The Fed Hiked Rates Today! The New Economic Cycle is Born, as the Current Cycle Dies

Introduction:

On Wednesday, the decision The Federal Reserve Bank (FOMC) has made and will implement, will divide this current economic cycle/era, from the new economic cycle/era to follow from this day forward. Janet Yellen is like a modern economic Moses parting the sea through which to walk; when she walks through she will have left the old economic cycle behind in Egypt, and will begin the U.S. economy on its journey to the promised land––if you like your well-worn and ill-suited similes.

I say Latinos should care and pay attention to this economic event, and if you don’t understand what is going on with economy now, this is a fantastic jumping on point for you to begin understanding the U.S. economy. Many Latinos I communicate with have heard a little bit about what is going to happen this day. My fellow Latinos today will be remembered as either a good decision by the Federal Reserve Bank of the U.S., or a piss poor decision that political vultures will criticize for decades for the support of popular sentiment.

Some background on the previous economic era that is coming to a close: The key interest rate set by the Federal Reserve has been zeroed out since 12/16/07; which has been meant to oil American economic markets with cash liquidity and low borrowing costs; which in turn was meant to encourage borrowing and investment from U.S. firms who would otherwise be cautious with spending in what would have been a struggling economy as a result of the housing market crisis.

Larry Summers’ Article on 12/15/15

Since this action will divide this current economic cycle/era from the next, let us consider the ideas about this action from the Fed, from the possibly the person who will become the next head of the Federal Reserve, former Secretary of the Treasury and Chief Economist of the World Bank Larry Summers.

The reason why we should pay attention to Larry Summers’ comments is because not only is he a former Secretary of the Treasury, but his current writings are widely viewed to be his campaign at becoming the next Chairman of the Federal Reserve, succeeding current Fed Chair Janet Yellen.

In his article, Dr. Summers acknowledges positives about the Federal Reserve. He points out that The Fed telegraphed this interest rate hike to the extreme, and Summers agrees telegraphing as such is the right thing to do. Summers then goes on to voice his well-thought out and outright genius concerns.

Summers’ concerns stem from three key objections:

Summers first asks if The Fed has weighed the risks to raising the key interest rate well enough; in essence, is The Fed taking a chance in a less than absolutely responsible fiduciary manner that is incumbent on an institution that is the risk-free rate.

Summers’ second concern is on the effect of the premature rate hike can possibly have, which is to ask the question, will the rate hike now kill the economy which Summers claims is struggling more than The Fed has led itself to believe?

The drive of Summers two key points is that he believes, and the man of prestige is most assuredly correct if anyone is, that if this rate hike is premature and The Fed reverses itself in shortly after, the effect of a quick reversal of monetary policy by The Fed will potentially have a grievous negative effect, and thus that negative effect can be avoided if the Fed just waits until it sees inflation more clearly approaching on the horizon.

However, it could be possible the Fed seems to be considering all of what Summers is pointing out, and, The Fed could possibly feel it is best to hide the potential strengths that are inherent in a rate hike now that can be reversed within five years from now. Which is to say, if the Fed raises rates now and the economy takes a downturn, the Fed will have the tool of lowering interest rates to stimulate a future economy in a downturn. On the other hand, if the Fed has the key interest rate at a zero-level years from now, and at that time the economy enters a downturn in spite of the zero rate, then the Fed will have the great Spartan spear that is the zero bound Fed interest rate rendered completely useless.

Why should we care?

Vonnie Quinn on Bloomberg Surveillance, on 12/15/15, had the excellent insight that Wednesday’s action by the Fed had already had its effects on Markets (“priced in”), and so people who want to see the results of the Fed raising the Federal Funds rate will have to watch the markets the day after the action is taken. Mark the events of the coming days, weeks, and months, because the beginning of the new economic cycle/era begins 12/17/15.

It should also be noted by Latinos who are learning about economics, that Larry Summers is an authentic and unparalleled Economist. Note that Larry Summers lays out his thinking in writing, leaving it open to scrutiny from his colleagues, and Summers makes predictions while laying out varying scenarios. Bogus Economists on the other hand will make claims and not lay out their thinking, and simply insist that they, the bogus Economist, is the only person who sees things as they are and that every other Economist who disagrees is a fool or a fraud. Pay attention to the structure and high quality of Summers’ thinking and lack of bias.

