Economics

The Case Against Film Subsidies

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After attending a recent hearing of the New Jersey Assembly's Commerce and Economic Development Committee, the Manhattan Institute's Josh Barro explains why Gov. Chris Christie was wise to kill off the Garden State's subsidy program for movie and television productions:

Industry lobbyists turned out in force to explain why giving money to their clients is essential for the state's economy. A representative from NBC/Universal asserted that the firm moved production of Law & Order: SVU to New York for tax reasons, and might not even have cancelled the medical drama Mercy if New Jersey had maintained its subsidy program. Unlike New Jersey, 45 states currently offer some kind of film production incentive….

Taking a step back, any industry would be thrilled to face a tax rate of negative 20% on gross expenses, as was the case with New Jersey's suspended credit program. They'd be even more keen on the 35% offered in New York City or the 42% on the table in Michigan. It is no surprise that these programs are highly successful at drawing in film productions, at least as long as they remain the most generous in the neighborhood. If a state offered such generous subsidies for rubber ducky manufacturing instead of filmmaking, it would see a proliferation of bath toy factories instead of soundstages.

Yet, this is not the approach we take to economic development in most industries, because it is unsustainable. Handing out huge subsidies costs a huge amount of money.

Read the whole thing here.

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  1. Excellent.

  2. The question is why screen prod’n, rather than bath toy, subsidies became so widespread. Was it because one state or Canadian province hoped to boost tourism with location shots making certain venues identifiable? Or because a particular state or province was losing prod’n to an adjacent one, and that hasn’t happened with bath toys?

    1. Because congresscritters are as star struck as the average American idiot who reads People magazine and watch Entertainment Tonight.

      They’re jock sniffers too. See ballpark subsidies for further information.

      1. Makes perfect sense. The ways one becomes a celebrity — entertainment (including spectator sports) and politics — are subsidized. Any others missing?

        1. Why don’t strippers, a very useful profession that provides entertainment to thousands of horny men get subsidies?

          1. Because it sets a bad example for teh childrun, Dan. Even though Golddiggers puts money into the economy, I get accosted by the cops nearly every time I leave the place.

          2. Because it sets a bad example for teh childrun, Dan. Even though Golddiggers puts money into the economy, the cops harass people nearly every night. I had one (CHP) follow me from the parking lot halfway to Visalia recently.

    2. Canada subsidizes film production (as well as other “arts” ventures) in an attempt to protect Canadian cultural purity. In selecting location shots, scouts try for the blandest most universal and unrecognizable spots possible.

      One problem for the cultural guardians is that, naturally, producers are going for the biggest moneymaker and hence are aiming at the US market. The last thing Americans want to see is something that “promotes” the “Canadian cultural identity”.

      Hell, Canadians have shown time and again that it’s the last thing they want to see, too.

      hence, very few films the cultural guardians actually approve of are made.

      It does keep a good number of Canadian actors off the pogey, though.

      1. Handing out huge subsidies costs a huge amount of money.

        And the result, most of the time, is a hugely crappy product that glorifies the state and casts businessmen (the ones forced to bankroll the subsidies) in the role of villain.

  3. Why do we need film subsidies when we have an enormous glut of content? If film subsidies were corn subsidies, we’d all have 200+ ears of corn in our refrigerator, and an even more ears of corn on the internet.

    1. As if we don’t have a huge glut of corn. The whole practice of subsidies in government use is to pay politically connected people for their overproduction.

  4. “Law & Order: SVU to New York for tax reasons”

    Also to be closer to the murderous raping Manhattan Prep School students who are the offenders roughly twice a month on the show. They want to get closer to them to better understand what makes these kids rape and kill so often.

    1. understand what makes these kids rape and kill so often.

      Manhattan Prep School student: What type of car am I getting for my 16th birthday?

      Wealthy Parents: Because of Film Subsidies, we cannot afford to buy you a Range Rover, like you wanted. Instead, we got you a 3 series BMW.

      Manhattan Prep School student: I’m feeling murderous and rapey!!!

  5. Ballparks for billionaires and tax breaks for movie moguls. It’s for the little guy.

    1. Oh, come on, J sub, O-town’s new O-rena with its splendid luxury boxes is a much better place for Joe Sixpack to go watch the Tragic lose in than the old one without the luxury boxes.

      It was worth it just to watch Buddy Dyer bring the city to the brink of bankrupcy.

      1. Disney will bail out Orlando, no worries.

        1. Just you wait and see. Parramore will turn into a tech village, the new arena will revitalize downtown, venues will make us all cultured, the condos will be overflowing with wealthy young urbanites, SunRail will eliminate our dependence on foreign oil, and the city’s growth will be smartly managed, thereby making Orlando a world class city of tomorrow’s future.

          1. I see a shining city floating above where Orlando once was!

            1. Man, orlando’s already a shining city.

              Oh wait, that just the window glass in the unoccupied condo and office towers.

              Some of my friends these days are strangely quiet, which is strange considering how noisy they were a coupla years ago heralding the new enlightened leadership that going to make things wonderful after all the years of Republican control.

              Interestingly “all the years” that Orlando had a Republian mayor were, like, eight out of the last hundred or so.

