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INTRODUCTION: THE BILLIONAIRE BOONDOGGLE
“ARE YOU NOT ENTERTAINED?”
So asks Russell Crowe’s character, Maximus Decimus Meridius, in the 2000 movie Gladiator, a moment that lives on today in eternal internet GIF fame. The film is built around the concept of the Roman coliseum, and the spectacles that famously took place in those ancient arenas as a way to placate and distract citizens with what the Roman poet Juvenal derided as “bread and circuses.”
Today’s entertainment industry is quite a bit different. No one’s being fed to any lions, and even mixed martial arts can’t match gladiatorial combat when it comes to sheer bloodletting. More important, the government is generally not in the business of organizing violent displays to keep the plebeians from rioting in the streets.
But don’t think that means the government is out of the entertainment business entirely. No, the biggest entertainment corporations in America today are very much entangled with lawmakers at every level, from federal on down to local. However, public money is spent not on keeping citizens happy to ensure they are pliant, but on keeping corporate leaders happy so they continue making campaign donations and don’t threaten to move their businesses to some other jurisdiction. Your tax dollars bolster the entertainment industry’s bottom line in an unholy convergence of private and public. And that’s merely the tip of the iceberg when it comes to the many ways corporate America makes off with your money, while not creating the jobs it promises.
Consider these stories.
In the spring of 2018, if you had taken the Green Line in Washington, DC, to the Navy Yard stop on a Tuesday night, then followed the sea of red-and-blue hats up onto the street, you’d likely be headed to a Washington Nationals game (barring some oddly placed political protest that evening). The Nats, as they’re known, have called America’s capital home since 2005, when the Major League Baseball franchise left Montreal, depriving Canada of the Expos. They have played in Nationals Park, on the shores of the Anacostia River, since the 2008 season.
The area around Nats Park, the shorthand favored by DC residents for the rather nondescript stadium, is up-and-coming, with hip new apartment buildings, fancy restaurants, and chain coffee shops—as well as the constant presence of construction equipment. Both a brewery and a winery are within shouting distance. A lot of people, from city council members to DC sportswriters, think all that development is thanks to the stadium—and they make their case, constantly, since the city paid to have Nats Park built.
The sticker price of the stadium was about $700 million, but once interest and other costs are factored in, Washington will have coughed up about $1 billion for the privilege of having an MLB facility within its borders. To convince taxpayers in the city to pay up, especially since DC has its fair share of nonbaseball problems and advocates clamoring for money to solve them, the story told by the stadium’s boosters was that it would revitalize a part of DC that desperately needed some economic activity, juicing development thanks to an influx of fans and their money. And new stuff is cropping up in that part of town every day, so mission accomplished, right?
Not so fast.
Disney’s The Avengers made well more than $1 billion at the box office. That’s not a bad return on a $220 million budget. Actor Robert Downey Jr. alone was paid some $50 million for reprising his role as Iron Man in the film, and the multiple sequels that followed made billions more.
Those are big numbers, but another one nowhere near as large should be just as eye-popping: $22 million. That’s how much New Mexico provided to The Avengers in film subsidies—tax breaks, essentially—even as the state was dealing with budget woes that required it to cut a plethora of government services, including funding for both pre-K and higher ed.
Those in favor of the subsidies argued that giving public money to blockbuster film productions would turn New Mexico into a “second Hollywood,” as former governor Gary Johnson put it, providing jobs to New Mexicans who wouldn’t have them otherwise and creating an entire industry where there had previously been nothing at all. Scores of folks who would have had to move elsewhere for work could instead stay in New Mexico, as an industry sprang up from the ground; people who previously had no interest in the state would flock in, fleeing the high taxes in places such as California and New York. It would be a win-win for taxpayers, workers, and industry alike, and all for the relatively low cost of a few tax incentives.
The case against? “We could have spent that twenty-two million dollars on all kinds of things, like education for our children. We could have spent it on roads,” lamented one New Mexico state representative at the time.