Latino Economist

Works Cited

 

Bloomberg Surveillance. Vonnie Quinn. Interview. Radio. 12/15/15.

Historical Changes of the Target Federal Funds and Discount Rates.

https://www.newyorkfed.org/markets/statistics/dlyrates/fedrate.html

Summers, Larry H. What the Federal Reserve Got Wrong, and What it Should do Next.

Washington Post. Web. 2015. https://www.washingtonpost.com/news/wonk/wp/2015/12/15/larry-summers-what-the-federal-reserve-got-wrong-and-what-it-should-do-next/

Wikipedia. The Federal Funds Rate. Image/Chart. Web. 2015.

https://upload.wikimedia.org/wikipedia/commons/thumb/3/31/Federal_Funds_Rate_1954_thru_2009_effective.svg/640px-Federal_Funds_Rate_1954_thru_2009_effective.svg.png

The Economy of Mexico, an Introduction

This is an introduction, specifically to Latinos in America, of Mexico as an Economy. We will approach Mexico by asking the questions that come naturally to us Americans when we think of the country Mexico.

We will talk about the poverty, income dynamics, environmental economics, and international trade of Mexico. And after we do we will come away with a general sense of what Economic faith Mexico practices.

The best way to approach our starting to understand Mexico on its own economic terms, is by considering first the most basic questions that might come to an English language person’s mind about what Mexico is all about economically. The information I will use comes from Prof. Roderic Ai Camp’s book, Mexico: What Everyone Needs to Know.

Essential Questions About Mexico

Ai Camp’s questions can be distilled to the following 11 essential questions (18-32):

Poverty Questions

  1. How poor is Mexico?
  2. What is Mexico doing about its poverty problem?

Trade Questions

  1. What is Mexico’s and the U.S’s. economic relationship?
  2. How is Mexico impacted by its international trade agreement (NAFTA)?

The Broad Economy Questions

  1. What is the state of Mexico’s economy today (book published 2011)?
  2. How is Mexico’s economic model structured, and how closely does Mexico’s behavior follow its model?
  3. Since Mexico is a developing country, how has its economic model succeeded and failed in terms of the broad goal of developing a poor economy and citizenry?

Environmental Economics Questions

  1. Why is Mexico City densely polluted?
  2. Can the pollution in Mexico City be improved?
  3. Has and does Mexico make an effort to address its domestic environmental issues?
  4. Can and does Mexico address the environmental issues it causes across its borders?

Answers to Essential Questions

Here is a brief summary of Ai Camp’s answers to these questions that do well to draw for us a basic outline of Mexico on economic terms:

Answers on the Topic of Mexico’s Poverty

 

  1. How Poor is Mexico?

Mexico’s poverty problem is its most serious problem. Also its problem has improved since 1950. By one minimum measure of three different poverty measurements (food, capabilities, and assets), 60%, 70%, and 90% of Mexicans were poor in 1950. As of 2006 only 14%, 21%, and 53% of Mexicans are poor by those same three standards correlatively (18-19).

  1. What is Mexico Doing About its Poverty Problem?

Mexico has been improving on its poverty problem over the last 50 years; however, the improvements are disproportionately spread over the last 50 years. The reason why is because of the conflicting agendas of governments that have succeeded one and other in the past; this has resulted in the unwinding of the improvements of predecessor regimes by successor regimes. For example, 100% of the progress could have been achieved within 20 of the last 50 years, while the other 30 years of the past Mexico could be stagnant economically because of poor or corrupt leadership (20).

Answers on the Topic of Trade

 

  1. What is the Economic Relationship between Mexico and the USA?

Mexico and the U.S.A have been connected economically for 200 years. The economic relationship is comprised of trade, and the U.S.A investing in Mexico. Mexico and America are each other’s number one trading partner, but Mexico is far more reliant on what trade with the U.S.A contributes to its economy than the U.S.A is impacted by what Mexico contributes to the U.S.A through trade (21-22).

  1. How is Mexico’s Economy Impacted by NAFTA?

Because Mexico was denied entrance into the European Union, after years of negotiation Mexico helped to craft, and is a member of, The North American Free Trade Agreement (NAFTA), along with Canada and the U.S.A. Issues that have arisen in Mexico as a result of NAFTA include labor rights and environmental issues. Benefits include the Mexican government democratizing their governing more, and improve labor standards in order to meet demands of NAFTA trade partners (23-24).

