If I were to sum up our challenges of the past year in a word, it would be externality. What, that isn't what you were going to say? Hear me out! In economics, an externality is when the effects of an economic activity (good or bad) can spill out beyond the consumer and producer of the good or service.For example, if you attending your favorite rock concert (heavy metal forever!!) causes you to bring home a COVID-19 infection to your grandma (who definitely tends Broadway showtunes) this would be an externality, since grandma wasn't directly involved in the concert as either a consumer (concert-goer) or producer (guitar-throwing metal head).
We could state this more broadly (and less ridic
ulously) for most kinds of face-to-face or indoor economic activity in the past year.Often the loudest cries to fix this are for government intervention, but let's rest easy a bit before worrying about that! The good news is that there are solutions that arise naturally from normal economic activity.
First, large businesses were among the first to pivot to remote work on their own.
Why? The larger the business, the more these spillovers add up internally- workers spreading it to each other or their contractors-- hurting their own bottom line.
Second, externalities are a problem when those involved aren't fully accounting for their actions on the wider social or economic environment. However, here's a chance for gossip to redeem itself! Social pressure and word of mouth have greatly influenced businesses: major and minor concerts cancelled to avoid bad press gain social praise and social media resources such as Yelp, Google Reviews, and Twitter are peppered with COVID-19 precaution ratings- for firms as well as their patrons!
What actions, or maybe even cool new products (like QR code menus!), have you observed from businesses being proactive and addressing their externalities?
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