Based on a book of the same name, ‘Boardwalk Empire’ is an Emmy award winning HBO drama set in prohibition-era Atlantic City that centers around the Life of Nucky Thompson, a real political figure of the time who rose to prominence and controlled Atlantic City. The critically acclaimed TV series showcases his attempts to dominate the illegal liquor enterprise and unravels the legendary tale of the notorious back room politics and power struggles that led to the city’s astonishing rebirth as an entertainment and gambling mecca.

Prohibition Era

As the show is essentially centered around a product that experiences extremely high demand and inadequate supply, there are several economic lessons it presents. What makes it more applicable is the fact that it is more than a mere TV show, there are some genuinely great teachers involved and much of the story is inspired by actual history. Throughout the show, various situations presented to the characters and their course of dealings exemplify guiding principles for economic decision making with respect to demand and supply conditions that can enable economists to make better assessments and analyses of harsh and volatile business climates.

The existence of Prohibition in America created a high-risk and highly lucrative opportunity, in other words ‘high, yet unsatisfied demand’, which led to the establishment of a large underground economy. Nucky Thompson’s huge financial and power gains from this enterprise produced very aggressive and ruthless competitors (Rothstein) and a federal agent (Van Alden) looking to bring him down.

A supply gap for a highly demanded product is bound to attract fierce competition, as it continuously does throughout the show. The role of the federal agent is similar to that of a regulatory authority in real world economies that control the supply of prohibited goods. Operating in a black market also meant building a strong, reliable and beneficial network (Chaulky White, Daugherty the AG, Al Capone, Luciano, Jimmy and his brother Eli as the police commissioner) which entailed maintaining control and harmony in order to sustain a comfortable positioning in such a demanding environment. This required consideration of all economic and non-economic factors that could potentially impact the business.

In Boardwalk Empire, the real sharks of the street (Nucky, Capone, Luciano, Rothstein) all knew the number one rule of investing: demand equals money. The Bootlegging enterprise turned a mere $5 bottle of Scotch into liquid gold! This is pure genius. Since the bootleggers were engaged in a black market (or illegal) economy, they could charge a premium price much higher than would have otherwise been determined by the price mechanism. Capitalizing on lucrative opportunities in such cut throat economic climates requires intense focus and keen observation skills. The riskier a venture, the higher its profit potential. In this case, the associated risks were potential legal action and incarceration versus the arguably infinite profit potential given the addictive and hence relatively inelastic demand, coupled with limited supply of the product in question.

Various incidents in the show serve as a reminder of the importance of knowing your surroundings when operating in a diverse environment. Being aware of your competitors and the opportunities and threats that exist therewith is integral to success. Inability to do so creates potential hazards that can lead to extremely costly consequences often beyond one’s control. The economic implication here is to have a comprehensive understanding of the environment or sub-sector of the economy that concerns your business and always try to foresee potential future problems; this means constantly seeking knowledge and working diligently to forecast and analyze environments and resolve complex challenges.

The show also provides strict lessons in the importance of timing. Every economy follows a cyclical pattern whereby it goes from slumps to booms, businesses therefore need to time their strategic moves perfectly in order to capitalize on the market. This transition can take many forms, such as mergers,  stealing clients, eliminating the competition, looking for cheaper or alternative suppliers etc. For instance, in the beginning of the show, Al Capone and Luciano are young kids in the drug game earning nickels for grunt work. But with perfectly, strategically timed moves, they are able to capitalize on the instability in the black-economy and elevate themselves above their competition, generating their own supply sources and establishing strong positions in the business by wiping out their enemies.

Illegal liquor poured away

Simply put, if people want a product, it automatically sells, and if people are unable to procure that particular product, as a rational economist you must provide for them. Essentially the same principles apply whether you’re peddling drugs or trying to establish a legitimate business. Your chances of success will be much higher if you take your cues from the paisans on the boardwalk.

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