Answers on the Topic of the Broad Economy of Mexico

 

  1. “What is the State of Mexico’s economy today?”

Mexico is the 12th largest economy in the world by Gross Domestic Product (GDP); however, Mexico is 60th ranked in GDP per capita meaning wealth is extremely concentrated in the hands of few people. In terms of corruption, Transparency International ranks Mexico the 98th most corrupt country out of 180. The uneven distribution of income (severe income inequality) is attributed to Mexico’s lack of investment in educating its population. These issues that have arise can be attributed to, or at least linked to, government economic policies that practically outlaw business competition and that allow for Economy damaging monopolies, for Example Telemex owning 85% of the Mexican telecommunications market, and the Mexican government facilitating and protecting these monopolies (24-26).

  1. “What kind of economic model does Mexico follow?”

The history of Mexico’s modern economy has its roots in a Modified Capitalist Model that would be used, according to implications from its 1917 constitution. Subsoil resources (petroleum, minerals, etc.) were claimed by the state in the document, with the claim that resources belonged to Mexican citizens. Economic expansion is limited by the government management of the above mentioned resources, and the government’s overreach of controlling non-subsoil resources; for example, the government has reached beyond the constitution by taking over control of non-subsoil industries at various times such as the restaurant, hotel, banking, and insurance markets, amounting to an estimated 85% control of the economy at one point (26). Since 1982, from that turmoil, Mexico’s economy has progressed into reduced government control over markets, labor, and firms, and increased international trade; however, when polled the sentiment of the Mexican citizenry is of the opinion that the Mexican government still possesses the level of control close to what it did at its height.

  1. ­ What does Mexico’s Economic Model Teach Us About Development?

The strategy of industrialization drove the Mexican economy for two decades in the middle of the 20th century. For what reason the expansion was sought, and the reason for the strategy used, was to remove Mexico from dependence on trade with other countries; incidentally, this caused the Mexican government to adopt protectionist policies of its domestic businesses and industries. Protectionist strategy tends to lead to lack of competitiveness on an international trade level, of a nation’s industries, caused by a lack of development of domestic industries from natural competition. And thus the internal growth of Mexico’s domestic markets becomes unsatisfactory because Mexico will not have developed a competitive advantage over other countries in trade. In addition to lacking relative value in international trade, the tariffs and quotas shut out other countries products and ideas from the protectionist nation, in this case––Mexico. New leaders have since employed a new strategy that is not protectionist in nature, and instead employ reduced tariffs, quotas, and includes joining NAFTA; and though Mexico has again seen more economic growth as a result of the new strategy, the distribution of wealth and improvement of income per capita in Mexico fosters inequality and higher than needed poverty levels (29-30).

Answers on the Topic of Mexico’s Environmental Economics

 

  1. Why is Mexico City so Polluted? Can the Pollution Be Altered?

In 1992 Mexico City was ranked the most polluted city in the world, while also being ranked number one as the most dangerous city in the world for children. Ai Camp succinctly points out that Mexico’s cities high altitude and being a valley have exacerbated effects of man-made pollutants by first burning fuels inefficiently, and second citizens of the city naturally breathing deeper in general because of the thinness of the air due to natural geography. Ai Camp points to perhaps the key factor of the pollution, in order to point out the kind of progress Mexico is making. The populations of 21 million people drive 4 million automobiles daily and the emissions from them account for the majority of pollutants in the city. Mexico has made great progress in the success of combating the above mentioned pollution problems, by doings things such as limiting the amount of cars driven on a given day, in addition to eliminating 95% of lead pollution, and 86% of the sulfur dioxide pollution. This progress is exemplary, even though much progress is still needed (30-31).

  1. How Has Mexico Addressed Domestic and Cross-Border Environment Issues?

Though Mexico has a long fight against environmental problems throughout its country ahead of it, progress has been, and continues to be made. Non-government environmental organizations have arisen in Mexico, and have raised awareness of the pollution problems and have had a major impact on improving the environment in Mexico (PVEM for example). The sentiment of the Mexican people in surveys show that the majority of Mexican citizens are aware of the environmental issues plaguing their country and the world, and are willing to have the government take steps in combating these worldwide. Mexico invests in developing renewable energies, and improving the state of waste treatment plant effectiveness, pollution, hazardous waste, chemical contamination, and reducing the negative effects of mismanaged pesticides.