So was this actually a heroic move on the part of New Mexico’s lawmakers or not?
As of January 2018, the state of Georgia has been providing tax breaks to concert tours that begin in the Peach State, as well as to recording or scoring sessions that take place there. Pinched by industry concentration in Nashville to the west and New York to the north, the state that was home to Ray Charles, the Allman Brothers Band, and R.E.M. wanted to prevent the biggest acts in the country from passing it by and preserve the recording industry’s foothold, so Georgia wouldn’t become another casualty of the ever-more-transportable nature of twenty-first-century capital. To qualify for one provision, bands needed to rehearse and begin tours right in Georgia. “Music made by Georgians, whether it’s the names you know or one of the thousands of unknown creatives behind the scenes, is one of Georgia’s biggest international exports,” said one of the proponents of the tax measures.
Other states had tried unsuccessfully to pass similar laws before. When New York Governor Andrew Cuomo vetoed an effort to spend $50 million on music-related tax incentives in the Empire State, advocates claimed he was shooting down a measure that would have helped some one hundred thousand New Yorkers find and keep jobs. In Georgia, meanwhile, small-government advocates and lefty policy wonks alike complained that the state was wasting money on yet another targeted tax break in a state already addicted to them, mirroring the debates that happened in state legislatures from California to Maine.
So who was hitting the right notes?
All of these stories and questions—which perhaps seem disconnected, since they’re about a stadium in DC, a movie made in New Mexico, and concerts in Georgia—have something important in common. They’re all part of the big lie propagated by the entertainment industry, in all its various iterations, and by the rest of corporate America, as well as by the lawmakers who do its bidding: that entertainment drives economic development and your tax dollars are needed to grease the skids.
From coast to coast, Maine to Hawaii and Washington to Florida, public money is being used to support the most high-profile cultural icons America has to offer, all based on a broken economic theory, one that says publicly supporting hugely profitable corporations or billionaire sports team owners will redound to the public’s benefit. That entertainment drives an economy is a myth, but it has permeated every facet of policymaking despite the overwhelming evidence that it results in a raw deal for the taxpaying public and windfalls for the already well-off; almost no one is immune from the effects, even if most don’t know it.
How did this happen? There’s no one moment to highlight, no inception-style instant to point to, no back room where shady corporate bigwigs smoked cigars, ate steak, and decided with their bought-and-paid-for members of the statehouse that it was time to start subsidizing some of the country’s most profitable entertainment entities. Instead, over the last several decades, America’s antitax fervor, penchant for crony capitalism, and genuine desire for economic growth and job creation have all combined into a toxic public-policy stew that benefits America’s corporate bigwigs. Subsidizing the entertainment industry up the wazoo is one of the results. What should be extraordinary—a hugely profitable TV show, massively popular sporting event, or grand luxury hotel receiving dollars from the public dole—has become commonplace, something that executives expect and public officials deliver as a matter of course. Whenever either conscientious citizens or concerned lawmakers make a fuss—suggesting that maybe, just maybe, companies run by billionaires that make huge profits year after year don’t need to be publicly subsidized—the policy blackmail begins: Threats of job losses, dooming a place to an eternity of economic malaise, are the currency of choice for the titans of industry.
This sounds like a lot of doom and gloom, and from a policy standpoint it is. But the way it’s portrayed in real time is precisely the opposite: Netflix, the NFL, Hilton, or Bass Pro Shops comes riding into town pledging to ignite an economic renaissance for the cost of a few tax incentives; executives make big promises about gleaming new facilities and the jobs they’ll create, putting out press releases touting economic development that will make other towns envious; politicians say that the deal is a slam dunk and that nothing but good times will follow the ribbon cutting; local reporters get caught up in the euphoria and uncritically regurgitate whatever positive numbers the company in question is throwing around; and a grand opening gets held at which everything seems hunky-dory.
