It is becoming harder to back the claim that the economy isn’t doing well because the private sector isn’t doing well. The evidence from this article further falsifies Governor Romney’s opinions claiming the private sector is in a disastrous state. If wealth was distributed more evenly, we might not see as many people in America desperate for jobs, or Americans working longer hours than ever before just to survive and fulfill their basic needs. The private sector does not need fewer taxes and fewer regulations. It needs to be restructured in a way that fairness can be restored.

Despite the cries from the wealthiest 1%, Obama is doing this country a favor by raising taxes. The wealthiest people at these corporations are making money at increasingly easy rates, while the rest of America suffers through working long hours for the lowest relative wages this country has ever seen. It is time for a restructuring of this economy and it starts with the re-configuration of corporations. The government needs to step in, because the market is not restoring these imbalances.

Henry Blodget put it most accurately when stating, “Our current system and philosophy is creating a country of a few million overlords and 300+ million serfs. That’s not what has made America a great country. It’s also not what most people think America is supposed to be about.” (With all of this said, we must still consider how this “equality” would affect individual’s incentives. One can only hope that these high earners woudn’t just relocate to a more “tax friendly” country.)

Capitalism: The Relationship Between Politics and Economics

By: Adrian Nardella and Luke Rebecchi.
Edited by: Jonathan Burns and Benjamin Virkus

By now, after decades of incessant repetition, free markets and capitalism are inextricable. Taken together or standing alone, these words sanctify a tradition of economic thought and political action. We consider capitalism a synonym for free markets and freedom. But might there be unspoken benefits of capital and its owners? As noted by Karl Marx, capitalism implies an imbalance that favors business owners to the dismay of laborers. The revolving door between big business and politics may explain why this balance emerged. More appropriate are its effects as seen throughout the modern world today.

Recent policy reflects the imbalance mentioned above. In the same year Bill Clinton signed the North American Free Trade Agreement (NAFTA), which promoted trade across the southern U.S. border, construction of a border across Mexico commenced. The message is clear, and continues to resonate: we do not grant labor the same rights as the owners of capital. Last week, The New York Times ran a three-part series on state/local government-issued tax expenditures for businesses. In order to attract ‘job-creators’ to their district, local governments have annually forgone over $80 billion (a conservative estimate) in taxes. When governments grant big business money to turn the lights on, it is done under the guise of protecting ‘job-creators’; conversely, when governments grant poor laborers money to work, it is condemned as buying votes and sustaining lazy welfare mothers. Through the use of political rhetoric, politicians justify the promotion of job creation as an acceptable tradeoff to forgo revenues (taxes). These are the same revenues used to fund social and economic programs which provide assistance to the under-privileged “laboring-class” of society. In essence, our current political system is designed to contribute to the underlying imbalance embedded within a capitalistic system. The fact that corporate America might be receiving favorable treatment, dare I say welfare, is anathema.

As Milton Friedman noted in the first sentence of Capitalism and Freedom, “It is widely believed that politics and economics are separate and largely unconnected; that individual freedom is a political problem and material welfare an economic problem”. At some point, the curious must question why capitalism deserves to be the predetermined derivative of free markets. Unfortunately, (as Friedman further elaborates) politics and economics are an interconnected and powerful vehicle. Although our current political system favors big business above all, it is an interesting concept to conceptualize a declaration of allegiance to free market labor amongst America’s elite policymakers. Rectifying this thought against the classical theory that equates the power of capital with labor within the same function, might provide more power to the lower classes of society. Only then, will local governments be forced to provide ‘job-creators’ with incentives other than those that solely impact the same laborers politicians claim to protect.

Should Puerto Rico Become the 51st State of the United States of America?

By: Luke Martin and Nikki-Lynn Marshall.

A major point of contention in the 2012 US election was the possibility of Puerto Rico achieving statehood. Such an action has been considered numerous times in the past few decades, but 2012 marks the first time that the referendum has proven to be successful, making such a discussion more critical than ever. However, before any legislation can be pursued the social and economic ramifications of Puerto Rico becoming the 51st state must be thoroughly examined.