Final Reflection

Let’s think again about what we just went over together, and sum it up in simpler terms: Mexico is the twelfth wealthiest nation in the world, but the poor are very poor and the Mexican government perpetuates the poverty of its citizens, although it must be noted that the poverty conditions are better than they were 60 years ago; Mexico ‘s economic model is not too different than the U.S.A.’s, or any other Western nation, though it is still distinct; Mexico is the U.S.A’s number one trade partner; Mexico has a pollution problem, but Mexican citizens are more aware and active about combating pollution than Americans are.

Let’s reflect and analyze a little bit on what Roderic Ai Camp did for us. Ai Camp’s approach seems to have its wisdom because Ai Camp is acknowledging that English language readers have assumptions, pre-conceived notions, and news stories in mind when we hear the word Mexico. Ai Camp, knowing what we Americans have been exposed to, knows Americans have developed misassumptions, that we harbor baseless notions, and that Americans believe whole-heartedly in the misconceptions we have about Mexico. It is for the above reasons that Ai Camp took up the most obvious questions about Mexico as an Economy, because it is the foundation of our understanding about Mexico. So then we must ask ourselves, so we make assumptions about Mexico, so what?

Every aspect of Mexico is transmitted with non-verbal implications to Americans, so that Mexico is presented to us only in relative terms. That is to say, all things reported on the U.S. news report that the U.S. is economically better off than Mexico. What Ai Camp’s book gives us the most basic information and facts about Mexico’s economy that if we do already know is redundant, but if we don’t know can completely change how we perceive Mexico. Learning about what misinformation we believed previously, will allow us Americans to re-orient ourselves and understand Mexico on its own terms, instead of how U.S. media portrays Mexico to us.

 

­­­­––Latino Economist

Works Cited

 

Ai Camp, Roderic. Mexico: What Everyone Needs to Know. Oxford University Press. 18-32. NY, NY. 2011. Print. http://www.amazon.com/Mexico-What-Everyone-Needs-Know%C2%AE/dp/0199773874

 

 

 

 

 

 

Business Cycles, Unemployment, and Inflation

The following is a summary from my Economics textbook, of Business cycles, Unemployment, and Inflation:

1. The United States and other industrial economies have gone

through periods of fluctuations in real GDP, employment,

and the price level. Although they have certain phases in

common—peak, recession, trough, expansion—business

cycles vary greatly in duration and intensity.

 

  1. Although economists explain the business cycle in terms of

underlying causal factors such as major innovations, productivity

shocks, money creation, and financial crises, they generally

agree that changes in the level of total spending are the

immediate causes of fluctuating real output and employment.

 

  1. The business cycle affects all sectors of the economy,

though in varying ways and degrees. The cycle has greater

effects on output and employment in the capital goods and

durable consumer goods industries than in the services and

nondurable goods industries.

 

  1. Economists distinguish between frictional, structural, and

cyclical unemployment. The full-employment or natural

rate of unemployment, which is made up of frictional

and structural unemployment, is currently between 4 and

5 percent. The presence of part-time and discouraged workers

makes it difficult to measure unemployment accurately.

 

  1. The GDP gap, which can be either a positive or a negative

value, is found by subtracting potential GDP from actual

GDP. The economic cost of unemployment, as measured

by the GDP gap, consists of the goods and services forgone

by society when its resources are involuntarily idle. Okun’s

law suggests that every 1-percentage-point increase in unemployment

above the natural rate causes an additional

2 percent negative GDP gap.

 

  1. Inflation is a rise in the general price level and is measured

in the United States by the Consumer Price Index (CPI).

When inflation occurs, each dollar of income will buy fewer

goods and services than before. That is, inflation reduces

the purchasing power of money.

 

  1. Unemployment rates and inflation rates vary widely

globally. Unemployment rates differ because nations have

different natural rates of unemployment and often are

in different phases of their business cycles. Inflation and

unemployment rates in the United States recently have

been in the middle to low range compared with rates in

other industrial nations.

