Heather Warner
Nov. 1, 2000
Economics in Film
(Economics 100 (02))
Professor Gabriel
Today large companies are
downsizing and reengineering with much more frequency, and it
would appear that the trend has become one of people starting
their own business. An interesting statistic stated that in the
United States a new small business is started every 11 seconds;
(of course many do fail, but they are started all the same). (Sullivan)
We must also keep in mind that starting a business and being self-employed
are not always one in the same-as this paper will examine in more
detail. People can be, and often are, simultaneously owners, self-employed
producers, and capitalists.
It was stated that,
In
traditional economics a basic principle is that
economic
resources-the means of producing goods
and
services-are limited or scarce. Economic resources
are
defined as property resources-land or raw materials and
capital-and
human resources-labor and entrepreneurial
ability.
Therefore, entrepreneurial ability is one of the four
cornerstones
of our economy. (Kautz, "Entrepreneurial Issues.")
The availability of all of these resources in turn, determines
the vitality of the economy and its growth.
Although to be an entrepreneur
does not require that one be self-employed, being self-employed
does require that one, at least to some extent, be an entrepreneur.
Therefore it is important to understand what it "is"
to be an entrepreneur as well as what it "takes" to
be an entrepreneur. The basic components of entrepreneurial ability
can be reduced to four basic components. First, the entrepreneur
is the one who takes the first step, and thus the initiative,
to combine the individual parts of land, capital, and labor to
produce a good or service in what they hope to be a profitable
venture. Second, they are the ones who make the business policy
decisions that set the direction of the business. Third, an entrepreneur
is an "innovator." That is to say that they are an individual
who attempts to introduce new products, new productive techniques,
and or perhaps new forms of business organization to the economy.
The fourth component to being an entrepreneur is that they tend
to be a risk taker in terms of time, effort, and reputation. They
are also risk takers in dealing with their own invested funds
and the funds of their associates and other stockholders. (Kautz,
"Entrepreneurial Issues.")
The ideas contained within
entrepreneurship are not new. Entrepreneurs have actually existed
throughout history, but the arrival of the 20th Century has brought
with it a new vitality to the economy, and there has been an increased
flourishing of the field of entrepreneurship. Our world is continually
and constantly changing which in and of itself creates new opportunities
for firms. The service sector of the economy is always increasing
and changing as well. Plus, the very fact that the public views
small businesses in a "positive light" and believes
that they are good for the overall well being of the economy,
is also a contributing factor to this increase. In 1969, there
were only 274,000 new corporations started per year, but by 1995
the annual number had reached 770,000. Another obvious trend is
the number of people who have started to work from home either
running their own home business or through telecommuting. In fact
astoundingly, the total number of such start-ups has reached about
4.5 million per year. (Kautz, "Entrepreneurship Issues.")
With all of this mention of "entrepreneurship" and "entrepreneurs,"
what exactly do these terms mean? A definition of an "entrepreneur"
is that it is,
Derived
from the French word 'to undertake.'
Someone
who is willing and eager to create a new
venture
in order to present a concept to the
marketplace.
(Martin)
"Entrepreneurship" can be defined as,
Any
attempt at new business or new venture
creation,
such as self-employment, a new
business
organization, or the expansion of an
existing
business, by an individual, a team of
individuals,
or an established business.
(Kautz,
"Entrepreneurs Add Vitality to the Economy.")
Another definition has it defined as,
A
process through which individuals and
groups
pursue opportunity, leverage resources,
and
initiate change to create value. Thus, an
entrepreneur
is one who creates and manages
change
by pursuing opportunity, acting with passion
for
a purpose, living proactively, and leveraging
resources
to create value. (Martin)
And still yet another variation to this definition
is that "entrepreneurship" is,
The
ability to amass the necessary resources to
capitalize
on new business opportunities. The term
is
frequently used to refer to the rapid growth of
new
and innovative businesses and is associated
with
individuals who create or seize business
opportunities
and pursue them without regard for
resources
under their control. They build something
from
practically nothing and usually reinvest earnings
to
expand their enterprise or to create new enterprises. (Martin)
Why do I mention all of this?
I discuss this because as previously mentioned, to become self-employed
requires that at least some of the components of being an entrepreneur
also be present. Entrepreneurship is a concept that I believe
has much to do with the economic system of "self-employment."
Self-employment and entrepreneurship are both major contributing
factors to a country's economic well being, both in terms of economic
growth and the very fact that they are creating more jobs. Taking
this all one step further, even the very definition of "entrepreneurship"
contains in it the idea of "self-employment." (Reread
the above definitions).
