A Little Known Phenomenon Called Supply & Demand

Although I shouldn’t be surprised, it never ceases to amaze me how little the general public and now most politicians know about the economy. Even if you haven’t taken a single course, the idea of supply and demand is pretty basic. They tend to have an inverse relationship, i.e. when one goes up the other goes down. If its that simple, than why have two solutions for two very pressing problems completely ignored this obvious market fact.

First, illegal immigration. The number of undocumented immigrants in the U.S. has fallen 11% over the past year according to a new report by the Center for Immigration Studies, an anti-immigration leaning institute. The CIS attributes this decrease to increased enforcement, and offers ICE a great big pat on the back for a job well done. Never in its report does it consider the economy as a factor. With the housing market collapsed, new construction has come almost to a halt. Many of those coming to America find temporary work in industries such as construction. At the same time, unemployment overall has gone up, food and fuel prices are skyrocketing and the dollar is falling abroad. Maybe there are less immigrants, because the U.S. is becoming a less attractive destination due to our weakened economy. Hmm…maybe they never thought about that, or maybe they just want ICE to continue their workplace raids.

Second, gas prices. About a dozen of the Republican house members have been staged out over the last week pontificating on the need for Congress to lift the ban on off-shore oil drilling. They claim that this increased production of oil domestically will soften prices now, even though the first fruits of this drilling is years ahead in the future, if ever. One politician even claimed that the reason oil prices have recently fallen is because of their threats to expand U.S. oil production. Maybe, the reason oil prices are falling is because demand has decreased as less people drive, and purchase less goods, requiring fewer deliveries. Overall, Paul my favorite economist sums it up nicely in his piece last week, please read here.

In other news, major congrats to the U.S. Men’s 4 x 100m relay team. We kicked the Frenchies’ butt. That’s what happens when you trash talk the U.S.A.!