 

  1. Economists discern both demand-pull and cost-push

(supply-side) inflation. Demand-pull inflation results from

an excess of total spending relative to the economy’s capacity

to produce. The main source of cost-push inflation is

abrupt and rapid increases in the prices of key resources.

These supply shocks push up per-unit production costs and

ultimately raise the prices of consumer goods.

 

  1. Unanticipated inflation arbitrarily redistributes real income

at the expense of fixed-income receivers, creditors, and

savers. If inflation is anticipated, individuals and businesses

may be able to take steps to lessen or eliminate adverse

redistribution effects.

 

  1. When inflation is anticipated, lenders add an inflation

premium to the interest rate charged on loans. The nominal

interest rate thus reflects the real interest rate plus the

inflation premium (the expected rate of inflation).

 

  1. Cost-push inflationreduces real output and employment.

Proponents of zero inflation argue that even mild demand-pull

inflation (1 to 3 percent) reduces the economy’s real

output. Other economists say that mild inflation may be

a necessary by-product of the high and growing spending

that produces high levels of output, full employment, and

economic growth.

 

  1. Hyperinflation, caused by highly imprudent expansions of

the money supply, may undermine the monetary system and

cause severe declines in real output.

As a Latino, I think a basic understanding of these concepts would greatly benefit Latinos because it will help us to understand the economic world around us better. If we can understand the world around us we can understand how to make better financial decisions that would cause our Latino economy to grow more rapidly and more uniformly.

For example, a (Latino) relative of mine has owned a business for 38 years, and over the course of the 38 years there have been several years of expansion, growth, profit, and success; and there have been years of the business struggling, shrinking, and year over year losses. The events of the business over the past 38 occurred without a deep understanding of the concepts above by the owner. Without understanding how the U.S. economy fluctuates in the business cycle can make it is easy to blame one’s self more harshly than one deserves because one will fail to recognize that the macro economy has more influence on your business that you as a business owner have.

This at least can be said about what happens to people who do not understand that the marco-economy is causing massive fluctuations in the success of their business: One will falsely attribute successes to their own superior intelligence too often when the economy is performing at peak; and one will too harshly blame their own inferior intelligence when  the business does poorly as a result of the economy being in a trough.

I hope this information useful,

Fabian, Latino Economist

Works cited

McConnel; Brue; Flynn. Economics. 18th Edition. McGraw-Hill. 537-538. 2009. Print.

 

 

Oil price volatility, what caused the price of oil to go from $10 to $145 per barrel?

At the end of the 1990s two broad market events occurred that collapsed the equilibrium price of oil in the stock market. The demand for oil was decreased, and the supply of oil was increased. The decrease in demand and increase of supply is described perfectly in our Economics textbook “Supply Increase; Demand Decrease What effect will a supply increase and a demand decrease for some good (for example, apples) have on equilibrium price? Both changes decrease price, so the net result is a price drop greater than that resulting from either change alone (57). The first was Iraq’s return to normality and stability, which allowed for Iraq to drastically increase its oil production. And the second Macroeconomic event is that the Asian countries with leading GDPs were engrossed in a financial crisis causing Asia’s demand for oil to decrease significantly.

Notice the chart between 1991 and 1997 is the gulf war and how low the oil production is, and notices the spike in Iraq’s oil production after the war. The market would have had its equilibrium at around $34 a barrel just before Iraq nearly doubled its daily output of oil barrels per day from 750,000 to 1.5 million barrels a day, from which Iraq’s supply to the market only increased.

OG-AA982_Iraq03_G_20140314115419

 

Here we have a chart created by the World Bank, which records the falling GDPs of the Asian countries that comprised the Asian financial crisis. The fall in GDP and fall in the rate of exchange of the crashing Asian countries would necessarily reduce the consumption/demand of oil this mass of Asian countries demanded pre Asian financial crisis.

images

 

 

 

 

 

As the Asian countries passed through the crisis demand returned to normality, and these countries continued to grow at developing country rates increasing the demand for oil from these countries. From the Asian financial crisis to now, China has also increased its demand for oil so much that it has over taken the U.S. as the number 1 consumer of oil in the world. This massive addition to the demand of oil has helped to continuously increase the equilibrium price of oil. The 2007 global financial crisis and 2008 global recession which the world is still recovering from also devalued the worth of financial markets worldwide, and reduced the worth of global currencies such as the U.S. which caused the price oil, which is a commodity to finally spike to its $145 dollar level, because the low worth of the paper currencies became devalued by 50% compared to commodities like oil and gold for example. In essence, the rise of the price of oil to $145 a barrel was caused by inflation.

crude-oil-price-history-chart-2015-07-18-macrotrends

 

 

(2) Why did a barrel of oil go down from $145 to approximately $60 in recent months?

