Box office futures, R.I.P. — thank goodness
I’ve had a couple — really, only a couple — of people push back at me when I’ve said that CDOs and other exotic financial instruments exist only to enrich their creators, and are societally useless at best, destructive at worst.
Okay, you defenders of useless paper, let’s hear you make a case for box office futures.
Then again, don’t bother. A little-noted part of the financial reform bill that just passed nipped that particular disaster in the bud.
You will recall, of course, that a bunch of entrepreneurial financiers (financial entrepreneurs? what expression am I looking for?) wanted to create yet another futures market, that of movie box office receipts. You can bet that a new movie will open big, or you can bet that it will tank.
It’s gambling, pure and simple, with no redeeming boost to any segment of the economy. I mean, if you are investing in pork belly futures, you at least have the option of taking delivery on the product. What exactly do you do with your box office future?
Movie studios and theater owners lobbied fiercely against it. So much for the lame argument that it gives film producers an opportunity to hedge their bets.
And, in fact, it’s probably easier to cheat at this than it is to count cards in casinos. The opportunities to bribe critics to praise or pan a movie — or the ability of critics to trade in insider information — is boundless. The ways to find out in advance how many theaters plan to screen a new movie — or maybe even to influence that number — are legion.
It is unlikely that this particular betting vehicle had the potential to bring down the larger economy. And truth? I’m not sure I know what gives the government the constitutional authority to ban it.
But I’m glad it did, anyway. No amount of Wall Street gambling is totally risk free to society. And there is the opportunity cost — money not bet on futures could be going out in loans to legitimate businesses, to home-seekers, to students. I’m fed up with feeling (rightly or wrongly) as though my tax dollars — and my stock portfolio — are being held hostage to “innovations” that are of benefit only to the already-rich.
The idea of movie box office futures should have been scotched a nanosecond after it was suggested. But better late than never.