Last year, I wrote an article discussing the United States’ ability to attract foreign investment. Global Talent I wrote an article in April about how immigrants have contributed to the high-tech industry. GDP per capita This is somewhat higher than in other developed countries. Recently I came across a few articles relating to the issue of American exceptionalism, in this case as it pertains to stock market wealth.
Although the US GDP per capita is slightly higher than Europe, Canada, and Japan, its stock market capitalization far exceeds its population and GDP.
As of June 2024, the U.S. stock market represents 61% of global equity market capitalization, the highest level since the 1960s. This is a significant increase over the past 15 years, and is particularly notable given that the U.S. only accounts for about a quarter of global GDP. The U.S. stock market is also about 10 times the size of its nearest competitor, Japan.
Not surprisingly, the same sources suggest that tech is responsible for this skewed distribution of global stock market wealth.
However, some argue that this level of concentration could mean imbalances in the economy. For example, the concentration of the US stock market itself is also notable, with just three companies – Apple, Microsoft and Nvidia – accounting for 10% of the world’s stock market capitalization.
Of the 18 Asian American members of the House of Representatives, five are Indian American. Ten years ago, there was only one Indian American. Kamala Devi Harris, the Democratic front-runner for the 2024 US presidential election, has an Indian mother, and Republican vice presidential candidate JD Vance is married to Indian American Usha (née Chilukuri) Vance. Last fall, two Indian Americans, Nimrata Nikki Haley (née Randhawa) and Vivek Ramaswamy, were front-runners for the Republican presidential nomination.
This is in contrast to other Asian American groups, such as Chinese Americans (5.2 million vs. 4.9 million Indian Americans), who are the largest subgroup in the U.S. The difference in representation at the executive level is Featured In sectors such as technology, Indians are significantly more likely than their Chinese counterparts to progress from technical roles to senior management roles.
So Second PostKhan points to the fact that immigrants from India come disproportionately from more successful segments of the Indian population.
In India itself, 28% of Hindus “General category” refers to Dalits (“untouchables”), indigenous peoples, Adivasi and the “Other Backward Classes” (OBCs). investigation Here, 83% are in the general category, 16% are OBC (35% of Indian Hindus), 1% are Dalit, or Adivasi 25% of Indian Americans are Brahmins (35% are Indian Hindus). Private surveys suggest that 25% of Indian Americans are Brahmins, compared with a maximum of 5% of Indians.
But caste only tells part of the story: What is most notable about Indian immigrants is their relatively high educational attainment, which correlates with, but does not fully explain, their unusually high incomes in the United States.
Approximately 80% of Indian immigrants over the age of 25 living in the US have a bachelor’s degree, compared to 33% of the general American population. Indian immigrants have a higher labor force participation rate than the overall population, at 67% compared to 72% for the general population. More than 75% of Indian immigrants work in management, business, or science fields (compared to 41% of the general population). It is therefore not surprising that the median household income of Indian immigrants is significantly higher than that of Americans overall ($132,000 vs. $66,000 in 2019).
Keep in mind that $132,000 is also more than the average income of a college graduate.
It might be helpful to consider three ethnic groups, roughly 5 to 6 million people each: Chinese Americans, Indian Americans, and Jewish Americans. Both Chinese and Indian immigrants come from countries with populations just over 1.4 billion, and both groups tend to be above average educated. So Jewish Americans seem like an exception. But Kahn makes a compelling case that in at least some respects (though not all), Jewish Americans are closest to the experience of Indian immigrants.
For example, India has complex ethnic groups, many of which have long been genetically and/or culturally isolated. Kahn points out that while intermarriage is now fairly common among both Jews and Indian Americans, these groups were more isolated for much of their history.
Of course, many ethnic groups have low rates of intermarriage, but the difference between Jews and high-caste Indians is that for centuries, despite living in the same ethnic group, they have largely avoided intermarriage. Within other, much larger societies. The world Jewish population is approximately 15 million, while the entire Western world (broad definition including Europe, the Americas, and Australia) has a population of 1.82 billion. Similarly, only about 5% of India’s population of 1.44 billion are Brahmins. In contrast, China’s most successful group (the Han Chinese) constitutes over 90% of China’s population.
Currently, about 40% of the world’s Jews live in the United States. If we consider only Ashkenazi Jews, who are the most successful part of the Jewish population, that number rises to about 50%. Based on the evidence presented in Khan’s post, we can say that the huge wave of Indian immigration to America between 1980 and 2020 has had a huge impact. Economical This is the equivalent of doubling the Jewish population – in other words, adding millions of the most educated and productive people to their homeland.
Now, consider the fact that US companies account for 61% of the world’s stock market wealth. This number has increased dramatically in recent decades. Obviously, there are many factors that led to this outcome. However, one important factor may have been the US’s ability to attract a disproportionate share of the global talent pool with outstanding talent in the following fields:
1. Creating innovative new products.
2. Possess the financial and management skills to turn those products into successful businesses.
The wave of Jewish immigrants between 1880 and 1920 demonstrated their ability to achieve both of these goals despite making up only 2% of the U.S. population, and the more recent wave of Indian immigrants has shown similar success.
This is not to say that these are the only two groups that matter to stock market wealth. Nvidia’s founder is from Taiwan and Tesla’s founder is from South Africa. Rather, I am saying that America’s ability to attract disproportionate numbers of Jewish and high-caste Indian immigrants is emblematic of America’s broad appeal to talented people from around the world. To summarize:
The United States’ slight advantage in GDP per capita over other developed countries is due to American workers being, on average, slightly more productive.
The reason why the US market capitalization is so overwhelmingly superior to all other countries is Very talented people, Perhaps coupled with the network effect of being able to work together.
It is hard to imagine how the United States could reduce its levels of wealth inequality to those of Europe, Canada, or Japan without expelling a large portion of its most talented people.
