Asian immigration will make America more unequal, and that's a good thing
By Scott Sumner
It seems that Asia has overtaken Latin America as the largest source of immigration to the US. Here’s a recent example of that trend:
Mexicans still dominate the overall composition of immigrants in the U.S., accounting for more than a quarter of the foreign-born people. But of the 1.2 million newly arrived immigrants here legally and illegally counted in 2013 numbers, China led with 147,000, followed by India with 129,000 and Mexico with 125,000. It’s a sharp contrast to the 2000, when there were 402,000 from Mexico and no more than 84,000 each from India and China. Experts say part of the reason for the decrease in Mexican immigrants is a dramatic plunge in illegal immigration.
The rest of this post will involve some ethnic generalizations, so I should probably add the usual disclaimer. Any generalizations merely reflect averages, and in some cases applies only to the subset of an ethnic group that self-selects to immigrate to the US.
One of the reasons why the US is more unequal than a place like Germany, especially at the very top, is that the US is host to economic engines like Wall Street and Silicon Valley and Hollywood. I suppose you could throw in fracking. There’s no particular reason why continental Europe couldn’t have its own Wall Street, or Silicon Valley or Hollywood or fracking industry, but they don’t. Britain has “the City” which is sort of the Wall Street of Europe, and that adds to inequality in Britain. But Europe failed to attract the other engines of wealth creation and inequality that are as dominant as the US examples. Europe’s industries tend to be less of the boom/bust variety that often lead to great wealth, although they certainly have their share of billionaires.
In one case (fracking) that is due to environmental lobbying. Europe is more left wing and more densely populated, and similar areas of the US (New York, California) also don’t do much fracking. But the other failures may have had more to do with other factors, such as regulation and taxes. And I would add to that mix of other factors “ethnic diversity.” The US hosts a larger than normal group of high-achieving immigrants, who have moved here from all over the world. One early example is the Jewish scientists who fled Europe in the 1930s. But it’s still happening today. Elon Musk is from South Africa. Peter Thiel is from Germany. And of course many highly skilled people have been arriving from Asia (and more than you might assume from Africa, Latin America and the Middle East.)
Even if these high skilled immigrant groups form a relatively low overall share of the US population, they can have a disproportionate impact on the sectors that create great fortunes, such as finance, technology, and the media. Fracking might be the one exception, and I suppose Germany with all its engineering talent would now have a thriving fracking industry if not for environmental restrictions. But in the other cases I think immigration may have played a factor in the success of the US economy.
The downside of this trend is that it increases inequality in the US. But that doesn’t mean it hurts lower income Americans; just the opposite is the case. Many California public programs that benefit Hispanic immigrants (higher ed, medical programs, etc.), are made possible by taxing the enormous incomes earned by the top 1% in California. If Silicon Valley and Hollywood moved to Germany, then tax revenues would plunge, and California state spending would look more like Mississippi’s. The money Hispanics spent on movies and software would not go to Europe. The same is true for Wall Street and New York State. And if the City of London financial firms moved to Paris, Britain would be more equal, but the working class in Leeds or Liverpool would be worse off.
In New York, Mayor Bill de Blasio is trying to hold back the progress of Asians via affirmative action programs for non-Asians. That’s because 70% of students at elite public high schools like Stuyvesant are now Asian. (Many are so poor they qualify for free lunches.) But even that won’t stop the progress of Asians, as education is mostly about signaling. Make it tougher for Asian students via quotas and discrimination, and whatever success they do have will look all the more impressive to potential employers.
As I said at the beginning, all these generalizations have exceptions. Chinese immigrants include scientists like my wife, and illegals from Fujian who wash dishes in Chinatown and sleep 8 to a room. But the number of high achievers among the Chinese immigrants (and even more so among Indian immigrants) is greatly disproportionate to their overall numbers in the US population, just as with earlier groups such as Jewish immigrants. Even black African immigrants do considerably better than native-born blacks. This trend toward high achieving immigrant groups will change America in many ways. We’ll become less equal, and also a richer, more diverse, and more interesting place to live, to the benefit of everyone except those who “don’t like foreigners.”
PS. Bernie Sanders helped sabotage Ted Kennedy’s immigration reform bill in 2007, perhaps because he has nostalgia for the 1950s—a time when the white working class did well, and everyone else was pretty much invisible. Now he’s changed his tune, but which view do you think reflects his true beliefs about immigration?