In terms of the benefits of Puerto Rico’s statehood, political parties and businesses alike are envisioning the future economic benefits of a Puerto Rican state. Not only do both democrats and republicans support Puerto Rico’s statehood, but president Obama has publicly expressed his support for Puerto Rico’s statehood. In his article ‘Make Puerto Rico a state: it’s good for business’, Gregg Easterbrook argues that Puerto Rico should be the 51st state because such a move would have a positive economic impact on both the US and Puerto Rico. He points out that Puerto Rican citizens already enjoy a number of the benefits afforded to Americans, such as the ability to freely move to the US. A formal move towards statehood would allow the US to collect not only income taxes from residents, but also corporate taxes from businesses operating in Puerto Rico. From a political standpoint he also points out that such an action would extend the democratic process in the US, as Puerto Ricans would be able to vote in US elections and would contribute the same amount of electors as Oregon (7).

When examining the positive effects of Puerto Rico’s statehood, Hawaii is often used as a parallel case, credited as a success. Many argue that the example of Hawaii proves that allowing an economically weak country to become a state can benefit both the US and the state itself. Prior to its statehood in 1959, Hawaii was an economically weak country, lacking in economic growth as well as public institutions. However, in 2012, Hawaii now boasts one of the highest GDP per capita’s of the US states and has significantly contributed to the US economy through it’s image as a safe, US tourism destination. Thus, many argue that allowing Puerto Rico to become a state will reform Puerto Rico economically, as well as contribute to the overall US economy.

The negative impacts of Puerto Rico statehood however must also be considered. While a small majority voted in favor of Puerto Rico gaining statehood it was in an unbinding referendum with dubiously constructed questions. In all prior referendums in 1967, 1993 and 1998, the proud islanders voted against becoming a state. The social and economic implications may suggest statehood is not in the best interest for either the USA or Puerto Rico. Economically Puerto Rican’s median household income is half of the poorest American state. This would likely necessitate an increase in government aid and other social services. And in a slowly recovering economy, government spending needs to be frugal in order to diminish the national debt. The Puerto Ricans themselves may have personal reservations for wanting to join the USA. As it currently stands the citizens of Puerto Rico do not pay federal income taxes. Obviously as a state they would be obligated to pay taxes and thus receive less income.

The social dilemmas of Puerto Rico joining the USA are also substantial. Many Puerto Ricans fear that becoming a state would catalyze an erosion of the unique Puerto Rican culture. Their language, food, and customs would all suffer a pervasive infusion of American influence. America is known as the melting pot, and Puerto Ricans fear that their culture would vanish like the Native American tribes before them. Another concern is that just 20% of Puerto Ricans speak English fluently, thus, many wonder how Puerto Rico can assimilate when so few speak English and their culture is so unique.

The island of Puerto Rico has been in a statehood purgatory for over a century. Up until the 2012 referendum the Puerto Rican people had been content to walk the line between territory and statehood. But it seems now Puerto Rican’s yearn for official statehood. And it is our opinion that it would be in both the US and Puerto Rico’s best economic and social interests to embrace each other with open arms.

Inequality Across the Globe

By:Alyssa Dizoglio and Franziska Meinherz.

According to the article “For richer, for poorer” in The Economist, socioeconomic inequality is one of the largest growing problems of our time. Unfortunately, is not a problem that will easily go away. The inevitability of inequality is more evident than ever. Comparing the first American Gilded age to the second, it would seem that inequality had diminished instead of increased. During the first Gilded Age, the wealthiest Americans, like George Vanderbilt II, had estates that were 300 times larger than the average American dwelling. However by the second Gilded Age, the gap had narrowed, and even some of the wealthiest individuals’, like Bill Gates, homes are only a mere 30 times larger than the average modern American home. However the improved living standards of the middle and working classes masks the dramatic concentrations of wealth held by the top 1% in America, a figure that has only increased over the past 30 years; the share of national income held by the richest 1% has doubled since 1980. Furthermore, the share of income going to the top .01% has quadrupled. It is hard to look at these figures and not see the inevitability of inequality.