              1. Shit, my typing normally sucks, but today it sucks really, really extra bad.

                1. dun’t b sow hard on yerselpf – looks oky doky to mi.

              2. Not a day goes by that I don’t think that moving out of that shithole was one of the best decisions I’ve ever made.

                Also I don’t have to put antipersperant on my crotch anymore.

            2. I moved to an acre plot on West Crystal Lake in Lake Mary. No more Orlando/County taxes for me. My bill went down by $3,000.

              1. Ah, so you’ve moved to the suburbs of Greater Taintsville, as well?

          2. But wasn’t it an Experimental Prototype Community Of Tomorrow we were after?

            And paid for with private money?

            1. No, that’s Celebration. Celebration was what Disney built to replace Walt’s vision of a real community after they turned EPCOT, which was actually supposed to be a real town where people worked and lived, into a theme park.

              I took my Mom to some specialist she had to see out at the Celebration Medical Center.

              There’s no flying cars out there, man.

  6. “”Yet, this is not the approach we take to economic development in most industries, “””

    Tax breaks are commonly used for economic developement.

    1. negative 42% That is all

  7. It is critical that we nurture our fledgling film industry. Hollywood is in a precarious position. It doesn’t have the name recognition or the funding to compete with film industries of other countries. I mean, who ever heard of a “Hollywood movie”?

    1. ‘Bout time something went our way in the legislatures of America!

  8. Going for the Godwin early –

    You know who else subsidized filmmaking?

    1. Dick Wolf = Leni Riefenstahl

    2. At least he got some decent films out of the deal.

    3. Teh Jooz?

      Because, really, they finance every movie made, amirite?

  9. I know this is compromising my principles, but I’m OK with subsidizing anything that puts Mariska Hargitay on TV.

    1. ….but if she didn’t receive the subsidies, she might have to take her clothes off.

      1. Unintended consequences of market interference strike again!

  10. I wonder if some state subsidized the production of Atlas Shrugged.

  11. There was an “analysis” of film subsidies on NPR a day or three ago. The story consisted of local business owners gushing about the boost their sammich shops got while the filming was taking place. I think they ended by saying there would be a part 2 the next day wherein they would consider the costs/benefits.

    1. Maybe they could just give the money directly to the sammich shop.

      1. maybe they could directly give the money to sammich eaters. I’ll take the Italian hoagie with extra garlic, peppers, and anchovies.

  12. Without the film subsidies in Michigan I wouldn’t have had to cross the street last week (on orders of a security guard) to stay away from the filming being done two blocks away from my office here. Nor would Grosse Pointe North high school students have got a chance to ogle Mylie Cyrus last month. We’ve got to have our priorities straight.
    Actually, the Detroit Free Press had an article over the weekend reporting on a study showing that this program is a net loss to the state unless you count intangibles such as ‘making Michigan more visible’.

    1. Thanks to Kwame, Monica, Bart and others Michigan is visible enough thank you very much.

      1. An elderly friend of mine just got a small role in the upcoming Harold and Kumar movie being filmed in various places around here. Surely you’re not suggesting that that isn’t worth the millions Michigan is doling out to Hollywood!
        Seriously, I hope everyone caught the <sarcastic> tag in my previous message.

    2. Yep, they’ve been using the abandoned, brand-new high school in Howell(‘nuther story about bad decisions all by itself)for filming, too.

      The townfolk were all atwitter…for about 5 minutes.

      Small benefit to some local shops (lots and lots of alcohol sales) – otherwise – thanks for taking our tax money guys!

      And am I the only person who thinks Miley Cyrus is fugly? I mean FUGLY?

  13. Maybe they could just give the money directly to the sammich shop.

    Government-subsidized baloney is not exactly in short supply.

  14. What about the children of the TV producers? If we end subsidies for this, they won’t be able to send their kids to private schools!

  15. I thought that the Reason company line was that allowing private entities to have money instead of the government was always and everywhere a good thing.

    1. I think there’s a difference between keeping your own money and keeping someone else’s money.

      A tax rate of “negative 35%” on expenses means, if I understand this correctly, that if the new series “Law and Order: Plea Bargaining” spends a million dollars producing one of their shows, the State of New York pays them $350,000 for producing it in New York.

      I don’t see how that’s equal to letting them keep more of their own money.

      1. It probably less than offsets taxes they pay to some entities some places.

  16. hehehehehe. Sound stages are big, open indoor spaces with huge windows. I’m a vertical farmer. The flight of the film industry could be a boon to New Jersey hydroponics. I feel like Dr. Frankienstien stumbling upon an unguarded morge. Mmmmuuuuuahahahahahaha.

    1. I don’t know about the windows.

      I used to work for a huge Canadian Corporation that has gone into bankrupcy.

      While it has kept some of its facilities in a reorganization and a new name, it has closed many.

      The Toronto works, where I once labored is now a housing development, but two of the plants (the one in Vancouver actually closed in the mid-seventies while I was still with them) have been converted to production facilities because of the huge open space they provided.

      So now films are made in spaces where once structural steel components for projects like the Golden Gate Bridge were once made.

  17. Having movies and TV shows set in some town is advertising for that town. Maybe the right way to view it as the states paying for product placement in films and TV shows. That is no so terrible in principle—but I suspect they are dramatically overpaying.

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