Why can’t we all just get along.

January 6th, 2008

In case you hadn’t noticed, the TV and film writers in the US are on strike. It’s been about 9 weeks now since they went on strike in November.

The economics side of this is the question of ‘why’? The standard theory suggests that you should never see strikes, because the simple threat of one should be all that the unions need in order to achieve the best outcome they could. What this ignores is the problem of asymmetric information – not everyone knows the same pieces of information, and some (like how committed the membership of the union is to the strike) are very hard for any side to know perfectly.

But even given that history, strikes in Hollywood tend to be long and vicious. I think that’s probably because the studios can stockpile a lot of finished product, especially in film, and that protects them from the immediate economic consequences. It’s probably also because the personality factors are going to be exaggerated in the environment they all live and work in.

So what are they fighting for?

They’re ultimately fighting over who gets a piece of the pie, and who gets to be treated as a hired player. There’s a strange line drawn in business between the people who are entitled to a share of the profits they create (authors, hedge fund managers), and those who are simple employees who have no rights to a share of profits.

Writers are currently in the first group, getting a (small) share of the profits that come from DVD, video and TV screenings of the things they write. The studios would like to put them into the first group.

Who’s right? It’s hard to say.

The best economic answer to the question of whether you should get a share comes down to bargaining power, and in particular of whether your characteristics (be they creative or simple marquee value) will boost the project more than the next available worker. In Hollywood some writers clearly have that cachet, and some do not. But they all bargain together, and so the value of the top writers gets pushed down to the whole pool to some extent.

So the pure answer would be ‘if they’ll give it to you, then you deserve it’.

Hence the strike.

I just wish they’d get back to it. I’m starting to miss TV, and I’ve finished half my computer game pile…