Although there is a statistic
which states that almost half of all businesses fail within the
first four years, there are a number of ways to avoid this shudder-inducing,
pessimistic statistic. ("Top 10 Reasons…") In general
it has been stated that ways to avoid failure include: getting
smart, getting advice, planning, protecting yourself, purchasing
a computer, persisting, visualizing success, starting right away
on a good idea, and avoid hiring employees (at least at the start).
(Sullivan) Of course these are rather general characteristics,
but I find the last one to be of most interest. This final tip
implies to me that hiring and maintaining employees must indeed
involve many legal, as well as everyday time-consuming, complexities.
To give a bit more detailed information to the reader, the following
are ideas which state a bit more explicitly some of the things
that one might try to do to ensure the success of their business
as an entrepreneur (self-employeed).
First, don't procrastinate.
One may find that in owning their own business, tasks and paperwork
pile up. However, putting any and all of this off will only lead
to a feeling of being overwhelmed. Another thing is that consumer
loyalty has declined recently and customers instead go where they
can find the best products and services. Therefore monitoring
of the competitors is necessary. Even "copying" some
of their best ideas, within legal limitations, could be good,
as well as devoting time to developing new methods, products,
and services for your own business. ("Top 10 Reasons…")
Market your products effectively.
This will help to keep your products selling and thus the money
flowing into your business. If you want to stay in business it
is crucial that you have the means to do so. ("Top 10 Reasons…")
In the film Do The Right Thing Smiley tries to "market"
his product by walking around on the street with his photographs,
trying to get people on the streets to buy them. It would seem
that Sal, the owner of the pizza place, is successful in his "marketing"
as all the people of the neighborhood comment on how good his
pizza is. There seem to be few people who do not know of his pizza.
Attracting customers is not the end of your worries, however.
Once you have their attention you must still work to keep them.
If you are not able to satisfy their needs then they will find
someone else who will. ("Top 10 Reasons…") In Do
The Right Thing we see how customer loyalty can easily be
changed. "Sal's famous Pizzeria" is owned by Sal himself.
One African American customer decides that he wants to boycott
Sal's pizza place because his "Wall of Fame" is comprised
solely of White Famous people. At first it would appear that the
customer loyalty to Sal's pizza places is strong, as no one will
agree to participate in this boycott. However, upon other African
Americans hearing and seeing Sal become angry with another customer
(the guy with the boom box) they too become "enraged."
A fight ensues and the viewer sees the loyalty destroyed as Sal's
pizza place is trashed, money is stolen from the register, and
then his building is burned. Another point in the film where customer
"loyalty" is tested is with the "Piragua"
snow cone cart (frozen ices with syrup). There are a number of
kids gathered around the man scraping the ice and pouring on the
syrup, trying to buy an ice. However, as soon as the kids hear
the ice-cream truck they all scream and run after it. It would
seem that they are not very loyal at all.
If you must hire employees,
then hire only those who are essential to your operation. Make
sure that they are trained and can complete the tasks that are
required of them. Try to keep them happy so that they want to
work-so that they are motivated to keep working and not slack.
("Top 10 Reasons…") (However, it is important to
note here, that once you hire employees you are no longer solely
self-employed. You may still be self-employed provided that you
are doing the work as well, but you are also simultaneously a
capitalist). Sal's sons work with him at his restaurant making
pizzas. Sal has also hired another man, Mookey. However, the lack
of desire to work is evident by the sons and Mookey. First, no
one wants to sweep up out front to make it look more appealing
to the customers. Therefore, Sal hires the "Mayor" for
$1.00 to sweep up out front for him. Lack of motivation is also
evident when we realize that Mookey shows up late every morning
for work. He also talks on the phone, preventing customers from
placing their orders, and thus costing the pizza place business
and customers.
Furthermore, Mookey takes
his time delivering the pizzas from place to place. He also spends
time with his girlfriend during the time when he is getting paid.
He even goes home during the day to his sister's house to take
a shower. His sister, Jade, says to him, "Sal pays you to
work. You should work and take care of your responsibilities…"
Later Sal says to Mookey, "Mookey you're pushing it. I don't
pay you good money to jerk me around. You'll be on the street
soon." We can further see how Sal tries to use payment as
a motivation to keep Mookey working, as he will not pay him until
the evening when they are done work for the day. Sal knows that
Mookey will not be back that day to finish work if he is paid
before closing time. We also see how the sons do not really want
to be there, each trying to make the other do their work for them.
Also, one son suggests that the father sell the pizza place. And
one of the sons also says, "I detest working at this place
like a sickness." This is a pretty strong thing to say.
