economics micro 2010

Josh Malcolm
Course 2010
Overcoming Poverty in the U.S.
Having read the recent article posted online regarding the economic frustration with the
inequality of income and poverty in the U.S I tend to find that many of the troubles we have in
this country are due to a few common factors. The first I would like to address is offshore labor,
the outsourcing of manufacturing in other countries. The second I would like to mention is the
declining middle class related to the economic breakdown in 2007 which put many people out
of job across the U.S. The third is the illegal immigration into the U.S in substantial numbers
along with remittance and backflow payments.
U.S companies have found that outsourcing the production of many of their products have
yielded many benefits to their capital gain, and have caused wages and availability of work to
decrease dramatically, and decrease the output and of course domestic production .Companies
who outsource their production to countries such as china or japan are able to bypass paying
higher wages and also providing health insurance to those in the U.S who by working and
receiving these sort of benefits would actually increase output and the overall wealth of the
United States. There have been arguments that because of the requirement of insurance to
employees or health and safety regulations enforced by OSHA or even the pollution rights one
must try to purchase to stay profitable all have to do with why companies may produce
overseas and pay importation fees as a less expensive alternative to producing in the U.S. These
arguments have validity and cause the employment in the U.S to decline. This also makes it
difficult for higher wages to be offered and more full time employment vs. part time available
to avoid having to offer health benefits. The issue I personally encounter with this is I sell
appliances at RC Willey and we sell many products imported from Korea such brand names as
LG and also Samsung to name a few. These manufactures have produced products in their own
countries at very low cost and have imported them to the U.S with more competitive pricing
than say domesticated brands such as Whirlpool and GE this causes lower profits for companies
who have to match such lower cost, making margins smaller and therefore affecting how I
personally am being paid as a sales associate who works strictly off of commission and is paid
based upon margins. Lower margins mean lower commissions. We need to put a heavy hand to
some of these Korean companies and keep them from dominating the market because of their
ability to operate and compete by the exploitation of people in their own country.
Since 2007, the economy has been spiraling out of control and government spending has been
following alongside. During the economic boom, as one may call it, there was a great increase
in the housing market and therefore more building, which meant more consumers spending,
more jobs and more money being borrowed. This was only short lived! The economy was
operating at an outrageous rate in which people were borrowing money for homes they clearly
could not pay back nor afford – hoping that after a few years they could take their investment,
sell it for a profit and pay back their loan and all would be well. Some indeed prospered at this
idea, some bought and sold during the economic boom and suffered no losses and maybe even
made some great economic gains, but many unfortunately were hit in devastating ways. When
the economy collapsed people lost their jobs, the value of homes fell so low people owed more
than there investment was worth and found themselves filing for bankruptcy and walking away
leaving the debt to be paid for by other tax paying citizens. The amount of jobs declined leaving
people without work and homes to live in. There was less lending happening after this
devastating down turn therefore entrepreneurial abilities were blocked for many and for others
the risk was too great to take.
Risk is part of innovation and where people are not willing to take the risk, innovation slows
down. Many have resorted since such economic turmoil to revert back to gaining more
education and more training so as to obtain skill levels of higher demand in the market,
allowing for higher incomes and increased benefits. Unfortunately for many such as illegal
immigrants and those in impoverished neighborhoods have less opportunity for advanced
training therefore survive on more menial labor, labor that had decreased in 2007 to today
leaving many without jobs and in need for government support and government assistance.
I would like to expand more on the previous topic headed before that I just briefly mentioned
and that is why we have been experiencing more than ever before high levels of illegal
immigration into the U.S. Although we are experiencing economic downturn many other
countries such as Mexico have felt it even more, and have next to no or very limited
alternatives for work in their country therefore seek work in the U.S. The poor economy in
Mexico leads to immigration to the U.S more often than not illegally. The U.S economy bears a
heavy cost with regards to illegal immigration. Many immigrants come here to our country with
working gaining more experience and training and accumulate some wealth than transfer their
incomes to their relatives or families back home these transfers are known as remittances. The
U.S is losing much of its GDP by these remittances. The economy suffers by not keeping the
money earned in the U.S and for lending and spending to continue. I feel that we need to keep
having heavier fees for money transfers outside the U.S in order to discourage the remittances
from occurring.
I enjoyed this class and learned much about the functions of the U.S economy and the way in
which it is governed and held together as a country. I appreciate the laws and the extent of
competition in the market and its value in keeping the country economically sound and strong
even amongst some of its most difficult trials and inefficiencies it faces.