 

In 2014 oil prices dropped 50%, from above $100 a barrel to as low as $50 a barrel. The reason why is because one of the largest suppliers of oil increased its supply to the market by a minimum of 680,000 barrels of oil per day. According to a Nov. 2014 article in Bloomberg Business, the “Saudi minister al-Naimi reiterated on April 7 that OPEC will only pare output to rebalance the global market if other producers share the burden. Al-Naimi has said several times since OPEC’s Nov. 27 decision that the group’s supplies shouldn’t be curtailed to make room for higher-cost producers. (Carpenter, Saudi…Rising Market Share Fight). It has been speculated that the higher costs producers that are being referred to are the Shale Oilers of America who are reaping profits from the high price of oil that is maintained by OPEC’s restraint of its oil production.

Saudi Arabia’s strategy is to take a temporary reduction in their profit per barrel by driving the price of oil down over 50%, Saudi Arabia accomplishing this by supplying more oil than the market demands; and the reason why the Saudi Arabia sees the loss as temporary is because, while Saudi Arabia has the lowest costs of any oil producer in the world, other oil producers who had thin profit margins while the price of oil was $100 a barrel and above, will cease participating in the oil business because they will be profitless and bankrupt; the perfect example of the low profit margin producers would be American shale oil producers. For Saudi Arabia’s strategy to be ultimately successful the low price of oil would need to result in pushing out the shale oil producers of the U.S., and after driving out the other producers, then the amount of oil supplied to the market will reduce back to its original output before Saudi Arabia increased its oil production because the Shale Oil producers will be diminished, and thus the oil prices will rise, though perhaps not back to $100 a barrel, but high enough for Saudi Arabia to recover profits by selling many more barrels per share even at a lower price.

 

1114_HowMuchCanFracking

 

(3) What is the equilibrium price of a barrel of oil today?

 

The price of per barrel a day closed at $59.13, and has been hovering around the $60 range for a while now. This is the new equilibrium price, as $60 per barrel of oil is the price that the largest supplier in the market (and leader of OPEC) is satisfied receiving per barrel of oil to supplied.

 

In an article from financial analyst house “Reuters” by analyst Alex Lawler, the current equilibrium price of oil is talked about, but more importantly the article quotes the OPEC leaders at their OPEC meeting in Vienne on 6/5/2015. In short, Saudi Arabia’s increase of supply has established the current equilibrium for oil at $60 a barrel but the other OPEC members who had been voicing that seeking $100 a barrel for oil “would be fair.” At the recent meeting in Vienne the Opec members other than Saudi Arabia are now saying that $75 a barrel would be a fair price, in hopes that Saudi Arabia will curtail its increased production in order to support an equilibrium price of $75 or above. The Reuter’s article states in light of the current equilibrium price and the comments of OPEC members other than Saudi Arabia, “The comment adds to signs that many of the world’s biggest producers are gravitating towards a new equilibrium price that they believe may be low enough to deter competition from higher-cost frontiers without wrecking OPEC members’ budgets (Reuters, OPEC Seeing $75).” This quote from Reuters is consistent with my current analysis.

 

 

Works Cited

 

Carpenter, Claudia. Saudi Oil Output Rising Amid Fight For Market Share. Bloomberg

Business. Feb 2015. Web. http://www.bloomberg.com/news/articles/2015-02-19/saudi-arabia-oil-production-rises-to-about-10-mln-b-d-pira

Lawler, Alex. OPEC price hawk Iran joins others seeing $75 oil as “fair”. Reuters. June 2015. Web.

http://www.reuters.com/article/2015/06/05/us-opec-meeting-iran-price-idUSKBN0OL0UC20150605

Rahemtulla, Karim. The Fall of U.S. Fracking?. Wall Street Daily. Nov. 2014. Web.

http://www.wallstreetdaily.com/2014/11/11/u-s-fracking-industry/

Smith, Grant. Saudi Arabia Adds Half A Bakken. Bloomberg Business. Apr. 2015. Web.

