Hollywood Babble On & On #133: Run away, here come the taxes!

Nikki Finke posted this little story about how Iron Man director Jon Favreau lobbied California governor Arnold Schwarzenegger. No, he wasn't lobbying for a state park to be dedicated to the movie Swingers, he was there about money.

Money, money, money.

And since I'm going to be talking about the rather dry subject of economics, I'll toss in some pictures of the lovely Zooey Deschanel, just to give you a reason to keep your eyes open.

You see California's hurting, a lot of productions are fleeing the city to greener pastures of greenbacks like New York City, Louisiana, and even Toronto despite the rising Canadian dollar. These "runaway productions" are lured to these faraway lands by flexible unions, unique locations, and most importantly in the eyes of studio moguls: Tax breaks and government backed incentives.

So now the studios are getting everyone and their cousin to lobby the Guvernator and state legislators to pony up some tax breaks. Favreau's even dangling the promise of a $600 million studio facility build by venerable comic publishers and fledgeling movie studio Marvel and all the wonderful tax paying jobs it will create.

Now I've always been iffy about the involvement of government, any government, in the field of business. I grew up in a region of Canada during tough economic times. During these times dozens, if not hundreds, of businesses, industries, and entrepeneurs came to our region, lured by job creation programs in the form of generous tax credits, rebates, and even cash up front incentives.

By looking at the numbers my region should be loaded with factories, warehouses, and retail business all bustling with activity, but it isn't. Most of these businesses folded and went away the moment they pocketed that sweet taxpayer money. The lifetime careers they promised disappeared.

And let's not forget what is the inevitable result of government and business interaction: Cronyism.

You see the image of the right wing businessman is really more of a myth. Businessmen are by their nature opportunists, and if they can wrangle some goodies from the state, it's hi-ho socialism for everyone (except for them of course). Politicians are also opportunistic by nature, and any situation that brings them together is a perfect storm of economic disaster.

You see once you get some sort of tax credit/incentive program set up, the politicians will start fiddling with the regulations to get those credits/incentives. Being masters of verbal manipulation they will leave certain qualifying criteria vague, so they can interpret them in their own way, usually giving preferential treatment to those who donate to their campaigns, or hire the politician's dimwitted nephew who needs a job that allows regular weed breaks.

And it get even worse when the glamour of movies get involved.

Canada's film industry is heavily subsidized by the Canadian government, and thanks to that it's basically an elite club, based mostly in Toronto, who feel entitled to free taxpayer money to make movies that no Canadian would actually pay to see. And when the government actually tries to enact the "piper" rule and ask for some say over whether or not the state should finance a film called Young People Fucking, and they scream like a choir of scalded cats. They want the government cash, but they don't want the government interference. Which is impossible when you are using government money, because no one will actually pay to see it because they don't want people to think they're watching porn.

And in this day and age of global trade, where Hollywood companies are being financed from once far flung places as Mumbai and Dubai, can production moving beyond the narrow confines of Hollywood's Thirty Mile Zone be even considered a problem?

Sure, it's bad for the Californians who are dependent on the industry to survive, but good for film professionals everywhere else. But when you take into consideration that this effect is caused not by the normal business evolution brought about by trade and technology, but by direct state intervention, it could become a house of cards that could hurt all involved.

Which brings us to another perfect storm, one where dysfunctional industry practices meets dysfunctional goverment policies, and they never really end well for anyone.