While the concentration of wealth at the top is certainly staggering in America and many countries across the world, this does not mean that the entire world has become more unequal in the past 30 years. In fact, global inequality has begun to fall recently as poorer countries converge (catch up) with richer ones. In the 19th and 20th century, global inequality increased as richer countries industrialized, allowing them to grow faster than poorer countries. More recently though, that pattern has shifted and global inequality has started to fall despite the fact that inequality within many countries has only risen.

When inequality first started to rise after industrialization, people weren’t all too worried about it. Simon Kuznet suggested an inverse U shaped correlation, known as Kuznet’s Curve between economic growth and inequality saying that inequality first rises with the beginning of industrialization, but that it then starts to decrease because society wants social policies to be implemented. Kuznet’s prediction seemed to hold until about the 1980’s when inequality started to rise again. Despite the rise in inequality, politicians, economists and the general society remained largely unconcerned with the issue. Only around 2001 with the dotcom bubble and subsequent recession did inequality become a top political issue perceived as potentially dangerous. Not only did fairness become an important concept, but the possibility that inequality leads to political instability became obvious. This had already been proved in earlier decades in Latin America, which had long been the most unequal continent, and which also experienced much political turmoil throughout its history.

While some societies are more concerned about the potential of increasing inequality than others, the reality is that increasing inequality is inevitable without some sort of government intervention. The article suggests that the problem can be solved by prohibiting abuse of financial resources through cronyism, which is certainly true in areas such as Latin America. However, not even in these countries would this policy be enough to keep inequality from rising further on a global scale nor would it serve to lift the poorest of society up from the rest, especially when considering that in many countries, the US included, nepotism and other forms of corruption are not the main cause of inequality. It is very unlikely that without government policies regarding income distribution the problem of inequality can be solved.

The Law and Disorder of the Financial Market

Image credit: Satoshi Kambayashi, published Oct 13th 2012 "Law and disorder: Financial institutions are vulnerable to investigation, prosecution and litigation from every direction." The Economist.
By: Wenqing Zhang and Janaki Patel.

There are many entities in the US coined to be consumer protection bureaus, many of which specialize in prosecuting financial firms. These entities are, for example, the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation, but there are also other departments which create settlements with big banks. Other entities that are often unrecognized as prosecuting entities, are the Department of Housing and Development, which assisted in a $25 billion mortgage settlement with banks. The persistent problem is that the settlements that are being made are not necessarily protecting the consumer directly, and on top of that, financial firms are being exploited repeatedly.

Furthermore, since the settlement will be used to fund the government budget, the reward for being the one who take the settlement will be great. Though there are some “underground” rules among those investigation departments, for instance, DoJ always takes the case that SEC are limited to take, the coordination among the investigation departments is not secured. According to the Standard Chartered case, in which the Department of Financial Service (DFS) rapidly collected $340 million settlement from the bank unilateral. Since the rewards for being the first to fine the financial institutions is so great, the investigation departments will have a higher incentive to be the first to prosecute. This behavior will absolutely destroy the coordination between the investigation institutions and in addition, it can disorder the market.

In fact, the settlement can now be regarded as a trade between the financial firms and their investigators. Since the result of an indictment of a financial institution can be really bad, for example, the indictment may suspend its license, so firms always choose to pay the settlement when the investigation starts. Therefore, if the firms did something bad, since they paid the settlement and the investigation ends, their bad behavior will not be found. If they did not have any bad behavior, the investigation department will also leave them alone because of the settlement. According to the article, “this cosy alignment of incentives worries some.” This “alignment” cannot be regarded as justice regulation any longer, it is just a different form of trade. The law of the financial market does not stabilize the market but disorders it.

