1880-1920 wave of Jewish immigrants demonstrated the ability to accomplish those two goals at a rate greater than their 2% share of the US population. The latest wave of Indian immigrants shows similar success.
This does not mean that they are the only two groups that are important in the stock market economy. The founder of Nvidia is from Taiwan and the founder of Tesla is from South Africa. Rather, I suggest that America’s ability to attract disproportionately large numbers of Jewish and upper-class Indian immigrants is a sign of its broader appeal to talented people from around the world. To summarize:
America’s lower income than other developed countries in GDP/capita is a function of our highly productive workforce, on average.
America’s huge advantage over all other countries in the capital market is a function of our disproportionate value very talented people, perhaps combined with the network effects of being able to work together.
It is hard to see how the US could ever reduce its level of wealth inequality to European, Canadian or Japanese levels without firing a large portion of our highly skilled population.
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