Sex, Drugs & ECONOMICS
by: Diane Coyle
Chapter 12:
Why Subtitles Need Subsidies
PowerPoint by: Ryan Ott
A General Overview
Commentary by Diane Coyle
• Bridget Jones’s Diary
was co-produced by
three movie
companies
– Canal Plus of France
– UK –based Working
Title
– Hollywood’s Miramax
http://movies.yahoo.com/movie/1
804536438/info
A General Overview
• This movie was untypical of many commercial
successes.
• It was a best selling book and an English
newspaper column.
• There almost wasn’t anything resembling
conventional Hollywood
• EXCEPT the plot spanned two Christmases and
showed a wintry England.
• It almost never snows in England at Christmas!!
Hollywood Values and American
Culture
• Dominant in the global industry
• Diane Coyle said, “nothing delights a wanna-be
intellectual as much as art house movies. It’s a
mark of free thinking and sophistication.
Beautiful French actresses taking their clothes
off-fantastic! Subtitles-even better.”
• “The chasm between commercial Hollywood
films and arty European ones is all too often
exaggerated, as the two traditions feed each
other.”
French Government
• There are more similarities between Hollywood
and European Art films than people think.
• The French governments have aggressively
defended their right to protect French films.
– Including: Minimum local content on television
channels
– Holding up all EU – U.S. trade negotiations
specifically to safeguard the industry against
Hollywood
• French call this the cultural exception
• Can there be a cultural exception to free trade?
French Filmgoers
• Despite the fear of the intellectuals…
– French audiences are as likely as any other
nationality to prefer the popular Hollywood
blockbusters to the obscure and homegrown
alternatives.
– The people’s choice seems to be Hollywood
How do European politicians
justify special trade protection
for their own cultural
industries?
Cultural Exception for their
countries
Free Trade
• Offers the lowest price for consumers at
the lowest price.
• Gives consumers choices
Economies of Scale in the Movie
Industry
• Do not arise in production because of low
budget movies.
• Costs of film-making is less expensive due to
technology
• Returns to scale occur in:
– Buying Superstar Talent
– Marketing and distribution
– Diane Coyle said, “Anyone can make a film as a
hobby at no cost, but few can translate their creative
skill into box office success.”
Hollywood Studios vs. European
Competitors
• Hollywood has an advantage due to
extensive, increasing returns to scale even
in the European market.
• They are in this position because the U.S.
is the biggest single English-language
country in the world.
• There are large language fragments in the
European market.
Diane Coyle’s Closing Arguments
• It’s isn’t enough to say that the film industry is
part of the nation’s cultural heritage.
• Defenders of subtitle films need to make a
stronger case.
• Diane feels that an afternoon spent watching
something subtitles is as much hard work as a
few hours sitting at the computer running
regressions.
• Hollywood has the best special effects, but not
the place to look for the intellectual cutting edge.
•
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Economic Concepts That Are
Needed to Address This Topic
Are...
What are subsidies and what do they do?
The idea of free trade
Economies of Scale
Returns to Scale
Diminishing Returns to Scale
GDP
What are subsidies and what do
they do?
• They provide domestic firms a cost
advantage
• It allows the domestic firms to be able to
market their products at prices lower than
warranted by their actual cost or profit
considerations.
The idea of free trade
• Reducing or eliminating trade barriers
• Allows exports to come in and imports to
leave with little or no taxes or barriers
Economies of Scale
• Situation when long-run average total
costs decrease as output increases
• Situation where cost per unit of output falls
as output increases
Returns to Scale
• Refers to a technical property of
production.
• What happens to output if we increase the
quantity of all input factors by some
amount.
• Diminishing Returns to Scale
Gross Domestic Product
• The total market value of all final goods
and services produced in an economy in a
one-year period.
My Thoughts
• Diane Coyle made some valid arguments.
• Movies are a reflection of cultures.
• With free trade though, you let the people
decide what they want to watch, opening
up more choices.
Economic Standpoint
• Free trade allows countries to see more
Hollywood blockbusters than does banning of
trade.
• If anything, bringing these movies to other
countries makes the domestic moviemakers
become more creative and innovative and raises
the art of movie making to the next level.
• The most important thing to remember is that in
the end the consumer wins, because with more
choices, the result causes prices to be lower.
Domestic Country Standpoint
• I see where countries don’t want movies
imported in from other countries because
that hurts their local production studios.
• Movies for these countries also give a
representation (sometimes not accurate)
of their particular cultures, giving them an
identity.
Conclusion
• Movies weren’t something I thought of as a
trading issue before reading this article.
• Products like coffee, cotton and sugar I know
have trade restrictions throughout the world but
as far as an item like movies, I never thought of
it as an issue.
• Choice is ultimately great for the consumer,
because if foreign countries just showed their
local films, then people that prefer action as
opposed to more intellectual films, might not
even go to the movies.
Conclusion, continued
• Outside competition either makes a firm
better or puts them out of business.
• In the case of the movie industry, I see
Hollywood films maybe hurting countries
art-like films but if people prefer more
Hollywood, than local films, than that
would cause countries to make a better
product, more appealing to their local
citizens.
Bibliography
• Coyle, Diane. Sex, Drugs & Economics:
An Unconventional Introduction to
Economics. Thompson/Texere. 2004
• Carabaugh, Robert. International
Economics 9th Edition. Thompson
Southwestern. 2004.
• Bridget Jones’s Diary, 2001
http://movies.yahoo.com/movie/18045364
38/info