Wednesday, July 1, 2009

What I've Been Watching

Over the past couple of nights, my wife and I were watching the DVD of the recent film, New in Town.

The film, which features Renee Zelwegger and Harry Connick, Jr. is a fairly predictably romantic comedy. It was enjoyable. (Why does he always seem to get cast as the down-to-earth local?)

The film focuses on Zelwegger's character, a rising corporate star from Miami who, in order to secure a promotion, volunteers to go to Minnesota to oversee a product transition and downsizing. Things don't go as planned, and the plant is soon slated for closure. Enter an interesting economics lesson.

In the first part of the film, you might be thinking about Schumpeter's concept of "creative destruction", only to move towards "destruction", as the situation grows worse. But in last third of the film (Chapter 18 on the DVD scene selections, or about one hour into the film), the film does a good job of illustrating another aspect of Schumpeter's work - the role of the entrepreneur.

Schumpeter saw the role of the entrepreneur five ways:
1. Introduction of a new product.
2. Using new or different inputs to produce a product.
3. Introduction of new technology or process.
4. Opening a new market.
5. Creating a new economic organization.
If you watch the last 30 minutes of the film (fast forward through the mushy parts), you can identify at least three. Do you agree?

This post references the following Keystone Economic Principles:
4. Economic systems influence choices.
5. Incentives produce "predictable" responses.

6. Do what you best, trade for the rest.

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