The Scene and the Unseen

Cross-posted from the Mackinac Center for Public Policy at www.mackinac.org.

Tom Long of The Detroit News is a terrific movie reviewer - my favorite - but his Oct. 9 column lends too much credence to those who contend that the state's film incentive boondoggle is a worthwhile expenditure of taxpayer dollars.

Long's piece is titled "Michigan's movie role pays off." If the words "for some" were added to the end it might be true, in the same sense that bank robbery pays off - for the robber. The analogy doesn't quite hold, though, because in this instance those absconding with the loot were invited into the vault by the bank's employees.

State officials, desperate to look like they're "doing something" about Michigan's economic slide, are throwing every kind of discriminatory tax credit, abatement and subsidy they can at selected businesses and industries. The latest is what amounts to outright cash subsidies to filmmakers in the form of refundable tax credits; if the credit exceeds the producer's tax liability, the state sends him a check for the difference. Some $148 million in credits have already been approved, and currently there's no limit on how high that could go.

Here's part of what Long wrote about the program: "Dan Gearig, owner of Ciao Catering, which has worked on a number of films, is also a big supporter. ‘And I'm not the only one making money,' said Gearig. ‘My produce guy, my meat guy, the linen people are having a field day. There's definitely a trickle effect going on.'"

To be fair, Long also quoted economist Gary Wolfram - an adjunct scholar with the Mackinac Center - giving an opposing view, but overall the column still fell short of recognizing a classic economic development blunder: Acting on the basis of what's "seen" in a program while ignoring the unseen, and so getting a skewed picture of its real effect. In this instance what's seen is the loot spread around by those film producers. Naturally, the beneficiaries think the Hollywood handouts are a fine thing. What's unseen is the effect on the people from whom the loot was taken. In the bank robbery analogy it's the depositors. In this case it's Michigan taxpayers.

Government has nothing to give to one person that it doesn't first take from someone else. Any benefits enjoyed by the caterer Long cites are at least offset by revenue lifted from other Michigan taxpayers - including businesses - to pay for the film subsidies. Worse, the Michigan Film Office bureaucrats don't work for free, and neither do the legislators who debated the film legislation and voted for or against its passage. Calculate in the share they "take off the top" and an honest accounting of the program is likely to show just one result: A net loss for the state.

Also of note is a sidebar in The News describing how the program works: "Filmmakers submit an initial script, the Michigan Film Office judges whether it is appropriate for the state." Is this what art subsidy supporters really want? Requiring artists to prostrate themselves before government apparatchiks who will judge the "appropriateness" of their work? History suggests that politics, bureaucracy and art make poor bedfellows - great works of art aren't born of backroom deals.

Comments

[JGillman]

the study used to develop the Film Credit plan was misrepresented to gain the support from both side of the aisle.

My analysis here: http://michigantaxes.com/wordpress/?p=324

essentially the way the plan works now.. why don't we just be a little more progressive and give them 101% back? I am sure that there wouldn't be a movie made anywhere else in the US if that were to happen.

wait.. should I even suggest such a thing??

[Peter Buxton]

Michigan Democrats: tiny thoughts for tiny minds.