I would like to make clear that I don’t agree with completely defending big financial institutions, because often times, bankers will often bend the rules for their own personal financial gain, as we have seen in the case of trader, Kweku Adoboli, who had his bank, UBS, be fined 29.7m pounds for fraud. In this case, UBS had made some serious mistakes in not effectively utilizing controls within the bank, but in other financial settlement investigations, the crime may not have been committed by one person or one firm and just one firm may be charged. Take, for example, the LIBOR scandal which costed Barclays $450m in settlement charges; this scandal, which some evidence claims that other banks have colluded on has not yet fined other firms ( though, it may soon enough) and manipulated LIBOR rates could have affected over $800B in trades, including almost half of the derivative market and homeowner interest rates. While the practices are not justified, it seems that every banker in the industry receives a bad name for the scandal and yet, the culture does not change in the upper-level management. The real problem is that these suits are costing financial firms millions of dollars, which are not necessarily improving the system and are not creating a more fair system . In addition to that, firms can be sued repeatedly for the same crime by federal and state authorities, and the banks may pay out settlement fines, simply to get political authorities off their back, even if they are not guilty of any crime, creating an endless and vicious cycle of continuous lawsuits. It seems that the only way financial firms can cope is to hire a larger legal team - though that seems unreasonable, considering that the point of the legal system is to decrease crime and bad practices, rather than increased the population of lawyers.

Taxing obesity?

By: Samantha Weinberg and Ryan Santana.
Edited by: Janaki Patel.

Many countries around the world have been trying to tackle the issue of obesity in new and creative ways. One such tactic has been to levy a tax on unhealthy foods so that they are less desirable for consumers. This was implemented in Denmark by the government so that 16 kroner (2.7USD) per kilogram of saturated fats in a product was added to costs. This led to an increase in costs for the producers of these goods and higher overall administrative costs in their attempts to adjust prices accordingly. Unfortunately, this “fat tax” did not have the desired results since it did not deter consumers from purchasing the unhealthy foods. In some cases, people actually crossed the Danish border to get their sweets from countries where it was cheaper without the tax.

The Danish government has announced plans to repeal the tax in light of its failure and has halted works on a sugar tax that was being considered. This failure calls into question what the government can actually do to encourage consumers to make healthy choices. In New York, and some other states, mandates have forced calorie information to be displayed in all restaurants so consumers can at least make more informed decisions. This method does not seem to be making much of a difference either. New York has also been one of the first states to place a ban on super-sized sodas. European countries have also tried to develop new ways to control the problem. One example is Hungary’s higher tariffs on soda and alcohol so the goods are more expensive on the local market.

With obesity becoming a growing problem in the United States and other developed countries the ability to curb this is seen as essential for governments. In light of Denmark’s failed attempt, other governments are questioning their tentative plans to implement similar programs. At some point government will need to decide how much of peoples’ decisions they can actually influence and also decide if it is worth the risk of potentially neglecting other important parts of the economy. The government will also have to ask itself whether it is realistic to control the problem of obesity. At the same time people must also take responsibility for the way they treat their body. There may be ways a government can attempt to deter the option for people to eat junk food but, like in the article stated, there are ways for people to ultimately get what they want.

The next step, as economists, is to try and think of ways that we can influence people's choices without interfering with the direct interaction between consumers and producers in a negative way that leaves all parties worse off. Although education on nutrition is better than ever before we could probably look into putting more energy and resources in the education of nutrition rather than possibly hurting the market. Educating kids on nutrition at schools and raising awareness about junk food can be a better solution. And while we’re at it we should also inform people about the dangers of non-organic and processed foods. If people know exactly what they are eating then people can make much more informed choices as compared to simply looking at a calorie count on a menu.

Is America the Greatest Country in the World?

By: Luke Rebecchi and Jacob Beck.

