According to McConnell, Gross Domestic Product is a measure
of the total marketplace worth of final goods and services produced in a certain
year. The primary objective of the GDP’s calculation is
to determine financial production, and assesses outflows about income, as it is
states in the article “Chapter 5 National Income Accounting: Measuring
Output,” 2007. The article debates fluctuations in Puerto Rico’s economy and the
resolutions diverse writers have suggested. Also, it makes a contrast between
the Puerto Rican and USA GDP and the islands reliance. A breakdown of fiscal growth
discloses that fiscal policies are crucial in the determination of solutions to
economic welfare when referring to nominal and real GDP.
Puerto Rico’s economy
has had numerous defeats since the 1970s, in disparity to rises in the 50s and 60s.
The articles suggest that these downfalls were consequences of US dependency
and poor labor force input. As of 2000, at 31 percent, Puerto Rico had the lowest
employment in the Americas and the Caribbean, as the article “Restoring
Growth in Puerto Rico: The Economic and Policy Challenges”, claims. Additionally, both articles conclude
that the substantial dependence on assistance programs lowered labor rates on
The articles powerfully state that rising
employment is vital to reestablishing economic growth, and, if it is not accomplished
it, it will result in a decrease in GDP for many years. Both articles compare GDP
measurements on the island and in the US. In the United States, consumption
(2/3 of GDP) is the key element, investment, government spending and the net exports
(Soto-Class & Lamba-Nieves, 2006). The process dismisses investment or public
sectors inventory variations (University of Phoenix, 2015). In the same way,
Puerto Rico measures for GDP, but they use the domestic investment factor in a different
perception, which is mostly because fixed domestic investments and inventory fluctuations
are provided by both the private and public areas of the country’s economy.
LaBossiere’s article, “Who Is Responsible for A Living Wage” states: “…either
employers can pay employees enough to live on or the taxpayers will need to
pick up the tab.” The issue is, if Puerto Rican’s employers pay all their
employees a living wage instead of the stablished minimum wage, this could lead
to an even higher unemployment on the island. Since most small business would
not be able to assure many medium salaries; they will employ fewer workers.
This fact could negatively impact the island’s overall economy.
Derek Thompson in his article, “This is the American worker’s saga” says that the
stuff people are making nationally is getting cheaper, but the stuff people
need is getting more expensive. That’s why people in Puerto Rico feel so
squeezed. LaBossiere’s article reflects every aspect of what Thompson emphasizes
in that thought. He makes a clear point that the worker-class struggles each
day more and more to keep up with the essential necessities, but work much more
hours than in previous decades and, paradoxically, live in desperate poverty.
Low income families hardly can pay for the main necessities: shelter, food, and
The aim of raising employment engagement through
government incentive and fiscal policy is achieved through public transfers
from the USA. These allocations represent 25 percent of the people’s income.
The federally supported Food Stamps Program was introduced in 1975. Soto-Class
& Lamba-Nieves articles’ points out that the way this and other federal
programs were administered produced labor force involvement to falling-off.
One of the articles is about a single
mother with 2 children. Absurdly, it states that if she has $0 income and be
suitable for all transfers, she would earn more in entitlements than if she
worked part time less than twenty hours per week. Also, she would only make $37
per month, which is more than if she worked full time at the established minimum
wage. This example proves the negative consequence that fiscal policy has had by
incentivizing Puerto Ricans to not work.