By Mel Copen
Sedona AZ (October 2, 2011) – These days, many Americans have lapsed into a feeling of despondency, helplessness and pessimism toward the future. This is a great nation, and all the ingredients for continued greatness are still here. But many challenges and lack of faith in the government to deal with them, both domestically and abroad have, for many, eroded faith in the future. Some of the important elements include: the need to generate job opportunities, the weakness of the housing market, the inability to obtain loans, the crazy gyrations on Wall Street, the growing gap between the rich and the poor, and the many problems that have been ignored or glossed over by Congress too engaged in infighting and battling with the White House. Causes which led to the economic decline of the last few years still persist – some of them in even more intense forms than before. Special interest groups have been especially adept in avoiding penalties, some even reaping financial rewards for their screw-ups, and much of the “regulatory legislation” that public opinion forced Congress to enact has turned out to be toothless.
How do we break this malaise that grips so many Americans and get back onto the road to a bright and exciting future? It can’t be done overnight, but it can be done, one step at a time. Let’s look at one possible measure relating to the video game industry.
The budget deficit and what to do about it has been a major battlefield. The basic solutions proposed either involve cutting programs (social security and Medicare among them) or raising taxes or some combination of the above. But just focusing on making programs more efficient and weeding out miss-use and corruption would do much to narrow the gap. But that seems to be lost in the struggle for which side will have its way. But there is another approach.
A few months ago I wrote about what I thought was an amazing and perverse decision by the U.S. Supreme Court. In “Brown vs. Entertainment Merchants Association” the Court struck down a California law banning the sale of violent video games to minors. The court said video games were subject to full protection of the 1st amendment and that California does not have the “power to restrict the ideas to which children may be exposed.” In writing the majority opinion( for 5 of the 7 Justices), Justice Scalia compared violent video games (defined by the California law “in which the range of options available to a player includes killing, maiming, dismembering or sexually assaulting an image of a human being”) as equivalent to the violence in Snow White, Cinderella and Hansel and Gretel. The difference between reading about violent activity in fairy tales (all of which, by the way, has a happy ending) and committing violent activity (and being rewarded for it) doesn’t seem to register with at least 5 of the keepers of our Constitutional integrity.
I thought that was the end of the story, Unlike Congress, I still harbor the hope that the Supreme Court can’t be bought, although their role in the Florida election dispute in 2000 started to raise serious questions of credibility. But then a recent story from the New York Times (September 10) by David Kocieniewski put things in a somewhat different perspective.
Video games represent one of the most profitable industries in the nation. Except for excited teenagers and the employees of that industry, it is hard to see much of social redeeming value – particularly for games built around violence Yet it is one of the most highly subsidized industries we have. “Because video game makers straddle the lines between software development, the entertainment industry and online retailing, they can combine tax breaks in ways that [other companies] cannot.” The author goes on to state that “even oil companies have questioned why the government should subsidize such a mature and profitable industry…”
The article cites one company which showed a total of $1.2 billion in global profits for the last 5 years but, largely because of these subsidies, reported a net loss, and on a global basis, paid a total of $98 million in taxes. In most cases, the justification for providing tax incentives is to help new and struggling industries, particularly those that provide social benefit, to establish themselves. The article points out, the Video Game industry, with annual sales of $15 billion/year – needs no such incentives. But rather than cut incentives, the lobbying efforts of the industry have actually resulted in increases. Many of these incentives were designed to encourage software development related to national security – but were not written specifically enough to exclude video game development.
The author indicates that corporate tax incentives amounted to $123 billion in 2010. Originally, most were written for specific purposes, but as in this case, were written broadly enough to open the door to all sorts of other operations. And Congress has had neither the will nor the desire to close many of the loopholes, possibly because a portion of the funds generated by some of the major recipients finds its way back to the campaign coffers of individual Congressmen who have been supportive.
What is that next step? I would suggest removing the subsidies from the video game industry. By itself, this step would only make a small dent in the deficit. It’s not the Video Industry. Instead it’s an important statement that says: “we demand that you exercise integrity and stop being frivolous with taxpayer money or you will be history.” If enough members of Congress get the message, something will happen. That’s only step one. Each of the next steps needs to follow in quick succession – moving on to other issues where matters of economic reality, conflict of interest and integrity are important. It shouldn’t take many such steps before a change in the attitudes and behavior of our elected representatives will occur.
One might argue that singling out the Video Game industry is not particularly significant. True. But the issues here are matters of morality and integrity – and these are things which should not be compromised. If people are willing to toss politicians out on their ear for not upholding the highest standards, three things will happen: some will get tossed; others will “see the light;” and, finally, the new pattern that emerges may encourage more good people to run for office.
Before cutting important programs, let’s eliminate waste and frivolity – including those built into the tax incentive programs. If enough people speak out to their representatives in Congress and challenge the benefits going to special interest groups, major inroads can be made. We’ve got to start somewhere. The Video Game Industry is as good a place as any other.
© Mel Copen, October, 2011