They are a superficial solution to the brain-melting problem of stability and profitability in a post-internet world. They provide no incentive for a studio to make a better film, they don't empower the industry with tools to survive the internet age, and they hamstring non-Hollywood oriented production from gaining a foothold in an ever changing marketplace. Studios are beholden to no one when the decision to chase better incentives presents itself, and that makes for an unhealthy balance of priorities for our industry. Oh, also, subsidies don't work.
The argument centers around the infrastructure these subsidies help create, which can be an essential resource for future non-Studio productions. But what comes bundled with that infrastructure, and that shiny new production of The Dark Knight? You certainly don't get to shoot the sequel in your city next year (sorry, better incentives in Pittsburgh), but you can keep the draconian copyright law, Union busting, and three-strikes internet policies that your tax relief helped buy.
Also, for good measure, your taxpayers can keep weathering an ever-increasing portion of the risk associated with production in order to keep the handful of TV or small-scale films still present. If those shows get canceled, or fail to turn a profit, well, much of that risk is yours to weather as well. You then have the same specialized, unemployed workforce you had before it all started, only with fewer tools to innovate a localized solution. Everyone remains dependent on whether the Circus comes to town.
Just look at the sorts of things demanded of the New Zealand government in order to keep production of The Hobbit on their own soil. To keep their studio happy after the huge success of The Lord of the Rings trilogy, New Zealand changed the nature of their entertainment and copyright law, not to mention preemptively limiting Union bargaining powers in the process. All this in exchange for the carrot-on-a-stick promise of a few hundred industry jobs, and with any luck, an increase in tourism.
As Karaganis states in his article:
"The worst part is that, for most of the wannabe Hollywoods, it’s bad economic policy on every level. The productions bring in mostly low-end, temporary jobs, while the high-end jobs remain in Hollywood or New York."Extrapolate that to Chicago (as above), New Orleans, Charleston, Albuquerque, or whatever city comes next. Hell, look at Detroit, which has unfortunately fallen for this ruse before at the hands of the then-powerful, now-ailing Auto Industry.
It takes more than infrastructure to get a film off the ground, after all. Studios have power because they have money, and the means to create something from nothing (which comes with risk, and the urge to minimize that risk by any means possible). When studios leave a given city, exactly how much of that content-creating power remains for the local economy? The claim is that future, non-studio films will grow from this now-fertile soil. Though having grown up in the Detroit area, I've seen this claim before. My local government only managed to keep the Auto industry happy in Detroit (temporarily) by selling out Unions, neighborhoods, and tax-payers in turn.The Auto industry left anyway.
Toothless, industry-wide subsidies don't lead to flower gardens, they lead to strip mines. I can tell you how this ends: the industry bleeds the village dry, and moves on.
Luckily, there is reason to believe that the subsidy-craze has peaked, but where things go next is difficult to glean. Unless we think our industry will succeed where the Auto and Music industries failed, Studios must ween themselves off subsidies sooner than later by adopting a better model. I'd like to believe that somewhere out there is a healthy model, with a unilateral interest in workers, content creators, consumers, and distributors alike, rather than another short term bait-and-switch.