Organizations & Transaction Costs

            When I was in high school, I watched a YouTube video of an entrepreneur motivating the audience to be go-getters. He urged those watching to not wait to participate in things but rather be the leaders who start companies and movements themselves. I was extremely pumped by this video and thus, after brainstorming about what topics I found most important, I settled on an idea: to gather a group of my peers who would, on a weekly basis, travel to the elementary schools in the poorest parts of town to read to the children in the afterschool programs. It was easy enough to find willing participants; college applications were right around the corner and this would undoubtedly look great on a resume. The experience was incredibly rewarding- the students, parents, and administrators of the various schools would thank us endlessly. Parents would come up to me and tell me how they were working multiple jobs to support their family and simply didn’t have the time to read to their children; they would explain how they would always worry that their kids were missing out on working on their reading/vocabulary skills. Our time and mere contribution of reading to the precious children seemed so valuable to those we were trying to help, and this made everything feel both fulfilling and effortless.

                                                                                                                            

           Unfortunately, this didn’t last long. There came a point where my members were unable to dedicate as much time as I needed them to. Thus, I started trying to find a similar group within 20 miles that I would be able to recruit into mine. Eventually I found out that there was an organization that was doing exactly what I was doing, but on a much larger and professional scale. They had schedules of readers, transportation set-ups for volunteers who needed rides, and even a mini library of their own to take with them to each school. I was both giddy with excitement and relieved that I would be able to take my tiny operation and add it to a bigger, more impactful one.

             I still get a little sad looking back at this monumental decision, as it basically was the demise of my whole idea and purpose. I wanted to provide those with very little with the tiny gesture of reading to them. I wanted to help children born into less fortunate situations by aiding them in achieving success, in the hopes they would be able to live more privileged lives in the future via proper education. The group my remaining members and I joined did not have a similar vision. Instead, they explicitly visited schools that were upper-class and privileged. They would fundraise and, as the parents of better schools would obviously be able to donate more, they would only visit those particular schools. Of course, none of this was advertised or even known- I only learned all of this after joining the board. 

            In terms of transaction costs in relationships, they exist within all of my connections. For example, I’ll analyze one of my closest work relationships: my boss. He is an absolutely lovely man, both helpful and compassionate. A transaction cost of this relationship is that many of my coworkers are apprehensive in entrusting me with small tidbits of info (such as leaving the office to grab lunch), as they think I may betray them in some way. I try my best to show them that I would have no reason to go out of my way to tattle tell, but I think it’s scary for them. Another transaction cost is that I’m unable/unwilling to do many things that other coworkers do- such as wasting time, taking personal phone calls, leaving work early, etc. I respect and genuinely admire my boss too much to partake in these things, even if he would not mind. I think transaction costs are a very interesting concept, and I hope I’ve understood them correctly. Although so many relationships have transaction costs, the only thing that matters is that they are worth it.