Claire and Jay are visiting a competitor’s business. The competitor wants to buy Pritchett Closets, but Claire and Jay have a different idea. The new company is focused on creating smart closets that can pick outfits for the person based on the weather and their current size. They have great technology, but they don’t have the manufacturing capabilities to fulfill all their orders. Pritchett Closets, on the other hand, has the manufacturing space, but they haven’t invested much in technology. Claire proposes that they merge instead.
See more: acquisitions, industrial organization, mergers, proprietary technological knowledge, technological change, technological knowledge, technology
Haley is at a staff meeting. She’s worried that she hasn’t had enough good ideas lately. Her fear is that this will lead her boss to believe that she isn’t working hard on behalf of the company. Haley signals that she’s a good worker by suggesting that Gloria sell a family recipe to the company (NERP). Gloria has long held the recipe secret. The recipe is an example of private technological knowledge. The recipe is valuable to Gloria because of the family tradition. The recipe is valuable to NERP because it could give them an edge in the lifestyle industry. Will Gloria sell? (Note: Jay also makes a fantastic joke about the value of a bachelor’s degree that can be used for discussion on human capital).
See more: entrepreneurism, human capital, human capital investments, moral hazard, signaling, signals, technological knowledge
Claire and Phil go to a magic shop and talk business with the legendary Mister Ekshun. The magician laments that he can’t be at the shop everyday because he’s booking “road jobs” which we should infer have a higher payoff than the shop’s profits. Phil is curious about how a magic trick works, but they need to make sure Claire (a non-magic person) isn’t able to hear the trick. Phil learns that he had an opportunity to become a magician on a cruise ship earlier in life, but Claire had never told him about the call because of how busy their lives had been. One of the issues in determining the impact of an event is the lack of a good counterfactual to compare decisions to.
See more: counterfactual, licensing, occupational licenses, opportunity cost, physical capital, proprietary technological knowledge, scarcity, substitution effect, technological knowledge
Phil goes into the wild to live like the famous Robinson Crusoe. In doing so, he provides a fantastic example of the factors of productivity. Productivity (Phil’s ability to survive in the wild) is determined by his human capital, technological knowledge, physical capital and natural resources. He has natural resources in abundance – fish, sticks, blueberries, honey and fresh water. He has some good technological knowledge because he knows how to build a fire. It’s not clear that he has the experience (human capital) to successfully build the fire. But, having lost his physical capital (fancy camping gear), it’s not clear whether or not he will be able to survive.
See more: factors of production, human capital, natural resources, physical capital, Robinson Crusoe, technological knowledge
One of the tougher topics to get across to students is why older Americans start to leave the labor force. One explanation for the leave is that they see a decrease in their human capital and that some of their previous training is no longer relevant. This clip does a good job bringing humor to a topic that often sounds derogatory.
See more: human capital depreciation, innovation, labor, life cycle considerations, technological change, technological knowledge