I don't have any doubt that Hollywood is experiencing some problems transitioning to the new world, at least in the developed world. Given that, well:
If evidence of political corruption, racketeering, and attempts to control the marketplace through government activity reveal dying industries, then real estate is a dying industry too, as well as high finance and numerous others. Considering how pervasive political corruption is in the United States today, almost every single industry in the American economy is dying by Paul Graham's reasoning, except for those few industries which are so new that legislation does not yet exist for them. Agriculture has been dying, by this metric, for at least a hundred years.
Speaking of historical perspective, the Catholic Church experienced a period of extraordinary corruption more than five hundred years ago, during which time popes waged wars, had mistresses, and in some cases even died from sexual exhaustion in the beds of married women. Logically, if political corruption and government thuggery are hallmarks of dying institutions, the Catholic Church must be a historical relic that ceased to exist shortly after this period. However, it kept going another 500 years, and in fact still seems to be around. Not only that, it built nearly every hospital and orphanage in Europe in a period which followed after its apex of corruption. There's a good chance that when humanity colonizes Mars, there's going to be a Martian archdiocese. This is just one of countless examples of an institution which failed to collapse under the weight of its own corruption.
Graham's argument doesn't just operate in defiance of historical precedent, but also in defiance of easily obtainable facts. Studios are seeing tremendous growth today; even though American audiences are shrinking, audiences worldwide are booming. Globalization has been very, very good to Hollywood. Many movies don't even premiere in the United States any more. And as for history, the studios have always been brutally dominant, cynically exploitative, and extremely corrupt, and, despite Graham's argument, were so even during their periods of greatest growth. Why else would writers and actors have unions?
I lived in San Francisco during the late 90s, and during that time, I was acutely aware of a perceived rivalry between San Francisco and Los Angeles -- but when I moved to Los Angeles in 2007, I discovered that nobody in LA had ever even heard of this rivalry.
(emphasis in the second paragraph added)
The piece Giles is responding to from Paul is here: ycombinator.com/rfs9.html
Giles is right to say it's stupid to want to kill Hollywood. He wants to get rid of the lobbying. Others, like Marco, seem to want to fix our campaign finance system. Others want a "lobby for tech" that will further push our horrible lobbying system forever into the future.
We already have solutions to these problems: elections. If you have shitty politicians taking money from shitty people to do shitty things then all you have to do is vote in less shitty people. You can work within the parties or outside them. Laws will be worked around. Amendments are impossible to pass, period. The best way to kill the lobbying industry, like Hollywood, is just to ignore it and do something else. You don't need to kill Hollywood to have good content elsewhere. You don't need to kill lobbyists to have a less shitty political system. You just need politicians who won't take a meeting with them. The problem is not with the system. The problem is with the people.