Yet the downside gets hidden from public view. It remains invisible to those who don’t take a closer look or who understandably don’t have the time to delve into the ins and outs of their city or state budget: the revenue for the local school that goes uncollected, the health care program that gets underfunded to cover the cost of tax breaks, the library that gets closed so debt service on a stadium can be paid. The opportunities that cities and states miss when they decide to subsidize the entertainment industry often don’t garner headlines, but they can be far more important to the people who go without public services than an arena or sporting goods store is to the patrons who visit them.
It’s not only the entertainment industry, in all its iterations, that takes advantage of economically dunderheaded tax breaks and giveaways. Amazon’s high-profile search for a location for its second headquarters—which had cities and states tripping over themselves to give away tax breaks, land, and other public infrastructure, with some even saying they’d let Amazon decide how the town spent tax revenue going forward—shows just how pervasive the pro-corporate mind-set can be when it comes to American policymaking. The idea that we should all be okay with politicians effectively bribing corporate leaders to expand, build, and create new jobs is so commonplace that’s it’s often hardly remarked upon.
But the way in which TV, movies, sports, and other fun and games have taken hold of the public purse strings is, perhaps, the most egregious, because it plays off not only the legitimate desire for jobs and development but our cultural heartstrings and celebrity longings, too. We can have new jobs and famous athletes plying their trade in our town? We can support local businesses and see movie stars congregating on Main Street? Where do we sign up?
However, the promises made regarding the benefits of such policies rarely come true, while the negatives are all too real. The development doesn’t materialize, while the costs pile up, forcing impossible choices onto lawmakers and making residents of a place choose between their entertainment and their health or education.
Spoiler alert: Nats Park isn’t what caused an economic boom on DC’s waterfront, nor did The Avengers do heroic things for New Mexico’s economy. Subsidizing the next Rihanna tour isn’t going to give Georgia a leg up over its neighbors on the next Bureau of Labor Statistics jobs report. Upon closer inspection, as I hope you’ll learn from flipping through these pages, the economic theory for publicly supporting entertainment behemoths is built on a myth, one that persists despite the evidence against it that piles up every day.
The corporate leaders, sports team owners, international committees, hoteliers, or the lawmakers who help them out are not all bad people or corrupt, intentionally hosing the public in a cynical bid for money, power, and reelection. (Though that does happen!) No, a lot of what I’m going to describe can be explained by the simple fact that too many people have, because it is good for them personally and politically, bought into a theory of economic development that doesn’t make any sense, while the case against that theory doesn’t get enough attention. Those fighting for more public dollars to be blown on entertainment goodies are a cohesive, concentrated lobby, while opponents are often a mishmash of good-governance types, economists, and random members of the public, a group too diffuse to do much good and always underfunded compared to their opponents.
The good news is that the latter group have the facts on their side. Delving into these deals, it’s easy to see why: They’re the epitome of boondoggles, the sort of things that liberals and conservatives alike can join up and hate, if for different reasons. When enough people find out what’s going on and prove themselves determined not to throw public money down a rat hole—as Boston showed when it took a stand against hosting the 2024 Summer Olympics—it’s possible for them to overwhelm the entrenched interests and save their city a whole lot of trouble.
Also, the antisubsidy crowd should be able to form a political coalition that covers the entire spectrum: Real, traditional fiscal conservatives should be against the sort of thing we’re discussing because it’s crony capitalism at its worst, the government stepping into the market to further entrench moneyed interests and the already wealthy, leveraging the purchasing power of the government on behalf of those who can pay their own way. Liberals should realize that every cent spent on something such as a sports stadium is one less cent for an often-already-strapped government to use on things that are actually within a government’s purview, such as health care, education, infrastructure, and on and on. Even if they agree on little else, left and right should come together on this one.
In a perfect world, what happened in Boston would become the norm rather than the exception, and America’s entertainment titans would be forced out of the business of vying for taxpayer dollars. If enough information gets out there, anything is possible. After all, no one likes a total boondoggle.
Copyright © 2019 by Pat Garofalo