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Source link: http://archive.mises.org/9956/how-antitrust-ruined-the-movies/

How Antitrust Ruined the Movies

May 15, 2009 by

It wasn’t the free market, consumerism, or capitalism that killed the movies after World War II. It was antitrust regulation, as enforced by the Federal Trade Commission.

This government intervention in the 1940s radically altered the structure of the film industry for the worse. The direct and immediate result was a decline in acting, scripts, scores, content, and the cultural contribution of films.FULL ARTICLE

{ 18 comments }

Bob Roddis May 15, 2009 at 9:07 am

Newspaper executives were testifying before congress on C-Span this morning. One exec pointed out that it would be illegal for them to all agree to charge a fee for their websites due to anti-trust law. He was arguing that anti-trust was a main reason for their financial troubles.

Michael A. Clem May 15, 2009 at 9:16 am

What happened to my previous comment? All I said was that I didn’t realize that the movie studios originally owned their own theaters.

kmeisthax May 15, 2009 at 9:47 am

Copyright infringement isn’t killing Hollywood, the government is.

SweetLiberty May 15, 2009 at 10:19 am

In lamenting the “Golden Age” of Hollywood, you presume that everyone holds the same opinion that movies were better back then. Some were, some weren’t. Some are horribly dated and have ridiculous and unrealistic dialogue and plots. This may appeal to some, but I favor the vast diversity we have today. Protesting that actors today are “free agents” seems itself a cry against freedom. We can agree that government interference in the movie industry (or elsewhere for that matter) is deplorable, but pining for the “good ol’ days” does not make your point in this case. Ticket prices and concession prices are a function of supply and demand. If they are “too high” then people would stop going and the theaters would go out of business. Clearly, if grand theaters could pull in the masses, they would still exist. But they are not cost effective and therefore are replaced with multiplexes that are far more efficient. However, if you believe that others are of a similar mindset as yourself, you are free to raise the capital, erect an enormous old-style theatre, and charge a pittance for admission and concessions while showing nothing but “classic” movies to nostalgic cinephiles and to a generation that hasn’t seem them all yet. My guess is, though, you will find yourself bankrupt very quickly because audiences by-and-large choose to watch the summer blockbusters and modern award winners (Slumdog Millionaire) to 1939 style caricatures. Sorry, I just don’t agree that the good old days were always better, and even without government interference, I would speculate going to the movies would eventually evolve to about the same place.

Adlyn May 15, 2009 at 10:30 am

I see what you mean about movie, I went to see watchman and that was a big disaster, I hated it! Too raunchy for my taste! The only thing I didn’t hate about the movie is that fact I didn’t waste any of my money, I was treated by a relative.

Inquisitor May 15, 2009 at 10:32 am

Right but the author still has a point that the government is diverting the industry from its more optimal structure. I think the difference is these firms will cater to what they perceive to be their customer’s tastes. Governments do so many things to increase their subjects’ time preferences (shorten their effective time spans, delay maturity) that it is not surprising that there is a “perceived” degeneration in cultural produce. And firms will respond to this.

Michael A. Clem May 15, 2009 at 10:36 am

SweetLiberty, the change in the quality of movies is debatable, perhaps, but your counter-argument misses the point: one is not free to recreate the integrated movie-to-theater system that existed in the 1930s–it’s illegal. Building an old-style theater that shows old movies isn’t the same as the system that existed then.
Furthermore, the alleged intentions of the antitrust actions have clearly failed to achieve their purpose, regardless of the debate over the quality of movies–that’s not just deplorable, that’s criminal.

Arend May 15, 2009 at 11:11 am

@ SweetLiberty: As far as my analytical skills go I agree with mr. Thornton on the good-old economic issues of the ruined market he describes, while not agreeing totally on all/most of the personal taste issues. A critical remark could be that mr. Thornton mixed personal tastes and feeling with sound economic analysis; on the other hand he did (while maybe not entirely explicit) keep the respective arguments apart, which is fine by me and makes this a good read for a history of the US movie industry n00b like me.

Matt R. May 15, 2009 at 11:22 am

Great article! I always remember Jimmy Stewart talking about how he missed the studio system, even he did very well with the new model.

Tim May 15, 2009 at 11:54 am

I do agree with most of your conclusions about how AT legislation done more harm than good for the movie industry. With most of today’s cinematic slop favoring style over substance, and treating the audience as if they were all like drunken frat boys, it’s no wonder that I might feel nostalgic for movies made in an earlier, more honest era.

