Fruits of free trade bloom in South African film studios and beyond

The Cape Town Film Studios have been much in the news recently. The extensive complex boasts state-of-the-art sound proof stages, post-production facilities, set-building workshops, cutting edge recording studios, editing and production facilities, makeup suites, and a 37-seat cinema.

The 200-hectare site is located about 30 kilometres outside of Capetown and is principally funded by two South African companies. The Studios are attracting major productions and top talent from around the world: Mandela: Long Walk to Freedom and Mad Max: Fury Road both filmed there, and Stephen King’s Dark Tower series began in May. According to Geoffrey York’s article in the Globe and Mail, Cape Town Studios have been so successful that they have had to turn away work, and are now competing with studios that are more than 10 times their size.

What is the key to this African success story?

Some of it seems to be explained by the strength of the American dollar against the South African Rand (production companies often shop locations based on relative currency advantages). Some point out that the tax breaks make a competitive difference. But dynamic leadership, lower wages and a commitment to cost-cutting innovation seem to be the principal drivers behind the Cape Town Studios. Whatever the combination of factors, one thing is clear, the rise of the new studios is a success story of that much-misunderstood (and even more maligned) concept: globalization.

For centuries, perhaps millennia, people have benefited from “globalization.” But despite a preponderance of beneficiaries, there have always been opponents—from the protectionist mercantilists of eighteenth-century Britain to the violent protesters at the Seattle WTO talks in 1999. Where you stand on the issue of globalization depends on how you define your terms. Some see the phenomenon as an ineluctable push towards “Americanization”—of the forceful or predatory attempt to promote dominant “big brand” companies. Others see globalization as a collusion among governments to exploit human capital and natural resources, or clandestine arrangements between government and corporations to establish unnatural monopolies or protectionist trading zones.

While these may be accurate depictions of some varieties of globalization, they do not accurately reflect free (or open) trade globalization. As Fraser senior fellow Don Boudreaux points out in his excellent book on the subject, globalization can be seen simply as “the advance of human cooperation across national boundaries.” The Cape Town Studios are a great example of how cooperation in the film industry pulls people half way around the world to collaborate.

One of the great aspects of the studio’s success is that it employs many local trades people who had lived in poverty with few prospects for employment. As Geoffrey York observes, many who are working on the film sets have never actually seen a film in a cinema. Now they are developing advanced skills in an industry that has big budgets and international exposure.

Open or free trade is often confused with government interventionist trade (or varieties of crony capitalism), which is precisely what free marketers oppose!

Free trade means just that: trade that is conducted openly, without restriction, other than those rules agreed to by consenting parties. For every new tax imposed, every regulation enacted and every subsidy provided, there’s a diminution in free trade (I am not suggesting that one can abolish all regulation, the question is what regulations are necessary and helpful, and which ones designed to favour particular interest groups at the expense of individual rights and greater overall prosperity).

Many will lament that if globalization—free trade globalization—is allowed to develop naturally, that it will result in the loss of jobs. It’s true that set builders and recording mixers at Universal or Pinewood Studios will have a harder time finding the same work they have been doing, but the work they will find will be higher value, or contribute to another industry in some more productive way. Ultimately, the optimist’s view is that the process of globalization will push industries around the world, bringing new levels of prosperity with it.

In 20 years, Cape Town Studios may be competing with another film production business based in Cameroon, Guyana or Bangladesh. We can only hope, since that would mean that those countries would then be poised to enjoy the employment (and prosperity) currently enjoyed around the Cape Town project.