I've written before about states and communities trying to create a film industry as part of their economic development strategy. Today's Wall Street Journal has a story about the latest attempt, in Michigan -- Detroit as Dream Factory. The story outlines the steps the state is taking to get companies to shoot movies in the state. Mainly these involve tax incentives.
Unfortunately, as the story points out, other locations are attempting to do the same thing:
Pittsburgh is trying to create "Hollywood on the Mon(ongahela River)." New Mexico and Louisiana are well ahead on this path. And there's nothing stopping Kentucky, Colorado or Florida from leapfrogging Michigan, which previously hiked its rebate to 20% in 2006.
What worries me is that we are once again into a smokestack chasing race to the bottom. To create a sustainable cluster, you need to develop the infrastructure which makes the location of the industry desirable. You have to develop the reason to be there -- other than one-shot tax incentives. If your main tool is tax subsidies for a one-time activity, there is always someone who can outbid you. Not a way to create jurisdictional advantage.
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