Understanding the concept of "value"
In chapter 5 of “The Seen the Unseen and the Unrealized,” the author, Per Bylund, discusses the concept of value. He explains that in an exchange, both parties leave better off than before, as each side received something of greater value. This is a recurring concept that is discussed throughout the book and was reiterated in chapter 5. Bylund brought this up again, so he could transition the topic to some nuances that are present in his statement. One of the major nuances to his argument is the possibility of deliberate destruction in order to force another party to participate in an exchange for a single individual’s benefit. The example used throughout the chapter was originally from Bastiat and included a hypothetical shoe store owner and his son. In the example, the son, because of his carelessness, breaks one of the windows of the shoe store. The father was then forced to pay 6 francs in order to restore the window, instead of, for example, investing in his business with the same money. In this scenario, one could argue that it is in the glazier’s interest to deliberately break as many windows as possible to increase profit. Bylund then argues,
"Indeed the opportunity cost to breaking the window (or, really, to replace the broken one) is the other value that is foregone by this action, This is the reason what it makes no sense to smash windows to create income for glaziers–it doesn’t make society better off(Bylund 2016, p. 78).”
Bylund is explaining that this type of destructive behavior is counterproductive to society and hence is why regulations are present in today’s economy (a concept that is discussed further in chapter 7). I, for one, agree with his disdain towards destructive methods and also agree that they are counterproductive to the economy, however, there are many people who could not care any less about others and will do whatever they can to make a profit–even if it is at the deliberate expense of others. Of course, this is why regulations are present, but, nevertheless, there are ways around rules and regulations and both of them tend to lag real-world issues. For example, during the initial crypto boom, many individuals were scammed by investing in certain cryptocurrencies. These individuals would put money into a coin and get “rug pulled” by the developers who would sell into them with their large holdings after pumping up the value. Since crypto was an emerging sector, there were minimal regulations. Eventually, the SEC was able to make statements regarding this behavior and attempted to thwart future attempts. Regardless, regulations can only do so much for the individual. At the end of the day, it is in everyone’s best interest to educate themselves so they do not become prey to those that find loopholes in the system. According to Bylund, the same concept can be applied to wars. Wars are not beneficial to society, as they can set us back for decades in some instances. The principle of opportunity cost can again be used to explain why wars are terrible overall, however, there is always someone that benefits. For example, "Bylund (2016, p. 79) explains that the economic activity after a major war may increase, but it only increases because the value that was lost has to be restored. Therefore, the value is not being created, rather it is being restored to what it once was." Because of this, All the time of the war and all the time it took to rebuild are “wasted,” because society could have been building from where it once was, prior to the onset of destruction. I agree with his argument, regarding the opportunity cost of wars, however; wars, recessions, corrections, etc… are all natural processes of the world and are great times for rebirth of new and improved methods. Every depression the world has experienced since Rome in 30 A.D. has led to more advancement and innovation afterwards. Despite the opportunity cost of the destruction, the world always seems to get further than before. The resets serve as a way to flush out the “bad” and foster new and improved methods for the future. Everything in the world is cyclical, from the debt cycle to the water cycle. It is important to let cycles play their part in order to continue on the path of expansion and development in society.
Understanding the concept of Opportunity Cost
Speaking of cycles and destruction, in chapter 7, Bylund explains how people value convenience less after major, destructive, events. He explains (Bylund pg100) that needs become very basic after a disaster, since people are busy attempting to get back to the level they once were at. The rush of productivity is what gets the economy out of a rut and brings things back to where they once were. Because of the importance of the economy, there are ways the government can intervene with this rebuilding process. An example of this is the concept of Quantitative Easing. The Federal Reserve, although technically a private entity, floods the economy with money by buying up bonds and loans. Congress is then able to provide direct stimulus to its citizens as well. The goal of this process is to stimulate the economy enough to get back on its feet and continue back to where things used to be and beyond. The example I provided above is a perfect representation of regulations used by the government. In chapter 7, Bylund shares his thoughts on regulations. He says
“Very often, governments are unable to enforce their rules on citizenry that is not willing to be subject to those rules–or at a minimum is willing to resist them(Bylund 2016, p. 104)."
This prompts a completely new use-case of regulations, which is related to the ability of the government to set rules for citizens to abide by. An example provided in the book was prohibition. To explain the quote above more in-depth, a perfect example of failed regulation was the government’s attempt to prohibit alcohol in 1920. The citizens did not care that the government set a regulation against the purchase of alcohol and many people completely ignored its enforcement. The people resisted prohibition to the point congress eventually had to make an amendment that allowed its use once again. I believe the government needs to be very careful with how they meddle with the economy, specifically through regulations. As even stated in chapter 7 by "Bylund (2016, p. 102), there can be various unknown consequences of regulating something. The goal of regulation, as stated by Bylund, is to influence or prevent a certain behavior." I worry that this power could be misused and certain prohibitive regulations could be enforced to knock out competition. Lobbying in government is prevalent and therefore could lead to competitors attempting to eliminate one another through regulations. A possible example of this is congress attempting to ban Tik Tok’s use in the United States. What if Meta lobbied for a bill like this to be put into action in order to knock their main competitor out of the country, under the guise of “espionage?” Although I have found no evidence of this, it is still a possibility and therefore those who create regulations need to be watched very closely. Regardless, both chapters provide an excellent summarization of the concept of values, opportunity cost, and regulation. I tend to stand on the side of minimal involvement by the government to intermingle with these economical forces, so my position is for mitigation of their attempts to step in.
Sources:
Bylund, P. L. (2016). Chapter 5: The Seen and the Unseen. In Seen, the unseen, and the unrealized: How regulations affect our everyday lives (pp. 73–82). essay, Lexington Books.
Bylund, P. L. (2016). Chapter 7: Taxation and Regulation. In Seen, the unseen, and the unrealized: How regulations affect our everyday lives (pp. 99–115). essay, Lexington Books.
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Hunter, C. (2017, November 9). Economics 102: Value. Retrieved from https://christopherhunter.me/thoughts/2017/11/9/economics-102-value