Location is key to the success
of your business! Even the best stores will fail if they are in
the wrong place. Consider such factors as traffic-the number of
potential customers that pass your firm during the course of an
afternoon, etc…, and convenience-how hard is it for regular
customers to get to your store on a regular basis? ("Top
10 Reasons…") The reason that Sal built the pizza place
here and not in his "own" neighborhood is because there
are too many competitors there. Thus he has been at this location
for 25 years and it has successfully "put money in his pockets
and kept food on the table."
Make sure you know how to keep track of the money coming into
and out of your business. Make cash flow projections that will
help you decide how much money you can afford to spend. ("Top
10 Reasons…") It would seem that the Korean family does
this especially well, as it is mentioned that in less than one
year they already have a good business going in the neighborhood.
Of course, Sal is still in business after 25 years, so it would
appear that he is successful in this as well.
Make sure you have people
that you can look to for advice and consult others before making
huge financial decisions. Plus use magazines, books, and other
resources to learn about small businesses and to be informed.
And the final suggestion is that you start with realistic goals,
set them within your limits, and work hard to attain them. ("Top
10 Reasons…")
Within this generalized concept
of entrepreneurship, working for yourself (being self-employed)
is one of the fastest growing economic groups. A simple definition
of "self-employment" is, "One who produces the
work themselves and who then gets the rewards of this work.-You
own what you produce and you personally reap the benefits of it."
(Gabriel) It is stated that 30% of the work force participates
in "nontraditional" employment. Free agents, for example,
are at 21 million. (Georgia) Why would people want to be self-employed?
The pros and cons may or may not be apparent, but there are indeed
many of both.
The rewards of being your own boss can be numerous. The following
are some of the generally agreed upon pros to being self-employed.
For example, you can adopt a more flexible schedule. You are able
to adjust your day around appointments and work as many or as
few hours as you want. You could work a few hours, take a break
and then work a few more hours. (Georgia) Sal is not solely self-employed.
While he does make the pizzas himself, he has also hired help:
his sons and Mookey, and occasionally the "Mayor" to
sweep out front. Therefore, it would seem that while it is up
to him in terms of the schedule that is made, it appears to work
the best to stay consistent, not only for his employees, but also
for his customers. Mookey, on the other hand, seems to function
as if he were self-employed. He takes a few hours break whenever
he feels like it, returning to deliver the next pizza only when
he wants to.
Being self-employed
also means that you get to choose who your clients are and what
your assignments are. (Georgia) This is demonstrated when Sal
kicks one African American customer out of his restaurant when
he starts to be rude and obnoxious about the "Wall of Fame."
Sal again displays his authority over choosing his customers when
he refuses to serve the guy with the boom box until he turns it
off and stops disturbing the overall peace of the restaurant and
the other customers.
Another positive aspect to
being self-employed is that you can keep adding variety so that
things seem more challenging and interesting and open up new opportunities
which all help to improve your skills. (Georgia) Sal and his sons
not only make pizza, but they also make sandwiches and serve Italian
ices and soda. Furthermore, Sal is able to make a "special"
meal for Jade to eat. This, along with having friendly conversation
with the customers helps to keep things interesting for Sal.
Being self-employed also means
that you can decide how much you will earn without being in a
huge corporate structure. (Georgia) This is shown by the fact
that Sal decides on the price of a slice of pizza. He sets it
at $1.50 and says that it is $2.00 for extra cheese. Although
some customers say that this is expensive, he sticks to this price,
and it would appear that the customers still pay for it. Within
a certain range Sal probably could charge more or less to increase
or decrease his profits, as he sees fit.
This may all seem very appealing,
however, that does not erase the fact that there are also quite
a few negative aspects to being self-employed. Some of the cons
to being self-employed are discussed below. In all reality people
tend to actually work longer hours, especially when they are first
starting out. Furthermore, clients may not call until the last
minute, when they are absolutely desperate for help and or falling
behind. (Georgia) Although Sal has been in business in his pizza
place for 25 years, he still works longer hours to keep his customers
satisfied. Near the end of Do The Right Thing we see Sal
let 4 kids into his restaurant, despite the fact that he has already
closed up for the evening. The kids each want a slice of pizza
and he is willing to open up for them and make them some pizza
well after closing time.
You, as your own boss, are
now responsible for all administrative and back-office tasks.
