Introduction
Throughout our assigned chapter of The Seen, the Unseen, and the Unrealized, the author demonstrates multiple illustrations to his audience outlining the known and unknown government regulations, policies, and the influences they have on the economy. Bylund uses these factors to demonstrate the opportunity cost attached across all trading platforms, with the concluding objective of satisfying the consumer’s demands. In each product market, entrepreneurs are consistently looking for innovations in the market. This consistent search/trial and error brings about many consequences, but also breeds growth within the industry, Bylund (2016, p. 72-74).
The Seen and The Unseen
As explained by Bylund, entrepreneurs must understand their target market’s thought and behavioral patterns more than their competitors. To do so, they conduct multiple forms of research, aiming to uncover the psychology of their consumer base, and measure the opportunity cost involved in their exchanges with consumers. These studies can dictate the exchange value and volume of the product. Ultimately, it is crucial that these tradeoffs, between the buyer and purchaser, create high-volume demand, and satisfaction. If an entrepreneur can successfully produce an exchange with the buyer, that breeds fulfillment, the product demand will increase. Through consistent, voluntary exchange, there will be a multitude of economic activity that facilitates economic growth. Bylund (2016, p. 77-78).
The opportunity cost of breaking the window 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, pp. 78)
The author uses the window shop example as an analogy to highlight this concept of opportunity cost. He talks about a son who breaks the window of his father's small shop. To compensate for the disaster, the father must decide where to replace the window, or use those funds for something else. He chooses to purchase the replacement window, which dictates the superior value he places on that window, rather than another other product or service of equal financial cost the money could have been used for. The alternative purchases he has forgotten are no longer available and he must live with the positive and negative consequences of his decision. This is a direct example of the opportunity cost, and the decision-making process we battle with every day. Some students decide not to study or prepare for exams, and rather use the time partying, sleeping, or engaging in other activities. While they are able to completely enjoy themselves, they forfeit the chance to study for their class, likely landing them a bad grade. On the other hand, there are the scholars who place a higher value on strong grades as opposed to extracurriculars. They are willing to forfeit after-school activity if it increases their chances of success in the classroom.
Through his example, Bastiat continues to outline the ramifications behind these decisions. On a larger scale, these choices influence more than the parties directly involved. With the window shopper, by purchasing a replacement window, not only is the consumer happy with his restored boutique shop, but additionally, the distribution unit is pleased they gained another customer/ potential referral. This economic activity also boosts the status of the economy. Even on a smaller level, these same consequences are true. Students who continuously choose the alternative of fun over preparation for their studies bear the risk of lowering their GPA and losing out on any potential grants, loans, or scholarships. This can result in parents, grandparents, or loved ones having the obligation of paying substantially more than they were originally responsible for.
Taxation, Regulations, Government Play
During this chapter, Bylund breaks down effective and ineffective regulations and their appearance on many different occasions. Their goal serves to bring change to the flow of the market. Similarly to opportunity cost, taxation and regulations are factors that must be heavily considered with any venture. However, as outlined throughout the entirety of chapter seven, the government has implemented many barriers to entry, policy changes, and taxes that carry a ripple effect through an entire industry. (Bylund, 2016, p.114). While they may occasionally engage in some beneficial activity with positively motivated companies, it does not come strictly from the kindness of their heart. Oftentimes, the many acts of kindness they perform come with their share of unseen actions that stalemate the benefits provided. These are measures all business owners have learned to account for. During this chapter Bylund mentions,
“The purpose of regulation is to change completely or influence behavior in some specific way to thereby to a different outcome of the production and activities that take place in the market.” (Bylund, 2016, p. 115)
At the back-end of the chapter, Bylund informs the audience of the most set form of regulation, prohibition. This format can cause an entire company to stop their continuation in any specific fashion. Users must oblige with the law established which oftentimes causes a complete shift in the business model. Even for those not fortunate enough to afford these abrupt changes, they are forced to shut down immediately. This is one of the most dire circumstances that all organizations must account for.
References
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.
I agree with a lot of what you had to say. It is up to the entrepreneur to know the needs of his/her customers better than they know their own needs and better than the competition knows their needs. This can be done through market research but also through effectual reasoning and problem solving. If done successfully, the entrepreneur can create a product that is valued highly by consumers so demand increases and everyone ends up happy. The entrepreneur gets the money, and the consumer gets a product that they value more than the money they spent.
I also enjoyed your summary of the shoemaker’s window. This story is a great example of the ripple effect.
When the shoemaker’s son breaks the window, the shoemaker has to decide if replacing a window is worth the cost which would be money that he could use to buy more resources and in turn sell more product. This decision has further ramifications than that though. If the shoemaker decides not to get the window replaced, the glazier might not get any work and go home with no money to spend on his own. If he does decide to replace the window, the glazier may take the money he gets from the project and put it back into the local economy. This is a great example of the seen and the unseen. The seen is the son breaking the window, but the unseen is the decisions made after that and how that impacts the local economy. The son breaking the window started a ripple effect that seemed like a bad situation but ended up stimulating the local economy.
Government regulation seems to have unintended effects. If we were to look at a certain regulation in a vacuum, like when government is trying to stimulate a certain industry, they may be effective. Unfortunately, real life doesn’t happen in a vacuum. The seen is the government adding a regulation or a tax in a given area, while the unseen is everything else down the chain that that action causes. This is another great example of the ripple effect and how businesses are indirectly affected by the actions of the government, causing them to pivot and sometimes shut down depending on the severity of the situation.
I really liked the segment where you compared the window story to the consequences a student must face if they do not study for an exam. The student is willingly taking the risk of being unprepared in exchange for leisure, as you mention
“While they are able to completely enjoy themselves, they forfeit the chance to study for their class, likely landing them a bad grade.”This is a great comparison to a relatable occurrence in every person’s life that I wholeheartedly agree with. I, for one, have experienced this time and time again and always do my best to think of my future self and make sure to study. Even though it is hard at the moment, the outcome makes it worth it in the end. In Bastiat's example, the father should have taught his son form a young age to be careful around windows in order to lesson the odds of something like that happening. Secondly, you made a great point when you reiterated the above topic when analyzing the possible risks of such an action. For example, you mentioned that forfeiting study time can have ramifications such as a poor GPA, which could result in no scholarships–A consequence that could affect the entire family. This was yet again a wonderful representation of a risk from not studying. As I read near the end of the paper, it was apparent that your opinions and relatable comparisons were less pronounced. Make sure to include more of your opinions on a topic all the way throughout the paper. You made it a point to provide a lot of context and summarization at the start, but neglected it near the end. Nevertheless, you provided a good outline of concepts such as taxation and prohibition. I am in agreement with your claim that many times a certain regulation can have differing effects than its known intention. An example of this was the government bailing out banks recently, which can increase more risky behavior in the future. If the government is always there to support institutions such as banks, then what is stopping them from taking on more and more risk? The intention of the government is to help the people that had funds stuck in the banks that failed, but the principle may hurt more people in the long run. Overall, you provided an excellent summary of both chapters, just make sure to include more of your opinions in the latter half of the paper.