In economics, externalities are anything that one produces that isn't considered in costs or benefits. For example, when a factory produces steel, the smoke that belches from the stacks is a negative externality since everybody gets to deal with it, but the factory itself doesn't pay the cost. Similarly, a friendly and rich neighbor who puts on a private fireworks display produces a positive externality because the whole neighborhood will get to enjoy the fireworks.
As Jim Kearl, BYU Economics professor put it, "All of Christ's parables tell you one thing: produce positive externalities or you go to Hell!"
A laughable connection, but a valid one.
You see, production of positive externalities is always low. Mutual enjoyment of activities is always appreciated, but underproduced. When the good Samaritan stopped for the traveller, he produced a positive externality by benefitting his neighbor at cost to himself. Last week, my mom and dad knew I was having a rough time, so they called and left messages letting me know they missed me. More positive externalities!
The power of positive externalities is a curious thing, however. We (as manual-reading LDS persons) tend to think of it as SERVICE, the magic word of Scouts, mothers, and college acceptance committees. When one produces service, there is an obvious benefit to society (the positive externality). However, what Dr. Kearl failed to mention is what Christ taught about positive externalities and service, as he voiced from his Father.
"For this is [my economic benefit]: to bring to pass the [positive externality] of man."
A curious thing! It would seem as though a higher law transcends economic principles! That, however, leads into a discussion of market failures...and frankly, that's just for another time.
I like Jim Kearl; he tells like it is. I enjoyed your blog entry. What a great connection!
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