http://www.bloomberg.com/news/articles/2015-04-16/saudi-arabia-adds-half-a-bakken-to-global-oil-market-in-a-month

 

Impact Illegal Immigrants Have On The U.S. Economy

PREFACE: Greetings readers of Latino Economist. Donald Trump made, to most, offensive claims that Mexican illegal immigrants have a negative impact on the U.S.A socially and economically. As a Latino I take issue with this, but more importantly I wish to weigh Trump’s remarks in Economic terms. Why put aside Trump’s social offense? I do so because Economic data (money) is the first language of the U.S.A. In order to have an impact on real issues, and to have a voice that will be seriously considered by U.S. residents of all ethnicities, I currently am of the opinion that Latinos need to present inequalities in the language that the majority society of the country we live in speaks.

Also, if we analyze the facts and can present an alternative narrative based on facts, rather than unsubstantiated claims like Mr. Trump has made, I believe the majority of U.S. citizens, who are fair-minded people, will draw fair conclusions about immigrants, and even illegal immigrants, if people are presented with the reality of what illegal immigrants contribute to the U.S.A. economically.

As such, I am seeking to research economic data on these subjects to compile a scholarly research paper that will present a whole picture of the historical, current, and future reality of the Mexican illegal immigrant economy in U.S.A., and how it impacts the country.

To begin this journey I submitted a request via e-mail to my Macroeconomics Professor, for his aide. What follows is the letter I just e-mailed to him:

Hello Prof. [name omitted],

Fabian [Latino Economist] here, from your online Macroeconomics class, summer 2015. I would like to request your aide in my independent research. My research is in the field of Economics (I believe).

REQUEST: I would appreciate it if you could direct me to databases that you use and know of, where I can acquire and research reliable and comprehensive, scholarly and official, economic data on Mexican illegal immigrants that reside in the U.S.

REASON: I would like to read and analyze the research and write an academic level paper on it for my own benefit in the future, as I plan to major in Economics and I desire to improve the latino economy in the U.S. throughout my life through the use of the economic tools I acquire.

WHAT I THINK THE DATA WILL HELP ME UNDERSTAND AND CONCLUDE

The impact illegal immigrants have on the U.S. economy, and whether that impact is worse, equal to, or better than the impact the average U.S. citizen has on the U.S. economy. And how so, statistically.

THE TYPE OF ECONOMIC DATA I AM SEEKING

I feel the amount of years of economic data can be an important factor. I would like for the economic data to span back in time as far back as the first year of economic data, on the impact illegal Mexican immigrants have on the U.S. economy, and from there every year up until the present.

I would like to discover about the Mexican illegal immigrant economy in the U.S.A:

  1. How much economic value is contributed to the economy? For example, what is the quantity of final goods produced, as a percentage of real GDP, by Mexican illegal immigrant labor?
  2. What is the negative value subtracted from the U.S. economy by Mexican illegal immigrants residing in the U.S.? Which theoretically can be caused by the taxes Mexican illegal immigrants do not pay on income, or the percentage of real GDP removed from the U.S. economy and transferred into the economy of Mexico when money is sent to Mexico by Mexican illegal immigrants.
  3. I would like to determine mathematically if illegal immigrants do more good than harm, or alternatively, more harm than good to the economy.
  4. I would like to know the crime rates in the illegal immigrant community in the U.S.A and compare it to the crime rates of legal U.S. citizens.
  5. For comparison to understand the immigrant dilemma in the recent centuries in the U.S., I would like to research the economic history of Italian immigrants (legal and illegal), and crime data from the era of Italian immigration until now.
  6. The current economic status, and crime rates, of Italian-Americans in the U.S. (I want to track the historical progression of factors for immigrant groups transitioning into ethnic citizen groups, which can be compared to the early-american slave exploiting european immigrant economy, that has transitioned to no longer thriving on slave labor).
  7. Etc. etc.

HOW MY RESEARCH RELATES TO CURRENT EVENTS, MYSELF, AND HISTORY

I am Mexican-American. Recently Republican Presidential candidate DonaId Trump has implied in recent public statements that illegal immigrants are a drain or some type of negative impact on the U.S. economy. What I noticed is his lack of citing official information derived from the research and analysis of data, on the negative impact illegal immigrants have on the U.S. economy, and how it may differ from statistical U.S. citizen behavior.

