Reasoned like a true economist

"Why Larry Flynt's right

Larry Flynt and Ben Dover want the UK and US governments to bail out the porn industry. Now, I’m no expert on this - of course not. But they have a point.

Porn is a key strategic business. It has been a driving force behind the spread of several technologies: the triumph of VHS over Betamax tapes, cable TV, and broadband. It also creates skilled workers for other industries; countless actors and cameramen have moved from porn to mainstream TV and film work. The porn industry, then, generates knowledge spillovers for other industries. Such positive externalities mean that there's a market failure; porn is under-supplied by the free market. A subsidy would correct this.

The need for a subsidy is especially pressing because the industry is under threat not just from the availability of free porn on the web, but also competition from another source - women giving it away for free. Both of these can be seen as a form of predatory pricing, or dumping. Many policy-makers believe it’s acceptable to protect industries from this. As it’s impractical to put a tariff on slappers - though I write without knowing Harriet Harman's views - this leaves the only alternative being support for the industry.

In the UK, there’s another case for government support. The strong euro is raising costs. Not only does UK porn have to pay more to its European performers, but also the cost of shooting in foreign locations has soared; filming in the UK is impractical in this weather, isn’t it gentlemen?

We must also remember the cultural importance of the porn business. When we think of the great iconic images of America, what comes to mind? Surely, tits and arse more than cars. After all, no car has ever been elected to high office, but plenty of arses have.

So, surely, isn’t the case for bailing out the porn business at least as strong as that for bailing out the motor industry?"

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