That Ahnold-Backed Hollywood Welfare Bill?

Matt Welch | August 26, 2005

It won't just provide targeted tax breaks (already bad enough, IMO) -- it will "offer cash refunds even when no taxes are paid." Which is Pig-Latin, for "subsidies."

The $3 million-per-pic maximum giveaway also depends on deciphering Hollywood's budgeting and profit/loss voodoo, so that should be funny. California's current budget deficit, which for some reason is never mentioned in those new-study-proves-we-need-subsidies stories, is still around $7.5 billion.

Comments

|8.26.05 @ 1:34PM|#

"Not exactly a spending 'terminator', huh?"

That's the lame gags pre-empted. ;)

|8.26.05 @ 1:40PM|#

I love it when John Stossel refers to these types as "Welfare Queens". I think I once saw him do that to farmers (or maybe wealthy recipients of federally-provided flood insurance), and the look of indignation was priceless.

|8.26.05 @ 1:45PM|#

test

|8.26.05 @ 2:00PM|#

Is there no shame left in the Republican Party?

Matt Welch|8.26.05 @ 2:06PM|#

madpad -- Perhaps not, but this *is* a Democratic bill.

|8.26.05 @ 2:18PM|#

And at least the Senate Republicans are reluctant to rain public monies upon the rich this time...

"As a refundable tax credit, this bill is the equivalent of a direct payment from the state treasury to one of the wealthiest industries in California," said the analysis of Nunez's bill, AB 777, by the Senate Republican Office of Policy, which generally favors tax breaks.

|8.26.05 @ 2:21PM|#

Which is Pig-Latin, for "subsidies"

ubsidies-say?

I'm not good at this. Did I get it right? gaius marius? Anybody?

|8.26.05 @ 2:28PM|#

"ubsidies-say?

I'm not good at this. Did I get it right?"

Si. Muy bien

|8.26.05 @ 2:33PM|#

"You must pay us a subsidy, because:

a) Outsourcing production to Canada and India is not sufficiently improving our bottom line
b) File-sharing is stealing our profits
c) Our lousy movies aren't selling enough tickets."

I say, let Hollywood tank.

Shannon Love|8.26.05 @ 2:48PM|#

Hollywood exist because the unique meteorological stability of southern California made it the best place in America and possibly the world to film outdoors. Hollywood is dying because movie and entertainment technology in general no longer require predictably mild weather. Movies like "Sin City" which was filmed entirely indoors in front of green screen in Austin, Texas - are the future.

Subsidy seeking is a sure sign of an industry in decline. Once they hold they cannot survive without state intervention it means that their fundamental business model is fatally obsolete. They must change or die. Subsidies will only prolong the agony and spread it around to the tax payers.

|8.26.05 @ 2:49PM|#

Nobody:

Yeah, it was a piece called "Confessions of a Welfare Queen"; the beautiful part about it was that Stossel's indignation was tempered by his unabashed admission that he, himself, was a recipient of this federal coastal flood insurance (it's free gov't money, he'd be a damned fool not to). I especially like the sub-title, "How rich bastards like me rip off taxpayers for millions of dollars".

|8.26.05 @ 3:00PM|#

Subsidy seeking is a sure sign of an industry in decline. Once they hold they cannot survive without state intervention it means that their fundamental business model is fatally obsolete.

That's only half the story, Love. The other half is that, when an industry becomes so massive and profitable, and so inexorably linked to your state or locale, it is an obvious cash cow just begging to be milked by greedy pols. And as the market sorts itself out and tries to correct for that intervention, the industry will seek out respites from that intervention---such as filming in less-interventionist municipalities. This, inevitably, leads to a drop in tax revenue and jobs---which, in turn, leads to government attempts to lure them back with fantastic cash prizes!

It's not pure subsidy-seeking of a dying industry, as you suppose. It's the simple fact that technology has afforded them a way to escape the burden of the state, and the state is now trying to win them back by lessening that burden.

|8.26.05 @ 3:30PM|#

technology has afforded them a way to escape the burden of the state

I know very little about Hollywood, so what technologies and burdens are you talking about? (Not arguing your point; I seriously want to know.)

|8.26.05 @ 3:54PM|#

Jennifer--

Burden: the high taxes that california imposes on them.

Technology: the aforementioned ability to film with greenscreens indoors, or construct entirely digital flicks. None of this requires southern california's consistently pleasant weather.

Creative Solutions Dep't|8.26.05 @ 3:59PM|#

Their lobbyists should get the green screens illegalized. Then they wouldn't have to resort to these unseemly corp welfare tricks.

Shannon Love|8.26.05 @ 4:09PM|#

Evan Williams,

You make a valid point but I think that as general rule, successful business seek tax relief, especially relief from taxes targeted at them instead of actual subsidies. Subsidies always come with strings attached which restrict the businesses freedom of operation. Economically viable enterprises will not seek out subsidies on their own initiative. Local politicians may attempt to bribe successful businesses to either enter or not leave a locality but this is different phenomenon.

