Stop Hollywood Giveaways – Mackinac Center

This item originally published in Newsweek May 31, 2024.

“We're not even in the game,” Michigan state Sen. Dayna Polehanki said recently, lamenting that few Hollywood studios are making movies in her state, which eliminated its film production subsidies in 2015 .

The senator could learn something from classic films. Like the 1983 nerd thriller War games Note that sometimes the only winning move is not to play.

For years, movie producers have pitted states against each other and raked in billions of dollars of taxpayer money. The smart strategy from state lawmakers is to stop playing.

When states compete for film production with taxpayer dollars, the only way lawmakers can up their game is to pay for an ever-larger share of Hollywood's spending. This causes losses for the economy, because it does not create more films – you must already have a film to compare against before applying for film subsidies – but it increases social costs.

That doesn't mean there aren't winners. Movie producers clearly win when they charge taxpayers 30 percent of their expenses, as they do in Georgia. People who sell things to movie producers love it when their sales go up. That's why some towns in Georgia are happy when filmmakers come to town.

Elected officials are attracted by the unilateral accounting of cinema subsidies. Promote the benefits, ignore the costs. Turn your head and squint, and perhaps the state appears to emerge victorious.

But a lucid assessment shows that the States are losing. Georgia listeners find that the tax revenue the state receives from the subsidized film industry is less than a third of what it spends on subsidies, even counting tax revenue from people who sell to film producers. New York listeners find similar losses in their state.

Legislators can convince movie producers to film in their state, but only at the expense of their cash flow. States seeking to attract film productions must spend more to earn more.

Michigan's experience with its 42 percent production subsidy (the highest in the nation at the time) was particularly bitter. Lawmakers spent $500 million chasing movies between 2008 and 2015. There's little to show beyond the credits of a few good films and many bad ones. After all, quality doesn't matter in terms of economic impact. Bad cinema money spends the same and applications are not rejected for the plot.

This $500 million could have been spent on more socially productive purposes. The state still isn't fixing its roads as fast as they're falling apart. This money could have filled many a pothole.

Georgia now spends more on movies than on state and local parks, according to the Census Bureau. Most Georgians would benefit more from nicer trails and playgrounds than from movie credits.

Subsidizing Hollywood production also saps money that could otherwise be used for social welfare programs. Instead of helping Medicaid recipients, taxpayer dollars go to movie producers.

Lost opportunities are difficult for legislators to grasp. They want to show that they are doing something for the economy. Few things are as flashy as movies and television. People notice when famous actors show up in their grocery stores.

But trying to win more productions is a losing game, and the game is rigged against states that offer subsidies. The public purse never wins, which means less money for the things governments can and should do.

If states remove their subsidies for cinema, people will continue to produce films. They'll just produce them in places that make sense, rather than trying to make Detroit look like Minneapolistrading to Boston for Detroitor designating Vancouver as new York And all other cities. These location choices are only made because elected officials distribute more money to producers.

It's best for state lawmakers to stop bidding on films altogether. All lawmakers need to do is say no to Hollywood when it asks for taxpayer dollars.

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