However I strongly disagree with you on one major point. Scarface and Pulp Fiction are one of my favorite films, yet they were filled with violence and profanity. These things which you call “rubbish”, such as violence, sexuality, swearing, etc, actually reflect a very important part of human character and can be used just as strongly to convey important themes and emotions. Whereas you apparently see them as black and white, I like to view these things as colors. Of course it goes without saying that they alone don’t make a movie good just as a family movie without any risque themes in it isn’t necessarily colorless.

Sovy Kurosei May 15, 2009 at 12:55 pm

Rose tinted glasses.

greg May 15, 2009 at 1:41 pm

Anti trust laws did not distroy the “golden age” of movies nor did it distroy the “company owned” theater system. Economic conditions, technology and the evolution of business did that and for the movie companies, it was about survivial.

Most successful companies contract or sub contract many of their services which keep their cost lower than if they controlled all aspects of production, distribution and sales. A good example is Boeing. They had a division that supplied them all the carbon based airplane parts. To cut their overhead and reduce their total cost, they spun the company off and created Spirt Aerospace.

Technology changed the face of movies in thousands of ways. All I can say here is that I prefer my 56″ LCD screen TV and a Blu-Ray to any theater in the country.

And really, TCM is there so you can watch those golden classics. But for me, they really were not that great and I really would not miss watching White Christmas one more time. However, I do have a copy of Evil Roy Slade that I pull out and watch with a six pack of beer.

The main point I am trying to make is that the anti trust laws really don’t work. The market system does.

Larry N. Martin May 15, 2009 at 2:53 pm

It’s not about watching old movies, guys! It’s about watching movies where the incentives to satisfy customers haven’t been skewed by government intervention. Sure, the market still works, even when the government interferes, but the result is different from what would have happened without that intervention. The movie system of the 1930′s might well have broken down or changed on its own without the anti-trust efforts, if only because of developing technology like big-screen TV’s and videos, dvd’s and the internet.
This post isn’t merely about movie nostalgia, but a recognition of what government has done and is doing to our entertainment media, such as the hold-up on video on demand over the internet.
The same kinds of things could be said about the FCC and early radio and television, and how cable and satellite is now being handled by government. Political decision-making interferes with economic incentives and results in a situation that is not as good as it could be for consumers. Just like most economic stuff, too many people don’t realize or understand the production side of the equation, and how it’s part and parcel of the whole market process. Televisions, furniture, movies, music, etc. aren’t just produced automatically and the only question is how to distribute these goodies to the people. Instead, how these products are delivered to consumers directly impacts how they’re produced in the first place. To ignore that and focus on only certain aspects of the process is a sure recipe for unintended consequences and failed policies, such as litters our history and the status quo.

Kiwi Polemicist May 15, 2009 at 3:42 pm

Let’s not forget the effect of the Marxist agenda of polymorphous perversism that began after WWI and included sending people to Hollywood.

More on that agenda at http://kiwipolemicist.wordpress.com/2008/09/08/new-zealand-has-changed-a-lot-in-20-years-thanks-to-the-liberal-left-agenda/

Mark Thornton May 15, 2009 at 3:55 pm

SweetLiberty:

These are not my opinion these are the opinions of experts and some “amateur experts” that I know.

The biggest economist expert on this subject also agreed with the article.

Inquisitor May 16, 2009 at 3:11 am

“Anti trust laws did not distroy the “golden age” of movies nor did it distroy the “company owned” theater system. Economic conditions, technology and the evolution of business did that and for the movie companies, it was about survivial.”

Which does nothing to discount the fact that anti-trust laws had a definite impact on the industry.

Inquisitor May 16, 2009 at 3:13 am

“Rose tinted glasses.”

No, he doesn’t believe in anti-trust. :)

David K. Meller May 16, 2009 at 2:01 pm

Another way antitrust “law” probably impacted movie and Telelvision entertainment was by making it illegal for firms in the same field to collaborate in their technical, financial, and artistic production and distribution, a path was let open for businesses to invest which may have indeed been well managed, but whose executives, creditors, and senior shareholders knew next to nothing about entertainment. General Electric may indeed be an excellent electronics manufacturer (as is Sony) but it is difficult to see how the skills or experience in electronics translate into good movie or TV creations, sales, or direction.

By restriction of such mergers, acquisitions, and corporate ownership on the part of firms already in the industry, antitrust law inevitably brought in inept and destructive outside management, and hence accelerated the ruin of what used to be a magnificent creation of American capitalism!

PEACE AND FREEDOM!!
David K. Meller

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