February 23, 2010

The entertainment industry produces nothing of value?

By: Sonny Bunch

The first comment on my review of The Hollywood Economist over at the Wall Street Journal is rather perplexing: After totaling up the revenue that Hollywood pulls in from home video, theatrical, and television ($43 billion), the commenter goes on to write

compare that to revenues of companies that actually make real stuff that generates value and wealth in the economy:

— Intel Corp $35B
— Apple Computer $42B
— Caterpillar Inc $51B

Yet many states go ga-ga and pander to the vapid entertainment industry with taxpayer funded subsidies, etc. Govt business and economic policies should favor the true wealth producers, but sadly this is not often the norm.

A couple of points are in order. First, that $43 billion ignores ancillary revenue streams that don’t accrue to the studios, things like fast food tie ins at Burger King and McDonalds. How many Happy Meals have been sold by sticking miniature Disney characters into the bag along with a cheeseburger and a small fry? Then there’s the toy/merchandising industry, which has kept generations of kids entertained and stocked many a shelf at Wal-Mart. I assume all of that — along with DVDs, Blu-rays, etc. — falls under the category of “real stuff,” right?

Secondly, I don’t know what that commenter thinks that movies are, but they are certainly “real” and they certainly generate “value” and “wealth” in the economy. The average film production has to hire hundreds of people — principals like actors and directors and screenwriters, of course, but also extras, set designers, prop makers, cameramen, boom mic operators, etc. When I went over to LA to watch the production of 2081* — a short film shot on a small budget — there were probably at least 50-60 people drawing paychecks. How was that film not creating wealth or value for its participants? How are the major Hollywood productions that employ thousands upon thousands of people from preproduction through post not creating wealth or value?

Thirdly, I don’t disagree that states should give other businesses a tax break, but why wouldn’t you want a Hollywood production coming to your town and providing free tourist advertising along with an instant injection of jobs and cash? Would an Intel plant that provides stable jobs for decades to come be superior to a film production that will only be around for a couple of months? Well, yeah, obviously. But it’s not like you have to choose between one or the other.

*You can now purchase 2081 on DVD from Amazon. I’d recommend checking it out; Chandler Tuttle has a pretty keen eye, and it’s well-written. I enjoyed it, anyway.