Disney: analyzing the externalities

In the upcoming weeks, Disney is facing one of the biggest challenges to them since the beginning of COVID. Throughout the last couple of weeks, Disney has been going back and forth with the Disney world Employees to find a reasonable contract proposal that works for both parties. The challenge for Disney is the majority of these employees within the company are unionized, meaning that the workers within the corporation have organized and collaborated on pushing an agenda of improving the condition of their workplace and quality of treatment towards them. This union within Disney worlds workforce is around 45,000 employees. The main issue being debated about currently is the amount employees are being paid. Employees now feel they are being paid an amount that needs to be more than many to make ends meet.

This union has been fighting for an 18-an-hour wage which would be an increase of 1 dollar, which they hope to implement, continuing to raise the overall minimum wage at the rate of a dollar per year. This ongoing debate initially emerged in August, as citizens and workers struggled to make ends meet with the current inflation, rising housing, and food prices. Disney CEO Bob Iger was estimated to produce 27 million this year. With this current dilemma in Florida, the government entities have remained unspoken and isolated from this situation. Why? Because the impact and influence that Walt Disney World has on Orland are unprecedented. When we look at these large corporations, we assume that these are soulless entities, which take away from the locations where they dwell. But is this true? When assessing this question, we must look at the economics of this situation and address the question: Does Disney World’s externalities net produce positive or negative outcomes for the population of Orlando, and how does its presence affect the overall state?

To begin, we must summarize and state what externalities are. An externality is an event in which a byproduct of the initial event occurs. This secondary event can be either good or bad or, in other words, positive or negative. There are four specific types of externalities broken up into production and consumption. Examples of this could be a negative externality being smoking(consumption) or a company releasing chemicals into a river unethically. When looking at how externalities affect the economy, they can create situations where intervention is needed to address costs or issues from a specific market. When we measure externalities, we can look at either the way the cost of the damage has been implemented or the net benefits which can come from a fiscal rise or rise in social efficiency or the overall general welfare of society.

Looking at the numerous positive externalities on Florida, Orlando, and its citizens, we see that most of the net benefits are monetary. In 1967 when Walt Disney’s brother Roy broke ground, this was the start of a catalyst for change as Disney world would transform Orlando from a tiny six million-person town into a 21 million-person entertainment Mecca, an economy more significant than that of the entire Netherlands. Disney World created 75.2 billion dollars for central Florida and accumulated 463,000 jobs. In addition, a study conducted in 2019 found that, on average, they also produced 5.8 billion in additional state tax revenue. These numbers are not only extraordinarily influential but the tower compared to the products found in the halls of the state government. Another study conducted in 2011 found that in the Florida economy, the economic activity generated by Walt Disney Parks and Resorts accounted for 2.5 percent of Florida’s gross domestic product. This fact can be seen as positive in a base of externalities as through their financial contributions, collaborations with non-profits within the state of Florida, and additional donations, Disney brings numerous positive and lasting outlets of change to Florida.
However, even with the plethora of positive effects, Disney creates, just like any large entity, it does create negative externalities. One of the many factors to consider is the very thing that we believe to be positive also has some adverse effects. In a quote by Jewett, a political science professor at a university in Florida, states: there are some negatives when one’s economy is entwined with a theme park: “Yes, we have a lot of jobs. But they don’t pay very much. And we have lost ground over time, especially when it comes to housing costs. As well as this, Disney operates with its priority on maximizing profit and efficiency for its bottom line and personal gain.

Additionally, Disney’s influence enables this entity to spend tens of millions of dollars in campaign contributions to candidates involved in the Florida election cycle. This fact positively impacts Disney as they can create lobbying power for themselves in the state through a plethora of controlled politicians in office and numerous political action committees by managing their reporting requirements. Another imbalance we must consider is how Disney Can create fluctuations in the Florida economy at their discretion. As seen amid the Coronavirus, Disney laid off more than 32,000 workers during the crisis and was looking at a significant insurance increase. As House of Representatives member Anna Eskamini stated, “Instead of that money going towards social services or increasing unemployment compensation, it is used to cancel any increased tax rate for employers,” in a discussion of Disney’s influence in how Florida taxes and spends. The Walt Disney Company will not pay additional surcharges. It may benefit from paying less in the short run than it would if it were still maintaining the service and infrastructure costs in the present and future. These implications are important not to brush over, as it can be seen that the system that Disney has become so integral to and integrated into has positive yet negative effects through its prevalent influence and control.

So with these negative and positive externalities and prevalent pros and cons present, what should Florida do? The short answer: is they can only do something if they want. When considering the economics of Disney, we must look at the whole picture. Last year, Disney World received a record 19 million visitors, just short of the entire state of New York (19.84 million). A study found in 2009 that more than 1 in 50 employed Floridians had a job tied directly or indirectly to Disney World and its resorts. In Central Florida, the proportion was even higher, at 6%. (brilliant Asset). In other words, Disney is so integrated in Florida that it is impossible to differentiate the two or even separate them. In the future, we should look at these circumstances and ask what we can do with the present circumstances. For the everyday consumer, we must understand how we talk with our money. We represent our beliefs and choices by purchasing, investing, and donating. We must intentionally represent best or help causes dear to one’s hearts with our money, time, and choices. That will make the happiest place on earth the most comfortable position for tourists, amusement park connoisseurs, and everyone.

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