Each has a coin purse slung over a shoulder.
Each has a pocketknife, slitting the purse of the person ahead of them to steal some coins.
That many coins fall to the ground is tragic, but unavoidable.
Everyone could do better if they all put away their knives, but none will want to be first to try it.
Solving the social dilemma of the rent-seeking society requires everyone to throw their knives away at the same time. Everyone must trust that the person behind them is keeping their part of the bargain.
It has been done before. It is the simplest explanation of the reforms of the 1980s.
Manufacturers had been stealing from everyone with import licences and tariffs that inflated the cost of everything; farmers had been covering inflated machinery costs with hefty agricultural subsidies, stolen from taxpayers.
Over a short period of time, the knives all went away.
They’re coming back.
And each new knife begets more.
New Zealand’s film subsidy regime tries to keep up with foreign film subsidies.
Trying to keep up with European agricultural subsidies was a mistake that almost bankrupted the country.
Film subsidies are less wasteful only because the film sector is smaller.
A billion dollars or so over five years will not bankrupt us but does cause further problems.
Dean Hall, CEO of Dunedin-based videogame company Rocketwerkz, pointed out one problem two years ago. The government had recognised talent shortages in the videogame sector but was causing the problem by subsidising film companies like Weta to bid workers away.
It is hard to compete for talented computer graphics designers when your competition gets money back from the government for every dollar they spend.
Ending film subsidies would have been the sensible response.
The government instead is now considering subsidising videogame makers. New Australian videogame subsidies haven’t helped.
So instead of having one industry whose continued existence, at current scale, depends heavily on subsidies, we will have two.
But it will not end there.
When other software companies complain that they cannot compete with subsidised videogame companies for programming talent, will the government subsidise software more generally? What about other companies that also need programmers?
We are again forming the circular queue, with knives at each other’s coin purses.
The disarmament lessons of the 1980s will need to be learned anew.
Manufacturers had been stealing from everyone with import licences and tariffs that inflated the cost of everything; farmers had been covering inflated machinery costs with hefty agricultural subsidies, stolen from taxpayers.
Over a short period of time, the knives all went away.
They’re coming back.
And each new knife begets more.
New Zealand’s film subsidy regime tries to keep up with foreign film subsidies.
Trying to keep up with European agricultural subsidies was a mistake that almost bankrupted the country.
Film subsidies are less wasteful only because the film sector is smaller.
A billion dollars or so over five years will not bankrupt us but does cause further problems.
Dean Hall, CEO of Dunedin-based videogame company Rocketwerkz, pointed out one problem two years ago. The government had recognised talent shortages in the videogame sector but was causing the problem by subsidising film companies like Weta to bid workers away.
It is hard to compete for talented computer graphics designers when your competition gets money back from the government for every dollar they spend.
Ending film subsidies would have been the sensible response.
The government instead is now considering subsidising videogame makers. New Australian videogame subsidies haven’t helped.
So instead of having one industry whose continued existence, at current scale, depends heavily on subsidies, we will have two.
But it will not end there.
When other software companies complain that they cannot compete with subsidised videogame companies for programming talent, will the government subsidise software more generally? What about other companies that also need programmers?
We are again forming the circular queue, with knives at each other’s coin purses.
The disarmament lessons of the 1980s will need to be learned anew.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
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