Broken Windows on Display

Capitol Confidential ^ | 9/21/2010 | James Hohman

[MichCapCon]

Mark Adler, a lobbyist for the Michigan Production Alliance, and Carrie Jones, the director of the Michigan Film Office, defended the state's film subsidy program in a Senate Finance Committee meeting yesterday. To do so they employed a long-recognized economic fallacy, the "Broken Window" theory, which only considers economic activity that is "seen" while ignoring unseen economic costs.

Michigan currently grants film producers a combination of tax breaks and cash subsidies worth up to 42 percent of the expenses they incur shooting in this state. This is the nation's richest film subsidy program.

The "broken window" argument looks at the breaking of a window and describes the benefits of extra wages paid to a glazer, the additional sale by a window factory, possibly a debt service payment made on the window factory's construction loan, and so on. And since all industries are connected in some way - some more than others - the argument concludes that breaking a window is good for the overall economy.

It is fallacious because it ignores all the other industries that might have benefited if the window owner had been able to spend the money used to replace a (formerly) perfectly good piece of glass on other goods, services and investments that he may have wanted. The source is harmed economically by the broken glass.

In their testimony, both Adler and Jones mentioned that the film industry is generating some infrastructure for the state, and cited "multiplier" effects from subsidy recipients using multiple vendors...

[MichCapCon]

MI ping

[cripplecreek]

I see Sean Penn was at the Detroit Tiger’s game in Detroit yesterday. I’m assuming that means he’s here to soak up some taxpayer dollars.

[Blue Ink]

I work in production, and I cringe when I read about all these states pitted against each other to see who can throw the most taxpayer money at a given producer. What their elected officials need to understand is, at best, you’re buying a few TOURIST INDUSTRY jobs for a few months. Film crews bring their own skilled labor; they’re not gonna hire your kid. They eat at your restaurants for a few weeks and stay at a hotel, then move on, like any other tourist. Why not just cut the local restaurants and hotels a check? You’d save in the long run.

[MaggieCarta]

I see Sean Penn was at the Detroit Tiger’s game in Detroit yesterday. I’m assuming that means he’s here to soak up some taxpayer dollars.

Already been here, done that. He's going to Bad Axe, next. See this:

http://www.onlocationvacations.com/2010/09/20/sean-penn-draws-a-crowd-while-filming-this-must-be-the-place-in-michigan/

I have to say, I'm not at home, where I have stashed the handy-dandy html cheat sheet, so, this link may or may work. Copy & paste the above URL, that would work best for me. ;) Link?

[MaggieCarta]

Thanks, MCC! People see the end result of a movie made (or a "photogenic dam" built like in the '30s), but do not, as Mr Reed points out, see the long term effects of this kind of forced redistribution.

Michigan Capital Confidential / Mackinac Center for Public Policy bump!

[SunkenCiv]

Mark Adler, a lobbyist for the Michigan Production Alliance, and Carrie Jones, the director of the Michigan Film Office... employed a long-recognized economic fallacy, the "Broken Window" theory, which only considers economic activity that is "seen" while ignoring unseen economic costs. Michigan currently grants film producers a combination of tax breaks and cash subsidies worth up to 42 percent of the expenses they incur shooting in this state. This is the nation's richest film subsidy program. The "broken window" argument looks at the breaking of a window and describes the benefits of extra wages paid to a glazer, the additional sale by a window factory, possibly a debt service payment made on the window factory's construction loan, and so on... It is fallacious because it ignores all the other industries that might have benefited if the window owner had been able to spend the money used to replace a (formerly) perfectly good piece of glass on other goods, services and investments that he may have wanted. The source is harmed economically by the broken glass.

Plus, the joker who breaks the glass to demonstrate this argument could wind up choking to death on a cherry pit. [movie trivia]