You may have to spend a lot of time answering phones, trying to
attract new business, and running errands. You must make sure
that all clients' needs are met. Clients can also be very demanding,
and often don't care if it is before 9 AM or after 5 PM, or if
it is Saturday, Sunday, or even a holiday. They want their needs
taken care of. (Of course you could just turn the phone off or
not answer it). (Georgia) The people want their pizza delivered
fast in the movie. Also, this negative characteristic to being
self-employed is shown when the kids pound on the door to be let
in and fed despite the fact that Sal has already closed for the
evening. All that they care about is the fact that they are "starving."
Not knowing who your next
clients may be, or if you can get any, might be a source of anxiety.
You need to keep the cash flow moving, so you need to plan ahead
and attract new customers well in advance. (Georgia) Sal never
really knows if it will be a good day or bad day. We see this
in the movie, as he mentions after counting the money, "Today
was a good day." He cannot predict who will call to place
an order or request a delivery, or who will come into his pizzeria
each day. One could certainly assume that this might create a
bit of stress and anxiety for him.
What about self-employment
and starting your own business today in the United States? A study
shows that in 1997, 11.8 percent of people aged 25 and over, who
were born in the United States, were self-employed. This is a
big increase over the number that were self-employed in the 1960s,
as only about 9.6 percent were self-employed during that time.
And the trend is seen to keep increasing today as well. In 1997
11.3 percent of immigrants were self-employed. However, interestingly,
this is a dramatic decrease from the 1960s, as the percentage
then was around 13.8 percent. Yet despite the decrease with this
group of people the overall trend is positive. This overall growth
of self-employment on a national scale needs to be explained.
In the past it was assumed that high rates of immigration would
lead to high causes of self-employment, yet if this is no longer
being used as the explanation, then it means that natives are
becoming self-employed more often, but why? (Pettersson)
Many say that the increase in the
seriousness of the prospect of becoming self-employed reflects
the amount of information now available in the economy and the
role of the media in the economy. Many also have the desire to
eliminate the uncertainty of all that the corporate world seems
to entail. The entertainment industry is also playing a big roll
in the degree of self-employment as well (writers, producers,
artists, entertainers, athletes). It is also interesting to note
that usually with low levels of education and low levels of capital
it means that there will be low levels of self-employment. This
is demonstrated in part by, for example, Mexican immigrants who
are shown to have the lowest education level. It is stated that
64 percent of Mexicans 25 years and older have an education of
less than high school, and the chances of them being self-employed
is only 6.3 percent. Koreans, on the other hand, have one of the
highest levels of education. Only about 3.8 percent of Koreans
have an education below high school level. Koreans also tend to
have more wealth to start off with and more "social capital"-they
have connections and networks that aid in their being successful
in their own businesses. At 32.9 percent they have one of the
highest self-employment levels of immigrants. (Pettersson) The
movie shows a successful Korean family-owned business.
The United States seems to
have a "booming" economy right now, and people have
more money available to them. All of this, along with higher education
standards helps to contribute to the increase in the number of
native people becoming self-employed. What was found was that
low education, as a contributing factor, means that immigrants
(and others with lack of education and training) instead of starting
their own businesses work in low-skilled, low-wage occupations.
This is inexpensive labor in the eyes of the employer. (Of course
more public services will then be necessary to help support their
families). (Pettersson)
All of these factors taken
together, however, is how our economy is able to support all types
of systems. There are those who will be self-employed, those who
may start their own businesses and become capitalists, those who
will simply work under the control of other individuals (the capitalists),
or those people who will be some combination of the above mentioned
possibilities. (Pettersson) Which is the best economic system?
It is hard to say, as all contain positive and negative aspects
to them. But it would ultimately seem that all systems are necessary,
as we cannot have, for example, an economy with 100 percent entrepreneurs
because they require lots of attention, assistance, and capital.
Rubel and Palladino say that entrepreneurs bring wealth into a
community but small businesses tend to capture some of the already
existing wealth. Businesses tend to generate income and wealth
for the owner of the business, rather than putting together resources
or coming up with ideas that may lead to direct growth and investment.
Again, both are important, however. While entrepreneurs do create
new industries and new wealth and reallocate existing wealth in
the most productive industries and they do create job opportunities,
they also do suck up most of the existing capital. (Martin) All
of the systems would seem, then, to help to power one another
and to fuel the economy, that we are living in, along. A common
feature to any economic system, however, is that people need to
be motivated and disciplined if it is to be successful.
Gabriel, Satya (Professor). Class notes and discussion.
Georgia, Bonny L. "Going Solo. (Industry Trend or Event)."
April 2000.
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July 2, 1999."
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Business Journal. January 24, 2000. The Gale Group
(CBJ, L.P.).
Sullivan, Robert. "Nine Steps to Success." The Small
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