ARTICLE DISCUSSION
Essay
The basic principles of Economics might seem very primitive for someone. Even though, they usually easily describe the basic principles of life. The well known demand - supply balance works in every field of our life starting from buying stuff at the grocery store to searching for a person to spend your life with.
Article description
In this essay I would like to discuss the article written by Bob Davis called “The Thorny Economics of Illegal Immigration” from the Wall Street Journal. This article is about the issues that appeared as a result of an immigration policy that was invented in Arizona in several past years. Series of laws caused the decrease of the illegal immigrants quantity and as a result cheap illegal workforce in Arizona. There is also a story about the farmer who had a serious shortage of harvest workers and as a result lost a big amount of his green jalapeño peppers that turned red. He also had to invest over two million dollars in the development of the machine that could automatically collect the peppers. Now he is planning to make further investments as well as to hire well-qualified expensive workers from community college.
The article also gives additional information about the situation in the state. The number of illegal immigrants has decreased and that caused cheap workforce shortage, but the state could save some money on emergency healthcare and education for non-residents. The article also describes what happened in the real estate and on the markets after illegal immigrants left.
After the time 40% of illegal immigrants left the state, a lot has changed at the workforce market place. Suddenly there appeared a lot of job offers for the decreased number of workers. The low-qualified positions became very popular because of the workers shortage and the average wage started to rise. The shortage of the workers made the entrepreneurs to enroll the optimization of their working procedures. Like Mr.Knorr has invested $2 million in developing a machine to remove pepper stems. His neighbor invented the machine for carrots.
Even though the real estate lost over 30 % percent during the crisis, in Arizona the situation was even worse: the houses owned by Spanish-speaking customers fell by 63% between 2007 and 2010, compared with a 44% drop for English-speaking customers, a difference she attributes partly to financial pressure on owners who had been renting homes to immigrants who departed. Immigrants were not only renting the houses they were also buying food and services from local stores. When they left the demand for the services decreased and a lot of shops had to either optimize their work and to adopt to the new reality or stop working at all.
On the other hand the decreased demand for the free emergency services saves the state 61 million dollars and the annual cost to state prisons of incarcerating noncitizens convicted of felonies fell 11% to $180 million, from $202 million.
Analysis
As we see on the graph below( pic.1) the balance between the demand and supply is very fragile. By saying fragile I mean that every single change could lead to serious changes. And when the indicator has changed to 40 % - the amount of illegal immigrants has decreased , the supply of the workforce decreased as well and that cased the labor force shortage. The graphic has moved to the right and as a result all the farmers got a headache trying to find someone to work.
On the other hand the demand for houses, goods and services decreased and the price decreased as well. That caused a serious problem for the small entrepreneurs and forced them to make the supply of the goods and services smaller and some of them even were forced to shut down.
Picture 1. Demand-supply model.
But the decrease of the demand is not always a bad sign. We also have a description of the situation when the demand has fallen and it lead to the positive result. The emergency cost for non-residents has fallen and the state had additional money for other needs. However specialists say that the amount of tax that was paid by the illegal immigrants is bigger than all the expenses.
Because of the increased demand wages rose about 15% for Arizona farm workers and about 10% for construction between 2010 and 2014, according to the Bureau of Labor Statistics. Some employers say their need for workers has increased since then, leading them to boost wages more rapidly and crimping their ability to expand.
In this essay I have showed the way the demand supply principle works in real life situations. I have also showed how fragile this balance is and how some small changes can cause serious consensuses in a worldbased on the demand-supply principle.Resources
Davis B., “The Thorny Economics of Illegal Immigration” (2016)
Retrieved from: http://www.wsj.com/articles/the-thorny-economics-of-illegal-immigration-1454984443
