What is the Seen vs the Unseen?
I am sure you have heard the term “for every action there is an equal and opposite reaction.” This applies not only to physics, but to the economy as well. What you may not have realized is that for every action there are seen and unseen reactions. A seen reaction is exactly what it sounds like. It is the resulting effects that are very real and very visible. There are also ripple effects that come from the initial effects. So basically, one action can cause a string of events to happen that have far reaching effects (to what extent is hard to tell). The unseen reactions are the effects that could have been. What if you had made a different choice? What if you had gone somewhere else? We can only speculate what the unseen effects would have been because they will never happen.
What is the Importance of the Unseen?
It is important to consider the unseen because of the “opportunity costs” associated with it (Bylund, pg.75). An opportunity cost is what someone gives up when they make any decision. For example, if you were to decide to have dinner at Texas Roadhouse, then you would be giving up the chance to have dinner at Cheesecake Factory. This opportunity cost is relatively low because you could always choose to have dinner at Cheesecake Factory tomorrow. An example of a decision with a higher opportunity cost would be deciding what career field you wanted to go into. This could have much longer lasting and far-reaching effects (no pressure).
How Does this Concern Entrepreneurs?
Entrepreneurs must always consider the seen and unseen effects of their decisions because they are in the business of predicting future trends in order to best create value. Considering both sides of a issue will allow the entrepreneur to make a decision that will produce the highest level of satisfaction long-term and therefore, the highest level of profits.
What Effects do Laws and Regulations Have on the Economy?
Now that I have explained seen and unseen effects and how entrepreneurs create value, I want to explain how this relates to laws and regulations. In a “pure market” value is determined solely by the people (Bylund, pg.137). It encourages people to innovate, compete, and use resources where they will produce the most value. In a market controlled by laws and regulations, people lose optionality. (Bylund, pg.101). Bylund states that optionality is important to the economy because it is a sign of competition and wealth. When a regulation is put in place, it disrupts the natural flow of value creation that otherwise would have taken place. Regulations take away optionality which, in turn, destroys value.
What is my Conclusion?
I think the idea of a pure market is an interesting thought. I wonder where our economy would be right now if we were left to our own devices. This thought both excites and scares me. I do agree that people naturally steer the economy in a direction with the highest level of value, but I wonder how conflicting interests would play into this. Something that has stuck with me after reading is Bylund’s narrative about the government taxing people in order to provide subsidies that indirectly steer the economy in a way that ends up hurting them. If our government is created by the people and for the people, wouldn’t the government’s interests match our own? If this is truly taking place, I guess the question would be if our government is really a democracy?
Work Cited: BYLUND, PER L. SEEN, the Unseen, and THE Unrealized: How Regulations Affect Our Everyday Lives. LEXINGTON Books, 2018.
