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I saw the movie Daybreakers over the weekend and I was blown away by the economic policies and business practices you could pull away. There’s something wrong with anyone who thinks economics when he sees a vampire movie.  Seriously, wrong.  I didn’t think about batteries when I saw the Matrix. I don’t think quantum physics (much) when I watch Lost.  Yet Daybreakers turned on my inner economist.  Weird.

You’re going to have to follow an absurd line of thinking – we’re discussing vampires, humans, and blood to make several points about business, the free market, renewable resources, and other principles of economics. I [almost] minored in Economics in college, so Daybreakers was good not just for a plot, but for validating my sheer nerdiness.

This is your fair warning: The Whole Post is a Spoiler!

Great, let’s move on.

Daybreakers takes place about 20 years in the future. Vampires rule the world, less than 5% of the population is human.  Shortly after the vampires became known, they offered a deal to the humans for coexistence. Humans shoot it down – and alas – we have very few humans left by the start of the film.

Let’s first establish why there are so few humans left. They are a natural resource; there exists no alternative. This is not a perfect parallel to an oil crisis, but it’s worth considering. Humans are not necessary in the way oil is necessary, they are necessary in the way water is. Life is unsustainable without this resource. That establishes blood as a fundamental need. Though economically oil is a need, oil is not necessary to live through the week.

Following the canon of the vampire,  vampirism is a controllable disease. Its spread is somewhat voluntarily. Vampires have a clear understanding that in feeding on a human, failure to kill that human creates another vampire. So there should have been a huge incentive to kill humans after feeding from them. Doing otherwise would add to the pool of available consumers and thereby reduce the blood supply.  By the time we reach the story, humans are farmed  à la Matrix; keeping the vampire away from the human allows a demand to be met without creating a competitor.

This is the first challenge we have in this movie: There shouldn’t have been an explosion in the vampire population. In fact, the idea of limiting procreation in an environment where the resources are limited is observed and documented in nature.  Even though humans don’t balance themselves to ecosystems like other living beings, I still have a hard time believing this could have happened. Our ability to measure and forecast resources for sustainability appears to have been overlooked. Based on the movie,  immortal beings don’t plan ahead.

So imagine that we live in a world today where there are vampires.  Vampires would be very  small in number because they don’t want to manufacture consumers.  Doing so means more blood suckers for less blood.   So the basic principle here is this: You don’t make competition for yourself when your supply is limited.

So how does this happen in business? Well, there’s a few ways you can accidentally create your competition.  One is with employees.  Create incentives to keep your most valuable employees – lest they drift out and start their own business, with some or all of your trade secrets.  Another is through intellectual properties and patents.  Patents have a shelf-life; though your property is protected for a time, there will come a point where your patent is free to be used by the public (at which time, you have manufactured competitors).  Granted, not securing a patent gives you no control over your competitors; they can imitate and duplicate without fear of reprisal.   Even branching into an untapped market creates competitors.  Understand that innovation begets competition, and be prepared to respond.

As the movie progresses, we discover that the main character is working hard on finding a blood alternative. This isn’t a unique plot concept – other books and movies address the ‘blood alternative’ concept, too. What is interesting is that a supporting character, an evil corporate executive, admits that some vampires will still pay a premium for, “the real thing.”  He wants to make an alternative –  so that blood could become a luxury item. This isn’t a unique idea, either, but I like the fact that he’s speaking this as a business man.

And here again, we have another take-away:  Create alternatives to your own products. Apple is an awesome example of this by creating a whole line of iPods. The Touch is an alternative to the phone, the Nano an alternative to the Touch. Look at your product line and find out how to create at least two alternatives.  Don’t let another company be the alternative.

The conclusion to the film is what really got me. Our main character discovers a way to change vampires back to humans. So he found a cure. And this cure has a catch – now that the vampire is human; any vampire who bites him also becomes human. With vampires nearing starvation mode, our hero cures himself and lets our evil corporate exec bite him. The hero then serves up the exec to some hungry soldiers who then get served up to other hungry soldiers.

Simultaneously, a blood alternative is created. However, the film concludes with the assumption that humanity is on its way back up thanks to the cure, not the alternative.  I don’t think the cure would have helped any more than the alternative. In fact, neither would have fixed the issue  – and combined, the issue still lacks complete resolution

I hereby title this economic conundrum The DayBreaker Dilemma.

Here’s the dilemma: You have a non-renewable resource.  Consumption went entirely unchecked and demand is greater than supply, and  continues to grow. You have two choices: reduce demand, or create an alternative.

Creating an alternative increases supply. The problem, though, is that an increase in supply causes demand to go UP. This is a known force in economics; supply and demand affect each other.   The population sees that their size is now sustainable, and has potential for growth.  So the blood alternative doesn’t save the humans, which our hero thinks is the case throughout the movie. The blood alternative would actually still keep humans on the market – which is what our evil executive expects.  Why? The population becomes sustainable – and humans are now a luxury item. The alternative only fixes the problem of supply.

Our hero choses to reduce demand – so the thinks, anyway.  Converting a vampire into a non-potable human certainly reduces the number of vampires who need human blood.  But  he thinks that the cure will save humanity. He’s forgotten that some people like being immortal, and don’t plan on switching to sweet n low anytime soon.  This is that luxury market our corporate executive wanted to create. They’re still going to want human blood. Reducing consumers only fixes the rate of consumption, it doesn’t reduce demand.

So, in the issue of a non-renewable resource you have the Daybreaker Dilemma:  You cannot singularly create only an alternative or only reduce demand.  You must do both, and accept that it is not a whole solution. In Daybreaker, the solution should be to reduce the vampires and their consumption of human blood -and get used to serving type-o negative with vodka.

The movie ends on a happy note, but that really isn’t the case. Several things will need to happen, and it doesn’t look pretty for the pure-blood humans:

1. The vampire population must reduce its demand on human blood.
   1. Reduce the number of consumers – convert vampires to humans
   2. Reduce consumption of human blood – drink the sweet n low
2. The remaining vampire population must then  self regulate
   1. Don’t make more vampires than the available supply of blood
   2. Don’t make human blood readily available
3. Start farming the pure-blood humans

If you saw the movie, you walked away warm and fuzzy. Sadly, this won’t be the case. There will still be a demand for human blood. You have reduced the consumers, and you’ve offset demand, but you haven’t saved humanity. Pure-blood Humans will become a luxury item.  They are the alternative, and diet-blood is the norm. The mixed-breed human can go on and live a happy life. The vampire still needs blood, and diet-blood will be selling better than Coke Zero. But every graduation party is going to be serving AB Negative cocktails.

The upside is that the pure-blood humans become a protected species— for a while.  Vampires, knowing better than to ruin a good party, would protect humans and let them replenish, but the demand doesn’t go away. So long as there is a supply, there is a demand.  I still don’t get why they didn’t do that from the start, but then, there wouldn’t be a movie I guess. Unless you eradicate the vampire, humans are unprotected. If you eradicate the humans, you can’t assume that this wipes out the vampire population by-default. They’ll look for alternatives.

So what do we learn from this:  The Daybreaker Dilemma applies to all non-renewable resources. Alternatives and reduced consumers helps the issue — but so long as there is a supply,  there is a demand.

Vampires clearly need to take some economics classes. And I need to relax.