>The studio was the latest casualty of a trend that’s been plaguing the VFX industry in recent years: an outflow of work to countries with better tax incentives

Seems like the failures aren't just caused by the free market.

Surely this is a case book example of the free market in action.

How is something caused by government intervention an example of the free market in action?

One can argue that tax jurisdictions compete with each other in a market. Which is a good thing, as it helps put an upper bound on how aggressive a jurisdiction can get before capital starts fleeing.

But of course this picture is missing one of the key mechanisms of a truly free market -- there's no market pricing of the market participants themselves. You can't buy out a government that's acting foolishly.

It's a refundable credit, meaning that the government will reimburse the company for VFX work above and beyond its tax liabilities. How is this "tax jurisdictions competing" and not a direct government subsidy? http://www.bcfm.ca/faq/#pstc4

I think that's a distinction without a difference.

Whether the government taxes you less, pays you directly, or puts tariffs on your foreign competitors, it all amounts to a subsidy in the end.

(And I don't disagree that it's a foolish idea.)

The parts that are still free to do so, like nodes on the Internet, route around them. (Or, if you prefer, "avoid them like the plague.")

Govt subsidies are (in theory) an investment; you invest money in X so that you can make more money (or value) from Y.

In that sense, for example, there's a train of thought that if creating VFX in the USA becomes untenable then its move to other countries may drag money with it, then know how, then creative talent, then innovation, then production, then the entire industry and then it associated power for cultural dominance.

The entire sequence can be debated and argued and nitpicked to death (and I don't know enough about it to even try), but the underlying idea is valid.

Even the underlying idea (essentially mercantilism) is questionable.

While it can clearly benefit certain special interests (hence its popularity), it simply cannot benefit a whole society on net. Rather than repeat the whole argument, I'll just cite Adam Smith (a guy who was much more moderate than often portrayed by modern partisans), who showed in no uncertain terms that subsidies and tariffs make a nation poorer.

They are in theory an investment, more often they turn into huge wastes of money and cripple the industry they are supposed to help.

Did you read the article? Your response seems to be an all purpose response ignoring the specific circumstances that distinguish this specific case the general case.