In The Seen, the Unseen, and the Unrealized: How Regulations Affect Our Everyday Lives by Per L. Bylund, the author details his beliefs on what is not considered when making market decisions and what role government should have in the market to result in the greatest economic outcome.
The Unrealized Cost of Decision Making
Every time you give up something valuable of yours, such as money or time, there is a hidden cost of what else you could have purchased using what value you just gave up. This is what economists refer to as the opportunity cost of decision making.
This concept is most often considered in simple standards. For example, if I spend $20 at Target the opportunity cost of this decision is the ability to use that $20 elsewhere. However, Bylund—elaborating on a concept by French economist Frederic Bastiat—discusses the idea of a chain reaction in the market stemming from a singular opportunity cost that is unseen but still necessary for consideration (Bylund 76-77).
This unseen cost can be considered in relation to many factors of production, including the effects government regulation has on the market.
Impacts of Government Regulation
Bylund states that the effect of government regulation on a market results in unseen losses and changed structure (Bylund 110, 113). These unseen losses are the opportunity costs of the regulations the government is enacting. Additionally, these opportunity costs have a domino effect in which, by enacting legislation and therefore not letting the market settle on its own, means that the market gets further away from the natural position set by consumers demand.
Bylund then argues that by allowing markets to be unhampered they will settle at the level that is best for the consumers and the producers, saying “the market, when left to its own devices—and thus unaffected by imposed restrictions or large-scale destruction—tends to reach higher levels of want satisfaction” (Bylund 140).
Reflection
I found Bylund’s argument about opportunity costs and the profound changes that they can have on a market fascinating. His examples on how small choices result in large changes led to me to see markets in a slightly different way. Additionally, I had never delved deeper into an understanding of opportunity costs beyond a basic definition and I now believe that the choices individuals, or governments, make affect more parts of our society than most of us realize.
However, in terms of providing the most market value by supporting limited regulation, I have some reservations. While reduced market regulation may result in improvements, particularly in areas which either government or big businesses have worked legislation in their favor, I do not believe the successes would be as tremendous as suggested.
Bylund suggests that competition will be a key factor in the reduction of monopolies in a natural market. However, until a decent competitor comes up with an idea and gets funding to develop said idea, one company could have control over a majority of the market. This raises concerns that, to compete, companies would resort to illegal measures to retain their hold on an industry.
Additionally, some regulations are bad for business but are better for people or the environment. That on its own raises the question of what kind of morality would exist in a society with unhampered markets.
Overall, I found the passages from this book a worthy read. However, I do still believe that the idea of unregulated markets would not benefit the people of a society in a positive way without first making the market shambles and the economy worse off.
Works Cited:
Bylund, Per L. The Seen, the Unseen, and The Unrealized: How Regulations Affect Our Everyday Lives. Lexington Books. 2016.
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