“It’s not the greatest country in the world.” These words, spoken by WIll McAvoy, a newscaster played by Jeff Daniels on The Newsroom, could not have been more controversial. While Mr. McAvoy was trying to make a point that America has changed over the last few centuries, he took it a step further and essentially said that America sucks.

But is he wrong? Is this fictional big-wig news broadcaster incorrect when he questions the greatness of America? First, let’s start with what makes a country great, let alone the greatest. These factors will change country to country, mainly because people grow up in different places with different beliefs, leading to a different equation. Additionally, there is an inherent affinity to your homeland and for you, as a citizen, to believe that you live in the greatest country. For this task though, we looked at America in 5 different categories, to determine if it is, in fact, the greatest country: Democracy, Social Mobility, Children, Protection and Jobs.

Is America Democratic? Absolutely. Almost too democratic. Americans have an equal say in everything. Our lobbying system is one of the best around. People go to congress, say what they want, and either watch it happen or not, but we have the ABILITY to do that, and that is what matters. In a day and age where social media is the norm, people can start a message or a campaign in Florida and it could be in Oregon the next minute. We can start a movement and end a movement with the press of an “enter” key. Just look at this past election for example. The amount of people influenced by a clever meme or funny gif regarding one of the candidates was insanely high, but that is the day in which we live.

Key to the ‘bootstrap individualism’ that defines America’s ‘exceptionalism’ is the ability for those born in misery to attain great wealth, and those born in great wealth to lose it all. People in America, as it goes, succeed by the virtue and magnitude of their sweat and toil. The folksy ‘American Dream’ codifies the acceptance of and adherence to these principles. But, in light of income inequality reminiscent of the Robber Baron era, has America’s meritocracy been corrupted? In short, yes. Confirming much of the literature our class discussed recently, the work of the Georgetown University Center on Education and the Workforce consistently shows the return of a college education far exceeds a high school diploma. Further, amongst the most prestigious American institutions of higher education, only 3% of the student body come from families situated in the bottom income quartile, in contrast to a 74% representation of the top quartile. These elite, Tier-1 institutions pump out high earners that fill positions of power and prestige, but their composition shatters dreams of intergenerational social mobility. Wealthy adults regularly produce successful offspring, and vice versa for the poor. Only those fast asleep would view this as an ‘American Dream’. Furthermore, does the ‘American Dream’ include people struggling to find jobs? Probably not.

While Will McAvoy mentions America is 4th in the labor force, that is not necessarily a good thing. The only thing that says is that America is willing to work. We have people who are actively searching for jobs, awesome. The fact is, though, that many of Americans are unemployed. While we look forward to the day where unemployment will hover around 5%, we don’t know if that day is upon us. Sure, America has made strides since the beginning of the 1900s, now that we allow many more people to enter the labor force and encourage their participation. The desire to succeed has always been a bright spot for America, whether immigrants or not. People have a desire to work hard, keep a business running, and succeed, but right now, working in America sucks. One facet of America that isn’t too bad right now, however, is that of safety.

Though rarely a victim of foreign attacks (9/11 being the first foreign attack on American soil since the War of 1812), the American people pride themselves on their uncontested military power. With a military budget rivalling all other states combined, the U.S. regularly projects its hard power throughout the world, and does so with much enthusiasm from policymakers and (through outright deception?) the general public. In the words of former Secretary of State Madeleine Albright, “What's the point of having this superb military that you're always talking about if we can't use it?” Defining a country as great for its ability to project military power internationally is quite contestable. A number of empires throughout history have utilized force to attain strategic objectives, though we would certainly not consider Nazi Germany or the Soviet Russia as great. Greatness rests in utilizing that capacity wisely to protect American citizens domestically, and in accordance with, and for the protection of, basic human rights internationally. That the United States has not seen terror attacks in over 11 years speaks to our ability to protect our own. Quite conversely, the details of our most recent escapades in Iraq, Afghanistan, Yemen, and Pakistan question very seriously our commitment to international human rights.

