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Not everything people don't like is an externality. It has a specific meaning. Fired workers are not an externality.

But the unemployment that those workers receive is an externality. Now, the nature of UI does mean that it should wash out in the end, but in the near term laying off thousands of people simultaneously potentially puts a strain on the system.

No, unemployment costs is not a externality from the company. It is a public cost resulting from the layoff.

Externality has a specific meaning. It is a cost of production passed on to the customer or third party.

Not everything that has a consequence is an externality.

By your own logic, the government is a third party. Because the government aka the tax payer covers that public cost...

Let's say I'm a good neighbor and I take your trash to the curb. I decide to stop, you now have to take out your own trash or pay someone. That change brings a real cost to you, but it is not my externality.

If I put my trash in your bin, that would be an externality.

Not employing someone is neutral.

Laid off workers and the state are not harmed by the company that stops sending paychecks.

To think otherwise leads to absurd conclusions.

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