If I am reading the story correctly here, Hollywood is actively seeking a state subsidy. This suggest a problem with their current business model. If they were otherwise successful but merely willing to be bribed to stay in California then conditions would be as you suggest.

|8.26.05 @ 4:51PM|#

You mean my production of Ass-Licking Cum Gurglers 4 is gonna eligible for tax breaks and subsidies? Hoo Yeah!

|8.26.05 @ 6:06PM|#

I forsee a silver lining in this mess. Hollywood's accounting practices are infamously "creative". Hollywood's friends will not always be in office. Sooner or later, Hollywood's enemies will be in power. Imagine how much fun a headline-grabbing prosecutor will have accusing Hollywood producers of improperly obtaining subsidies through their usual "creative" accounting practices. It will be a good show.

|8.26.05 @ 6:38PM|#

"Hollywood's enemies": who, politically speaking, is this? Sure there are a few pols who bash Hollywood for points, but this is like saying "Detroit's enemies". There is no political class that is actually opposed to the industry; it donates money (and in a sense fame and glamor) to politicians, so they're not about to take it on in any serious sense.

|8.26.05 @ 7:35PM|#

Evan Williams,

Well, alternatively they can film in less expensive locales, like say Vancouver B.C., or the Czech Republic or Poland.

Shannon Love,

Economically viable enterprises will not seek out subsidies on their own initiative.

Right. :)

|8.26.05 @ 8:06PM|#

If we look hard enough no doubt we can find all sorts of ways in which the government of California is a burden on Hollywood. And if we look with a different perspective we can probably find all sorts of things that could be characterized as favors that the state of California bestows on Hollywood. Some of those favors would no doubt be for the Hollywood unions, but others would no doubt be for the executives.

And if we look carefully enough we can no doubt find all sorts of public sector favors that various other places are offering to movie studios. But we can probably also find all sorts of ways in which those other state and local governments are burdensome.

The bottom line is that if the government is big enough you can blame it for anything. I have no idea whether the burdens and favors yield a net bias one way or the other.

My guess is that, whatever the net bias might be, the bigger effect is viscosity: Reactions to threats and opportunities are slowed by aspects of the business model that have evolved to deal with a public sector burden or take advantage of a public sector favor.

Also, there are other factors to consider: Other locales may offer comparative advantages that have nothing to do with the public sector in either place. It could also be that there are non-viscous aspects of the business model that have evolved to the point where centralization is no longer so crucial. In that case we shouldn't be shocked if the business expands into other locales.

Indeed, there may be people who simply want to tap fresh pools: Discover new gems of acting, set design, and other artistic talents in the local theater scenes. Explore the location shoots that are possible in different locales. See what sort of talent the local music scene has to offer. And whatever editing, graphics, and other technical skill sets you can't find locally, well, that can be added in Hollywood during post-production.

In other words, not everything in life is a direct result of something from the public sector.

|8.26.05 @ 8:27PM|#

Hollywood exist because the unique meteorological stability of southern California made it the best place in America and possibly the world to film outdoors.

More specifically, Hollywood exists because it was the farthest place that the early moguls could get to that was far away from Thomas Edison and his industry-threatening patents, but still within the United States, and where it didn't rain all the time.

|8.26.05 @ 9:17PM|#

I'm waiting for someone to dig up a commerce clause argument to keep movies in Cal. The sad part is the $3 mil won't even pay the salary of the lead most days.

...their fundamental business model is fatally obsolete. They must change or die.

That sounds like it would make a better movie than most of the current lot.

|8.26.05 @ 10:51PM|#

"Hollywood's enemies": who, politically speaking, is this?

President Michael Medved.

|8.27.05 @ 1:15PM|#

The CEO of a major Chicago based business recently stated that they were considering opening a distribution facility in California, but that since it was the least friendly state to business they are opening the distribution center in Vegas instead.

|8.28.05 @ 10:44AM|#

http://www.nationmaster.com/encyclopedia/Assault-Weapons-Ban

Assault weapons may only be possessed if properly registered with the state. No new assault weapons may be manufactured, purchased, or imported into California except by licensed dealers or manufacturers for sale to law enforcement agencies or the federal government, or by production companies for use in movies. Certain pistols sanctioned for use by the International Olympic Committee are exempted from the Assault Weapons Control Act. A permit process does exist at the Department of Justice, but the DOJ's internal policy is reputed to issue permits to no one except movie prop companies.

|8.28.05 @ 12:38PM|#

Nobody Important-

Very interesting. I know that some people here will argue that we shouldn't be except that Hollywood is exempt, but rather thatn everybody else is subject to such gun laws. Fair enough. I largely agree.

But the fact remains that the presence of an exemption suggests that Hollywood isn't entirely helpless in the face of the regulatory state. So I question those who argue that movies are moving to other locales primarily to escape the oppression of Sacramento. That may be a factor, but let's not over-simplify.

|8.28.05 @ 12:39PM|#

CORRECTION:

"...argue that we shouldn't be upset that Hollywood is exempt..."