Imagine that you wake up one morning and you look outside. There is this beautiful substance falling from the sky. You grab your jacket and head out the door. With your mouth open you look up and take in some delicious…. chocolate.
Yes! That happened just this week. In a town in Switzerland where they produce Lindt chocolates, there was a malfunction at the chocolate factory, and the town was dusted in chocolate (CBS News)
Typically, when we think about factories emitting dark substances into the air, we think about pollution… a bad thing. We call this an externality.
Warning: Econ Definition. An externality is when the consumption or production of a good affects a third party not involved (and it isn’t reflected in the price).
Eyes glaze over.
In other words, an external party is impacted when someone makes something or consumes something.
An equilibrium price and quantity in a market occurs where the marginal value to consumers is equal to the marginal cost of production. But, when we have something like pollution, there is an extra negative cost to society beyond the cost to the firm of production. What that means is that society would be better off if less was produced (aka: reduce pollution).
Here’s a more concrete pollution example. The town of Irwindale, CA is home to a Siracha factory…. You know that hot sauce that is made from jalapeño chilis? A few years ago, the town complained. So much Siracha was being produced at once that the townspeople’s eyes were stinging (BBC News).
Innocent bystanders (people that neither worked at the factory nor bought Siracha) were impacted by the production of Siracha.
What should be done? This is where the government should step in. You could imagine that the local government might impose a tax on Siracha production. This would reduce the amount that the factory would want to produce (Their costs of production have risen). Or, maybe the factory has to pay everyone in the town to compensate them for their discomfort. Again, the costs of production have increased, incentivizing the factory to reduce the amount of Siracha they make. What ended up happening is that the town of Irwindale declared the Siracha factory a public nuisance, but the lawsuit was dropped because the factory said they added better filters (LA Times).
What about this sweet Swiss town with chocolate? In this case, I might argue that it is a POSITIVE externality. People in town – even those that didn’t buy chocolate – were made better off when the town got dusted with chocolate. Society would actually be better off if MORE chocolate was produced. Maybe the town should pay Lindt chocolate to produce more!
Let’s do a fun thought experiment. What if one town had both a Lindt chocolate factory (with the weird malfunction that caused cocoa to dust the air), and the town also had a Siracha factory. What would we get? Mexican chocolate! Would the positive externality of the chocolate outweigh the negative externality of the Siracha??
Mexican Chocolate Brownies
I have to confess… I’m not a huge fan of chocolate and chilies. I’ve had friends give me chocolate with chilis before (the same friends, multiple times), and I’ve lied and said that I loved it. I immediately turned around and gave it away. But, for the sake of this blog, I wanted to make some Mexican Chili Brownies. They were pretty good. Although, to me a little weird. You first get a taste of chocolate, then cinnamon, and then – bam – some spice. For those that love spice with your chocolate, this is for you.
I used the brownie recipe I’ve been using my whole life and just tweaked it a little bit. If you don’t like spice with your chocolate, I’ve written some modifications below. If you REALLY like spice, then up the amount of cayenne pepper!
1 stick (1/2 cup) butter
1 oz unsweetened chocolate
1 cup (200 grams) sugar
2 eggs, slightly beaten
1 cup (120 grams) flour
¼ tsp. salt
1 tsp. cinnamon
½ tsp. cayenne pepper
2 T. water
1 T. butter
½ oz. unsweetened chocolate
¼ tsp. vanilla
1 cup (120 grams) confectioners sugar
Make the Brownie:
Preheat the oven to 350 degrees.
In a saucepan over medium to low heat (you do not want it to boil), melt butter and chocolate. Remove from heat immediately and stir in sugar. Once it has cooled just a bit, add eggs. Add flour, salt, cinnamon, and cayenne.
Bake in 8” pan (either square or round is great) for 20 minutes at 350°.
While the brownies are in the oven, make the icing. Melt the butter, chocolate, and water in saucepan (I just rinse out the previous saucepan and use it). Once melted, remove from heat, and add powdered sugar and vanilla. You could also add some cinnamon here too (1/4 tsp.)
When the brownies are done, remove them from the oven and let them cool for just a few minutes before adding the icing.
*** If you don’t want Mexican brownies, but you want some delicious fudgey brownies, just replace the cinnamon and cayenne with 1 tsp. of vanilla.