Fiscal responsibility, is perhaps the most recurring theme in American politics. Beyond the simple extension of the frugal individual to the government as whole (a composition fallacy I will let slide), fiscal responsibility rests upon a moral argument that our children deserve a livable world. In this past election, both presidential candidates spoke often of sacrificing today for the well-being of our children and grandchildren tomorrow. So, extending the baseline indefinitely, how does the American child’s future appear? For one, he/she will live in a country that owes a bit of money. On first glance, a large debt frightens. More important than the size however, is the price of debt. Interest rates, the price of debt, are at historic lows, so it makes economic sense to purchase more. Hopefully, if and when interest rates rise, our policymakers will have the wisdom to change accordingly.

Beyond just debt, America’s children will have to adjust to a warmer and less inhabitable world, a stupid-expensive health-care system, and the rise of other states that challenge America’s preeminence. Each generation inherits a mess from the former, and only a fraction of it has been mentioned here. America has not quite abandoned its children, but her political intransigence will make their lives more historic.

The impact of income inequality in the US

By: Samantha Weinberg and Franziska Meinherz.
Edited by: Nikki-Lynn Marshall and Paulius Kosmarciukas.

In the last decade, the subject of inequality is one that has been a growing concern to developed countries. Presently, the US as well as other countries fear that an increase in income inequality will be detrimental to their economic growth. However, according to Diana Furchtgott-Roth in the article “A Big Gap Means There is Room to Move Up” inequality isn’t an obstacle to economic growth, but rather a consequence.

Roth argues that, as economies grow people will inevitably become wealthier, leading to an uneven distribution of wealth. This inequality however can spur further economic growth because the possibility of moving up incentivizes people to invest more effort. Furchtgott-Roth argues that the key to growth is job mobility rather than income equality. She proves that inequality can work as an incentive, whilst redistributive taxes may discourage growth using the example of Great Britain. In Great Britain, an increase in the top tax rate was shown to not increase revenues as predicted. Therefore, based on the argument that job mobility, rather than income equality furthers growth the focus should be on improved education rather than a change in the tax system.

Often people claim that inequality lowers growth because the poor don’t have the means to start climbing up the income ladder. But, according to Scott Winship in his article “Inequality is not what we imagine”, this doesn’t hold for developed countries such as the US. Inequality in the US as well as other developed nations is due partly to the increase in two-earner couples. Having multiple wage earners in a home creates a greater income disparity between households. Yet the US is far from facing mass poverty, which is associated with lower growth, due to the US’s higher living standard. The rising inequality is therefore mostly due to the wealthy families which get richer at a much faster rate than the lower income families.

We therefore agree that income inequality is clearly a result of economic growth, which the evidence supports in many instances, such as in the example of China. However, inequality is still a prevalent issue in many countries that needs to be addressed. This is because inequality can be an obstacle to growth if job mobility cannot be guaranteed and in countries such as the US. For the US in particular income inequality has recently become a more a prominent issue due to the economic recession and the present precarious situation for the lower income classes, who, due to rising costs of education have found it harder to climb up the social ladder.

Is income inequality too big to ignore?

By: Yannai Shmerer and Luay Kanaan.
Edited by: Nikki-Lynn Marshall and Paulius Kosmarciukas.

In Robert H. Frank’s 2010 New York Times article, “Income Inequality: Too big to Ignore,” he provide several explanations for the rising income inequality in the United States by looking at the 100 most populous counties in the country. He begins by analyzing the three decades that followed WWII and points out that they were decades in which incomes across the board rose both equally and rapidly. He then follows this discussion by looking at the last three decades (1980-present) and points out that in this period the income share of the top 1% rose from 8.9% to 23.5%.

