Tuesday, February 26, 2019

Immigrants, Economic Growth, and Job Creation

Forty-four million plus immigrants constitute over 14% of the U.S. population, the highest share since 14.8% in 1890 and 14.7% in 1910  The current percentage is triple that of the low of 4.7% in 1970.  Every year a million immigrants obtain lawful resident status in the U.S.  Half of all children born in the U.S. are offspring of immigrants.

Among the strongest argument for immigrants is that their entrepreneurship contributes to economic growth and job creation.

On December 4, 2017, the Center for American Entrepreneurship released a study showing that 43% (216) of all companies in the 2017 Fortune 500 were founded or co-founded by an immigrant or the child of an immigrant.  Of the Top 35 companies, the share is 57%.  The 216 firms produced $5.3 trillion in global revenue and employed 12.1 million persons worldwide.

Of the 216, 45 are high-tech, 37 wholesale/retail, 26 finance/insurance, 23 industrials, and so on.  They are spread throughout 37 states, with New York, Chicago, San Jose, Houston, and Dallas metropolitan areas each hosting 8.

Which immigrants contribute the most to growth and job creation?

Of 96 Fortune 500 companies founded or co-founded by immigrants, 73 came from Europe (Western and Eastern Europe), 11 from Canada, 6 from Asia, 2 from Latin America, 2 from Africa (one by 2 East Indians from Kenya and the other by Elon Musk from South Africa), and 1 from Australia.

Of 120 Fortune 500 companies founded or co-founded by a child of immigrants, 108 came from Europe, 9 from Canada, 2 from the Middle East, and 1 from Latin America (Cuba).

Summing up Fortune 500 companies, 93.5% of their founders were immigrants or children of immigrants from Europe and Canada (202 of 216).  Only 6.5% (14 of 216) were from countries outside Europe or Canada.   If the U.S. wants to attract entrepreneurial minded immigrants, it should focus on Europe and Canada.

Below is a list of top immigrants by name, the company with $2 billion or more in revenue they founded or co-founded, and their country of origin.

Steve Jobs, Apple (265.6 billion, 2018), Armenia/Syria
Jeff Bezos, Amazon ($232.9 billion, 2018), Cuba
Sergey Brin, Google ($120 billion est. 2018), Soviet Union
Andrew Grove, Intel ($73.2 billion, 2018), Hungary
Charles Pfizer, Pfizer ($50 billion, 2018 est.), Germany
Nigel Morris, Capital One (32.4 billion, 2018), England
Elon Musk, Tesla/SpaceX ($21.5 billion, 2018), South Africa and Canada
Maxwell Kohl, Kohl’s ($19.1 billion, 2018), Poland
Pierre Omidyar, eBay ($11 billion, 2018), France (of two Iranian parents)
Marcelo Claure, Brightstar ($10 billion, 2018), Colombia
Jorge Mas Canosa, Church & Tower, becoming Mastec Corporation ($6.9 billion, 2018), Cuba
James L. Kraft, Kraft Foods ($6.7 billion, 2016), Canada (8)
Andrew and Peggy Chern, Panda Express ($3.1 billion, 2017) Myanmar (Burma) (9)
Hamdi Ulukaya, Chobani Yogurt ($2 billion, 2016), Turkey (10)

Hispanic/Latino immigrants are starting small businesses faster than the general startup population, but many of these are founded to supply goods and services to the growing Hispanic/Latino population in the U.S.  Few firms founded by Hispanics/Latinos immigrants have achieved membership among the Fortune 500.

For those who want to explore the origins of recent company founders, 315 IPOs took place in the 9 years 2010-2018.  From the names of companies, one can identify the country of origin, the size of the IPO, the initial company valuation, and the current market valuation.  In 2018, none of the 48 IPOs was founded by a Hispanic/Latino.  I have not searched the other 271 IPOs that came to market during 2010-17, but it is likely that only a few was founded by Hispanics/Latinos in the U.S.  Latino/Hispanic founders of IPOs typically originated in Brazil or Spanish-speaking countries in Latin America. 

Thursday, February 21, 2019

Inequality: The New Growth Industry in Higher Education

Taxation has jumped to the forefront of 2020.  Democrats and their intellectual allies, including the mega-rich themselves, are calling for a blizzard of higher taxes on the rich and wealthy.  Some advocate higher marginal income tax rates up to 70-80% on those earning over a million dollars while others propose wealth taxes on centi-millionaires and billionaires, higher estate and gift taxes, higher property taxes on trophy properties, and higher consumption taxes.

Why now and why not during the last two elections?  Partly in response to President Trump’s tax cuts?  Partly in response to huge runup in the stock market since the bottom of the financial crisis in 2010, which disproportionately enriched the top 1% of equity holders?  Partly in response to the emergence of a hard new redistributionist left in the Democrat Party?  Partly in response to the declining influence of aged supply-side economists in universities and think tanks?

Four keystones underpin higher education.

First is Diversity.  Diversity (and Inclusion) is now settled doctrine.  Colleges and universities are moving at full speed to implement the agenda.  Older cohorts of White professors are steadily being replaced by women and under-represented minorities, who support and benefit from Diversity.

Second is Environmentalism.  Environmentalism (global warming, climate change, extreme weather events) is almost settled doctrine.  The vast majority of professors and think tankers contend that greenhouse gas emissions threaten the survival of the planet and life as we know it. They warn that irreparable damage will be done unless expansive measures, regardless of cost, are taken now to reduce carbon emissions (Green New Deal).

Third is Democracy (democratic governance), which has petered out.  After a flurry of gains in the past few decades, democratic governance is on a downhill slope in Europe, Asia, Africa, and Latin America.  Some scholars put the United States under Trump on that downhill trajectory.  Fellows and professors staffing centers for democracy in think tanks and universities have little to say about this discouraging trend except to bemoan it, with no new ideas to counter the trend.  All the older ideas they proposed have been tried and failed.

Fourth is Inequality, the topic du jour.  This fourth theme has given rise to demands for higher taxes on the rich and wealthy.

The Institute for Policy Studies has an aggregator site on Inequality.  It identifies 10 academic centers, 8 think tanks, 6 public interest groups, and 8 organizing projects focusing on inequality.  The site identifies 6 kinds of inequality (income, wealth, global, health, racial, gender) and 25 inequality topics (ranging from executive pay and taxation to social mobility and the racial divide).  As of late February 2019, it included 830 articles and essays on various aspects of inequality.  In the coming years, studies on inequality and political action to reduce it (poverty reduction, threats to democracy) will likely grow to match the scope and size of Diversity and Environmentalism.  A generation of undergraduate and graduate students are being educated on inequality and its detriments.  The pipeline of new Ph.D.’s will fill faculty slots for decades, who will advise politicians and publish papers supporting higher taxes.  Inequality studies threaten to overwhelm real world experience proving the benefits of low taxes and the harm of high taxes, a battle that has been fought since the beginning of recorded civilization.