"Oh we've got trouble, right here in River City." So intone the townspeople, led by Professor Hill, as he enumerates the problems that arise out of the presence of a pool table. I think this song can be a great example of externalities. Externalities are costs and/or benefits that accrue to parties outside of a transaction.
In this specific case, the owner of the local billiard parlor (who also happens to be the Mayor) purchased a pool table. The original parties are the billiard parlor and the firm that supplied the pool table. We presume that the parlor will charge a fee to individuals to play on the new table. Parties to those transactions, while varied on the one side, are pretty easy to define.
But we are interested in the externalities, particularly the negative externalities, listed by Professor Hill as he sets up his plan for the town. In this song, Hill lists a multitude of negatives: sloth, the progression from medicinal wine to "beer from a bottle," horse-race gamblin', and fritterin'. There's even a sound economic argument to this last one, as the boys will be ignoring their chores, thus reducing the productivity of the family enterprise. From empty cisterns to "dancing at the arm'ry," Hill paints a picture of depravity and degradation, all effects brought down on people who were not party to the initial transaction, and many of whom will not be party to the subsequent transactions.
More tomorrow. Please share your thoughts.
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Little did I know those many years ago when I was playing Marian the Librarian in my high school's version of The Music Man that I would someday work for the Fed and be enlightened to the economic lessons contained in the songs I once vocalized. I'm enjoying these posts and will be sharing with some educators we work with.
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