In the article, Frank uses the results obtained from his working paper “Expenditure Cascades” to stress the importance of income equality. His studies show a strong positive correlation between income inequality and financial distress in terms of divorce rates and the commute times. As the gap between the upper and lower tail incomes in the economy widens, divorce rates increase and commute times get longer as a result of urbanization and booms in the housing markets. Even though the data collected offers a stable ground for argument, the extent to which increases in the divorce rates were primarily fueled by financial distress depend on the country’s sociopolitical and economic stance at that time. Thus, a cross-sectional study between divorce rates and income inequality should look at year-specific cohorts to correct for any lurking variables such as the impact of war, political unrest, or age at marriage.

The financial distress among the middle and lower classes that Frank talks about leads to those classes rejecting public expenditure legislation that would ultimately benefit the working class. This rejection is borne out of a fear of an increase in taxes for those already in financial distress. Frank uses “crumbling roads, weak bridges, and an unreliable rail system” as examples of issues that the rejected public expenditure would help to solve.

One of the points that Frank both opens and closes with is the idea that economists are reluctant to talk about rising income inequality, claiming they argue that it is a subject better left to philosophers not economists. Frank dismisses this argument and calls for something to be done about income inequality: “maybe we should just agree that it’s a bad thing - and do something about it.”

Despite some minor inconsistencies with Frank’s paper, his argument is as sound as it gets. Unlike other economists, he is willing to take on rising income inequality almost a year before the “Occupy Wall St” protests began. He also acknowledges that it is, in fact, a problem that needs solving. However, he doesn’t really offer much of a solution. One fairly obvious solution would be to increase taxes on the top earners of the country while simultaneously lowering taxes on the middle and lower classes.

American Misconception on Immigration

By: Adrian Nardella and Fiona Maguire.
Edited by: Luay Kanaan.

From Italians and Slavs in the early 1900’s to Central and South Americans in the late 90’s early 2000’s, the concept of immigration in the U.S. has managed to maintain its political prominence due its substantial impact on economic strength, native employment rates and wages.

For some, immigration is seen as a growing concern to the nation; however, the article “Immigration and American Jobs,” written by Eduardo Porter of The New York Times proves this stigma untrue. Immigrants, generally, are employed for manual labor in-part due to their inability to obtain the qualifications and skills held by native employees – thus leaving more specialized and verbal jobs such as being a clerk Americans. These manual labor positions often pay lower salaries, but they act to “reduce the prices of some products and services by providing employers with a new labor source and creating more opportunities for investment and jobs.” Also, because the undesirable jobs such as being a dishwasher or landscape contractor are being performed by immigrants, higher paid positions are created for qualified natives to fill.

However, immigrants influencing the cheap labor market have been under intense media/government and political scrutiny, especially during the Presidential race, because during economic hardships like the 2008 recession immigrants are seen to “steal” American’s jobs because they work for cheaper wages. Not understanding the positive effects immigration and cheap labor have on the long-term stability of the U.S. economy makes it easy for “proud” Americans to be misunderstood as xenophobic Americans.

This article, “Immigration and American jobs” relates back to what we have learned in class, regarding the topics of immigration and income inequality. In class, we discussed how when immigrants first begin to work in their new country, they earn a 17 percent lower wage than natives do. Then, within 15 years of coming to the new country, the immigrant’s wages overtake the natives and within 30 years of arriving to the country, these immigrants begin to earn around 11 percent more than the natives are, therefore stealing American jobs and money. However, this article explains that this is not the case of the poor immigrants that are coming from Latin America. Thus, these immigrants are either creating jobs for Americans or taking jobs that Americans are not willing to take such as the dishwasher at a restaurant.

These Latin American immigrants are not earning more than Americans are, as seen in the graph on a sign used for Occupy Boston portraying the average household income from 1979 to 2007. This graph shows how immigrants that are in the bottom 20 percent of the population in terms of income, tend to remain at the very bottom of the graph without any increases.

This article on immigration and its effects on American jobs explain how immigration can be seen from a different perspective. As Americans, we tend to think that immigrants are taking our jobs due to their willingness to work for low wages. However, immigrants are helping Americans create domestic jobs and at the very least accept the jobs that Americans do not want.