I WANT MY CONCLUSION TO BE BASED ON DATA

Rather than basing my opinion of Trump’s claims on my emotions as an offended fair-minded person, or allowing my pride to be insulted as a Mexican-American, I instead would like to analyze whether or not Trump’s claims are true or false in economic terms. If he is correct or false I would rather let the data inform me rather than anything else.

 

RELATED RESEARCH TOPICS: HOW WELL U.S. ANTI-(ILLEGAL-)IMMIGRANT SENTIMENT HAS COMPARED WITH ECONOMIC REALITIES––HISTORICALLY 

  1.  The history of the anti-Italian immigrant sentiment of U.S. citizens, resulting in discrimination and scapegoating of Italian immigrants by U.S. citizens.
  2.  The history of anti-immigrant sentiment of U.S. citizens, resulting in discrimination and scapegoating of Italian immigrants by U.S. citizens.
  3. The history of anti-immigrant sentiment of U.S. citizens in general, and how it manifested itself in the form of discrimination and scapegoating of immigrants by U.S. citizens.
  4. Etc. etc.

 

Well then, that is my request, and those are my reasons for my request. I know you are a busy Professor and I understand you have many other obligations to meet for the school and whatever else I am unaware of in your life. I appreciate you reading my request. If you do not have the time to help I would appreciate guidance on what Professors or organizations I should approach at N.C.C. that could aide me in my endeavor. I really hope you have the time to help me and that it won’t be too much of a burden to you.

I hope you are having a good summer,

Fabián, Latino Economist

I am excited about this research project I have undertaken, and I look forward to any all feedback and discussion myself, and you the readers of Latino Economist will have on this subject.

Thanks for reading,

Fabián, Latino Economist

Macroeconomics: Test Two. 7/3/15

I am currently taking a Macroeconomics course during the summer. I have an online test I need to complete on Sunday, 7/5/15. I am using this blogpost to make and keep track of a plan of studying for the test.

The problem: I scored 82% on the first test.

The goal: To score 100% on the following four tests that remain in the course.

The test will encompass content from 4 chapters of the Economics textbook the class is reading.

  • Chapter 4: Market Failures
  • Chapter 24: Introduction to Macroeconomics
  • Chapter 25: Measuring Domestic Output
  • Chapter 26: Economic Growth

My current plan is to create two Microsoft Word documents as study aids:

  1. Economic definitions: One document will have all of the definitions from each chapter, organized alphabetically, and the document will have a table of contents with hyperlinks so that I can find the words easier in the table rather than scrolling through pages to look for each word. The MWord document is titled: “Test 2 Definitions|MacroEcon|6-30-15
  2. Reviewing the content of each chapter: The second document will have four sections, one section for each chapter, and I will copy the summary of each chapter in the etextbook, and paste the summary into each section of the Microsoft word document. The MWord document is titled: “Test 2 Chapters Review|MacroEcon|6-30-15.”

I have two days, Friday and Saturday, to study and review the chapters. Friday, 7/3/15, I will study chapters 25 and 26 because I believe those two chapters will have the more difficult concepts to learn, because I believe those concepts will involve some math equations that are used to measure economic growth, and domestic output.

I will devote my Saturday, 7/4/15, to studying chapters 4 and 24, Market Failures and Introduction to Macroeconomics. I am more confident with these two subjects because I have listened to several online lectures on these subjects from Professors at top Universities via the free content via the iTunesU platform, which I highly recommend, to supplement my learning.

There is the layout of my plan of study for test two. I will share my test results after I receive them. I earned an 82% on the first test. I will continue to adjust how I study until I earn 100% on the tests.

I am open to suggestions on how to improve how I study for the test, and I would appreciate anyone who would take the time to offer guidance.

Also, if I can be of any assistance to anyone regarding studying Economics feel free to communicate with me. I look forward to connecting with all people interested in or practicing the discipline of Economics, and especially but not limited to Latinos.

Fabian, Latino Economist

 

Why I am starting this blog. 7/2/15

I am starting this blog to force myself to:

  • Learn the discipline of Economics as effectively as possible.
  • Find, help, and learn from likeminded Economists and Latinos.

Thanks for reading!

Fabian