Many people were elated to see film crews touring Northwest Arkansas in 2018. Far from the film and television mega-centers of Los Angeles and New York, the filming of season three of “True Detective” offered local residents an exciting brush with show business. The project had a hometown link as well, as creator and writer Nicholas Pizzolatto spent four years in the natural state while studying creative writing at the UofA.
The production created an economic benefit in Northwest Arkansas without a doubt, as local restaurants, hotels, caterers and event planners saw an increase in demand from the visiting professionals. Unfortunately, these benefits were tragically undercut by near bribery from the Arkansas Economic Development Commission in a textbook example of rent-seeking at the expense of taxpayers statewide.
In economics, rent-seeking refers to an attempt by an individual or business to gain wealth for themselves without providing benefits to the entire economy by creating new wealth. A typical example would be an agricultural business lobbying the government for subsidies to crops it relied on. The additional revenue from the subsidy offsets the cost of producing the crop and raises the firm’s profits, but the additional wealth came from taxpayers. Nothing new was created, just unfairly transferred.
Arkansas, like many other states, directly subsidizes the costs of film and television productions filmed in the state. In the natural state, provided certain provisions are met, the Arkansas Economic Development Commission will refund up to 20 percent of the total production costs of a project, as clearly stated on the commission’s website.
Economically, this concept is hard to define. A film crew that takes these benefits is absolutely rent-seeking, but the rashness with which these benefits are offered could bizarrely be labeled rent-offering.
It’s difficult to criticize the “True Detective”film crew for accepting these benefits. No sane profit-seeking entity would turn down the chance to add 20 percentage points to its profit margin. To offer these benefits in the case of “True Detective” is especially ridiculous considering that these incentives likely had little effect on the choice of filming location.
Because Pizzolatto is a former resident of Northwest Arkansas, he has been steadfast in his admiration for the area. In a 2018 interview with KNWA, he stated that he found the area “evocative and powerful.” Star Mahershala Ali praised the community as well. Their compliments clearly demonstrate that the setting was key, rather than the benefits that accompany production.
It is also hard to blame the state of Arkansas either. While the cast and crew made their affinity for Arkansas clear, they only did so in the wrap up of shooting. Lawmakers can’t be reasonably expected to predict the future, and they’re forced to offer the same incentives as neighboring states. Missouri, the only other state with a comparable Ozarks setting, also offers a sizeable tax credit for film productions. “True Detective” aside, Arkansas could lose out on future projects with the same setting. Louisiana offers one of the most robust film tax credits in the country, and could steal away projects filmed in the delta.
This dilemma reveals broader issues nationwide. Film-related subsidies and tax credits attract a temporary sense of glamour from Hollywood producers. They could also possibly attract tourism from dedicated fans. These gains are only local, however. Tourism in Fayetteville does little for someone in El Dorado or Little Rock. The cost, however, is statewide, drawn from all taxpayers. Producers shouldn’t need a handout to choose our state. We should be chosen on our own merits, our hospitality, beauty and talents, not because of a paycheck.