Movie production credits – crony capitalism that attracts few jobs

Just in time for the Oscars….

Writing in the Wall Street Journal, Glenn Reynolds explains The Hollywood Tax Story They Won’t Tell at the Oscars.

He points out that about $1.5 billion, yes billion, goes to the movie industry as credits, exemptions, grants, and fee waivers to bring movie production to a certain state or city.

With 45 states in the game, all that does is move some amount of spending from one high-bidding place to a higher-bidding place.

The amounts tend to be less than the subsidies:

In its 2012 study “State Film Studies: Not Much Bang For Too Many Bucks,” the Center on Budget and Policy Priorities found that film-related jobs tend to go to out-of-staters who jet in, then leave. “The revenue generated by economic activity induced by film subsidies,” the study notes, “falls far short of the subsidies’ direct costs to the state.

Here’s the biggest flop Professor Reynolds cites:

Sometimes it is even worse, as demonstrated by Michigan’s effort, begun under former Gov. Jennifer Granholm, to woo the motion picture industry with an expensive state-of-the-art studio facility built on the site of a former General Motors factory in Pontiac. State leaders ballyhooed the plan as a way of moving from old-style industry to new.

Despite tens of millions of dollars in state investment, the promised 3,000-plus jobs didn’t appear. As the Detroit Free Press reported last year, the studio employed only 15-20 people. That isn’t boffo. That’s a bust. The studio has defaulted on interest payments on state-issued bonds, and the guarantors—the state’s already stressed pension funds—may wind up holding the bag.

3,000 jobs promised. 20 currently employed.

Ouch.

The state treasurer’s assessment:

“In retrospect, it was a mistake,” conceded Robert Kleine, the former state treasurer who signed off on the plans in 2010.

Ya’ think?

Some of us could have told you that before you got started.

Movie production credits are merely one example of governments doing a not-so-hot job of picking one company over another or picking one industry over another. And it’s the taxpayer’s money that goes down the drain with the lousy choices.