Every company, service, or product that we use in our society today started from the idea of a single individual or group of individuals. Throughout the process of creating items individuals want within societies, many complications are found, and some companies do not make it. However, those that persevere through struggles continuously work to remain successful and stay in business. As companies evolve, some changes must be made that the entrepreneur must adapt to. These changes are expressed, through Bylund, as regulation and prohibition. Within these two categories we also come across the ripple and multiplier effect. All of these are discussed in Chapter Five and Seven of Bylund’s book.
In Chapter Five, Bylund describes the ideas of the ripple effect and the multiplier effect recognized within our market today. Additionally, in this chapter, Bylund discusses a part of the title of his book and shows how it is demonstrated in our society. To start, Bylund uses the example of the shoemaker’s son breaking a window. The ripple effect is seen within this example because of how the individuals are each affected by the son's action. The window must be fixed, so the shoemaker loses some of his profit because he is using that money to pay for the window. As a total consequence to the shoemaker, if his son had not broken the window, he would have saved money by not fixing the window and could have made money by selling more shoes. This is also where we see the multiplier effect in this chapter because the shoemaker now has multiple issues. It is stated that,
“The ripple effects through the economy therefore amplify the effect of any investment or trade, the magnitude of which is what the “multiplier” is intended to estimate” (Bylund, 2016, p. 77).
This quote shows us that the ripple and multiplier effect play a key role in our market, because when something happens in production and sales it impacts how our economy functions. When these effects occur, individuals in the market may or may not be able to earn a profit through their products or services. Lastly, in this chapter, Bylund explains that the “seen” is the shoemaker’s son breaking the window, but what is “unseen” is the effect fixing the window has on the shoemaker. Individuals in society do not see the fact that the shoemaker could have sold shoes instead of paying for the window, but without the broken window, the glazier would not have been paid and then he would have been affected too because he would not make money on his service. I agree with these effects that Bylund uses in this chapter because I personally contribute to it. If I did not go to Chick-fil-a for lunch or Dutch Bros for breakfast, those restaurants would not have earned money that I typically spend. Without my money, these restaurants would need to spend more of their own money to purchase the products needed to make their food. This is how I see the ripple effect working and the multiplier is my purchasing can help these businesses grow.
Chapter Seven dives dipper into the ideas and terms talked about in Chapter Five. To start, ineffective and effective regulation is thoroughly defined, and an example of effective regulation is shown through how the soot put out as a result of the factories making nails is effectively managed so that it does not harm the environment. Ineffective regulation is when a change is not made issues arise, while effective regulation tends to have a major impact. Additionally, the ripple effect is seen as a direct effect due to the nail makers wanting to create a cleaner environment, with soot regulation in place, communities are kept safe, and people want to buy the nails. Through these regulations, entrepreneurs must stay on top of their businesses and become creative in order to keep their customers happy, along with a successful business. It is stated,
“Regulation forces entrepreneurs to redo their economic calculations and revisit their choices with new and different values” (Bylund, 2016, p. 111).
This quote shows that for entrepreneurs to still be successful within their businesses, they must adapt to situations and be prepared for anything.
Also, in this chapter, prohibition and the immediate effect is discussed using the same example of the nail maker hoping to create a cleaner environment. Bylund (Bylund, 2016, p. 112) explains that through these ripple effects, employees could lose their jobs if the whole nail company was shut down in order to create a cleaner environment. With effective regulation, maybe only two employees lose their jobs and nails are still able to be produced. However, if the entire nail company is prohibited, all employees would lose their job.
Overall, I understand and agree with these definitions and ideas that Bylund expresses throughout these chapters because I feel that I see them in practice in our society today, especially through covid. Many entrepreneurs had to adapt to the pandemic and take precautions that they never would considered they would have. With regulations on businesses during covid, there was a huge ripple effect on customers going to stores, employees going to work, which caused delay in production and lost profits. And the multiplier effect came when so many individuals were laid off because the businesses were not earning enough profits to employ them. We even saw some prohibition issues during the pandemic when the government limited which businesses were considered essential and could stay open versus those that were not necessary and forced to shut down. Luckily for those entrepreneurs who were able to be flexible and create on-line stores, they were able to stay successful.
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.
