Businesses, or industry in general, can help the government help people outside of the traditional public-private partnership model. While some may dismiss this help or others may criticize efforts outside of the traditional models, businesses in certain scenarios can lower opportunity costs for the government, deliver products or services more efficiently, and often even provide unexpected benefits.
Often much attention is given to “negative externalities.” In 1920, economist Arthur C. Pigou argued that economic externalities are most often orphans. As explained by Investopedia, economic externalities “occur when the production or consumption of a specific good or service impacts a third party that is not directly related to the production or consumption of that good or service.” How are these results “orphaned?”
If an industry produces a positive externality, then those receiving the benefit have no incentive to pay for it. If industry produces a negative externality, it has no incentive to cover those costs. The end result is that the market may under-supply a benefit because it is not being paid for, or overconsumption may result in the case where the externality is not included in the cost.
Some pro-tax advocates seize the opportunity arguing for taxes to be placed on market activity that creates some amount of negative externality, but they ignore positive externalities, taken for granted or thought of as an entitlement. This has led to a lack of appreciation for the positive externalities created by industry that directly benefits government and the people.
For example, by any measure children spending time in foster care face huge challenges. The result for some is homelessness and incarceration, both of which cost society directly but also cost society as the individual leads a life that is troubled instead of happy and productive.
Every state has a foster care database but not one that typically empowers social workers to do their job more easily. In fact, typically it detracts from them being able to spend more time in the field, with those kids and families who need attention. Binti, a software-as-a-service company, is seeking to remake child welfare. This is not an expensive custom software build as so many have been in the past. Instead, this platform can be used across states and molded to any unique needs, reducing risk and making it more affordable. The winners? Our kids and society as those kids become productive members of society and hence costing society less in terms of support for them.
Or consider the broadband industry and the help it provided during the height of the pandemic. As the U.S. COVID-19 outbreak began, the FCC asked broadband and telephone providers to take the Keep Americans Connected Pledge. Nearly 800 broadband and telephone providers stepped up to help hundreds of thousands of Americans during the time of need.
The cable industry has provided help even more broadly. As recently as yesterday, NCTA announced, “In rising to the challenge, cable broadband providers expanded and enhanced their low-income broadband programs and launched new programs to qualifying customers. To date, NCTA members have connected over 10 million consumers to broadband internet through these programs.”
One more example, while pharmaceutical companies raced to create, get approval for and manufacture vaccines to use to fight COVID-19, expert distribution companies such as UPS and FedEx were preparing for rapid and massive distribution, outfitting their trucks and airplanes to transport a vaccine that requires storage at extremely low temperatures. Government relied on the developed and robust expertise of industry to correctly and rapidly deliver vaccines. While some governments have seemed to fumble the role out the vaccines were delivered, and continue to be delivered, effectively across the country. Yes, industry won a contract for their service but government did not have to try to build an effective, efficient distribution system. When society returns to normal and you get to take that mask off sooner rather than even later, there is your positive externality.
These few examples barely scratch the surface of the positive externalities we enjoy because of industry directly or industry working with government. This is industry helping government help people.
Originally Publish by the American Legislative Exchange Council
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