Look for the unseen

Background: A letter to my state representative Vicki Barnett who attended a rally with Jeff Daniels and Mitch Albom promoting corporate welfare for film executives.

Dear Representative Barnett,

I strongly urge you to reconsider your support for the corporate welfare program which transfers hard-earned taxpayer money to rich Hollywood executives. Folks like Clint Eastwood and Michael Bay are doing just fine and do not need handouts from citizens slammed by conditions brought on partly by foolish policies such as film subsidies.

I recognize supporters of the subsidy would prefer to ignore the Senate Fiscal Agency’s analysis which found no film subsidy generated more in revenue than was paid. Instead, supporters choose to focus on the 2009 study from MSU and the most recent one from Ernst & Young which confirm their bias.

Basic economic laws tell us the subsidies don’t provide the claimed benefits. The MSU and E&Y studies fail to acknowledge one of the most important truths when performing an economic evaluation. This truth was articulated by the famed political economist Frederic Bastiat in 1850 when he published an essay titled “What Is Seen and What Is Not Seen.”

Bastiat pointed out what should be obvious, government policy has two effects: the seen and the unseen. And, as he noted in the essay, “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”

Based on Bastiat’s definition, the MSU and E&Y studies were conducted by “bad economists.” The millions handed to Hollywood didn’t fall from the sky. They were taken from the pockets of Michigan businesses and families. When E&Y claims each $1 generated $6 in economic benefit, a specious claim at best, they failed to account for the fact that each of those dollars would have been spent or invested if left in the hands of the rightful owners. This would have generated economic benefits without transferring wealth from the have-nots to the haves.

I strongly urge you to help the taxpayers of this state by reading Bastiat’s essay: http://www.econlib.org/library/Bastiat/basEss1.html#Chapter 1. Afterwards, announce your support for Governor Snyder’s plan to reduce the subsidies. Your next step should be to convince him to eliminate them.

Sincerely yours,

Steve Sutton
A vocal constituent and voter in Farmington Hills

[Sent 02/25/2011.]