The Power of Positive Externalities: Próspera’s Game-Changing Model for Socioeconomic Development
In the contemporary world, traditional market dynamics often result in negative externalities, which are unintended consequences of business operations that impose costs on society. In contrast, Próspera offers a groundbreaking alternative blueprint for socioeconomic development that not only mitigates the adverse effects of externalities but also internalizes the positive ones. This unique model presents a new approach to sustainable and prosperous socioeconomic development. Let’s delve into the mechanisms behind Próspera’s unique model, exploring how Socioeconomic Development Enterprises (SDEs) harness the power of market dynamics and entrepreneurial genius to foster a positively differentiated environment for businesses and individuals alike. This is all part of Próspera’s transformative approach to governance, creating the potential for unprecedented levels of wealth creation and shared prosperity while minimizing the negative impacts that have long plagued our global society.
Externalities are the effects from internal operations that materialize outside of the firm. Generally, externalities refer to negative consequences, such as environmental pollution, that firms impose on society. While firms can often theoretically mitigate negative externalities, doing so can incur substantial direct costs, potentially reducing ROI or rendering operations unviable. Although the costs of addressing negative externalities for a firm are direct and tangible, the societal costs are dispersed and often go unnoticed, making it difficult to attribute them to a specific firm. Consequently, firms may financially rationalize ignoring the issue, allowing negative externalities to persist. Multiply this behavior across thousands or millions of firms and we get serious problems and undeniable harms, prompting calls for government intervention. However, the government has a strong tendency to overcorrect (at best) and/or seeks punitive action against businesses collectively. Because governments are non-profit political machines, they usually lack the ability or incentive to restrain themselves, or optimize their solutions. A vicious cycle can ensue, causing a downward spiral in society as a whole.
Próspera reverses this trend. Fundamentally, as a firm, our business model is quite literally to tackle the root causes of negative externalities and to proactively create a positively differentiated environment for people and businesses to operate. When executed effectively, these two things are compatible and complementary. For example, people like to live in clean environments and the most sought-after individuals can demand the highest standards — thus businesses who want to aggregate top talent also need to operate in the best environments.
Próspera achieves this by pioneering a new type of business known as a Socioeconomic Development Enterprise (SDE). The core service of an SDE is Governance, hence our reference to providing “Governance as a Service” or GaaS. Through GaaS we first establish the essential foundations for a prosperous society to emerge, which include good rules and the effective administration thereof, justice, and security. Once these foundations are in place, we take on matters which traditional market participants often leave unaddressed given the aforementioned disconnect through externalities. However, the invention of SDEs introduces a new type of market participant which is directly affected AND motivated by market dynamics — harnessing the power of the profit motive and leveraging the ingenuity of entrepreneurial pursuits.
SDEs function as for-profit businesses and excel as governance providers because their innovative model effectively internalizes the positive externalities they generate. The concept of “internalizing positive externalities” was once considered an oxymoron; however, Próspera’s groundbreaking approach has made it a reality. As a result, this idea may initially be difficult for people to grasp, leading to misunderstandings or dismissal.
Próspera’s business model focuses on generating unprecedented wealth while effectively and efficiently internalizing a portion of that newly created wealth. This is achieved through three primary methods for capturing value:
- Directly charging for GaaS services and utilizing technology to maintain highly efficient operations, allowing for profitability even when charging less than one-third of the fees of our largest competitors.
- Adopting an improved form of “land banking” that acknowledges the direct relationship between the value of real estate and the activities conducted within it (and elevated given the advantages GaaS provides).
- Strategically investing in companies that can greatly benefit from operating within our hubs, which combine real estate and GaaS to enable these companies to compete and win, especially in industries that have become over-regulated by traditional governance service providers.
Próspera unlocks the immense potential of human prosperity by partnering with governments to provide the service of good governance. In doing so it has invented a new business model, Socioeconomic Development Enterprises (SDEs), which internalize the positive externalities of providing good governance and addressing other societal needs.
Próspera’s founder, Erick Brimen, has been working on this model for over two decades. In his college years, while developing the thesis for it, he envisioned a concept that “leverages market dynamics to address social needs“ implementing high-impact “strategies for stimulating regional economies”. This vision has been researched and refined over many years, drawing on insights and best practices from around the world to create what has become SDEs.
The creation of SDEs represents a paradigm shift in how to address the needs of our time. By harnessing the power of market dynamics and entrepreneurial spirit, Próspera transcends the limitations of traditional approaches to catalyzing socioeconomic development where it is needed most by making it a profitable endeavor for all involved.