State support of the arts

by on February 11, 2011 at 8:07 am in Economics, The Arts | Permalink

Jon Chait (a progressive) is against it, Ezra asks for my view.  I favor indirect subsidies for the arts, and indeed to non-profits in general, through our tax system, as we already do.  This tax policy is also a major subsidy to religion and, for me, a somewhat difficult decision to accept and also encourage…how shall I put it?…certain features of the American cultural landscape.  Nonetheless I believe in "diversification across countries" and I don't want the United States to become too much like Europe. 

In America at least, direct arts subsidies have both very low costs and very low benefits.

The issue currently at hand is whether various state-level arts agencies should be abolished or cut back, as is now the talk, including in Texas, Kansas, Arizona, and Washington state.  I say these states are doing the right thing.  If you're a libertarian, the choice is obvious.  If you're a progressive, it is better to spend the money on Medicaid expansion or other more worthy goals.  There really is an opportunity cost of this money, and reframing the choice as "so many cents per head" merely disguises that we could use those funds to save some lives.  Most of the benefit of arts subsidies goes to the relatively wealthy and well-educated.

I don't see any "intermediate" argument that beats back both the libertarian perspective, on one side, and the redistributive perspective, on the other.  The two extreme positions are more defensible than the middle, in this case, and each leads to the same conclusion.

Don't, however, think that cutting state arts funding will much matter for state-level fiscal problems.  It won't.  The budget problems are mostly about a mix of falling revenue and rising Medicaid expenditures.  I am against using such cuts to promote the idea that we are solving our budgetary problems; read David Brooks on this topic.

The real news is that some states are willing to cut arts funding even when they will cease receiving their transfers from the NEA.

If you're an arts snob and wish to mix aesthetics and politics for philosophic reasons, it is better to have arts money spent at the federal rather than the state level.  The state agencies are more aesthetically conservative and more oriented toward "economic development" (a myth, for the most part) and local special interest groups.  The state-level spending is less meritocratic and the NEA comes closer to serving an "R&D" function for the arts.  It didn't help the arts in this country when the NEA had, for political reasons, to start sending forty percent of its budget to the state arts agencies. 

The case for state-level support for the arts is strongest, by far, for the state of New York for reasons related to tourism and New York City.  But Manhattan, Kansas?  Let them watch YouTube.

Addendum: Here is my book on government support for the arts, and the proper roles of the aesthetic and political in liberal thought.

AnotherPhil February 11, 2011 at 5:10 am

"This tax policy is also a major subsidy to religion and, for me, a somewhat difficult decision to accept and also encourage…how shall I put it?…certain features of the American cultural landscape."

There's nothing difficult about this, unless you have some nebulous and visceral discomfort with religion. It's simply flip-slide of "separation of church and state", (that often repeated dictum of the left used as a rhetorical cudgel to silence opinions informed by faith). The separation includes the separation of politicians and their unending spending ambitions from church treasuries.

One could actually make the case that the secular temples known as universities are less worthy recipients of subsidies-and those subsidies are DIRECT and SUBSTANTIAL.

Do we have a case of people living in glass houses here?

Chris February 11, 2011 at 5:33 am

For the millionth time, a tax credit is not a subsidy.

A kid who swaps an orange for an apple at lunch-time isn't being given a "barter subsidy". It's a pareto improving trade.

Lou February 11, 2011 at 5:43 am

A real economist would call it a Pareto efficient trade.

Bill February 11, 2011 at 5:45 am

Elites like subsidies for their own programs.

What will be do without that wine and cheese event following the concert. My god, we might have to contribute more to our arts organization, rather than getting a state subsidy to leverage Biffy's and Buffy's contribution.

And, if the CPB doesn't get its subsidy, I may even hear less of David Brookes on the News Hour which will have to take on more sponsors or cut the pay of Jim Lehrer.

Sniff, sniff.

Just think of what we could do with that Medicaid money instead. Instead of fixing the spine of that indigent kid, we could have one more wine and cheese party or bring in that foreign concertmaster.

Talk about balancing the budget on the backs of the poor.

Derek February 11, 2011 at 5:57 am

If arts funding, subsidies or otherwise, go to the benefit of the educated or the wealthy its not for a lack of alternatives. Rather than citing this allocation as reason to revoke the benefits we could instead address our concern to supporting arts that engage communities. Via Augusto Boal etc..

Andrew February 11, 2011 at 6:10 am

I suspect Thomas Jefferson meant an education to help people see through government bull, basically literacy, and not education in the sense of promulgating central government bull. Educating someone to 'be a good citizen' nowadays probably has about the opposite meaning of what Jefferson might have meant. There is probably a likewise bifurcation between leaving arts alone and subsidizing them.

Bill February 11, 2011 at 6:29 am

I would like to attend a Bruce Springsteen concert at a lower cost.

I don't want to pay the market price for the concert.

Do you suppose that I could create this foundation to support the Arts, get my friends to make a charitable deduction to the foundation, and invite Bruce, and not charge him or charge him for the use of the space so his ticket prices will be lower.

Afterall, I like Bruce, you like Vivaldi. Why should my like of Bruce be treated differently than your like of Vivaldi?

Is it because we do not serve brie and wine after the concert? That your wealthy directors have more pull to bring in subsidies than my group? Is it because your art is better than the art that I like?

Jonathan Willner February 11, 2011 at 6:33 am

Somewaht interesting discussion, but seems to have lost a good deal of the point. Is art a "public" good in the economic sense? Does it have a postitive externality? There seem to be those that do not "believe" in the existence of either. Also, there seem to be some that believe that all markets exist and fit all the criteria of perfect competition. I find this latter fascinating. It's much harder to believe the latter because it is subject to empirical investigation. In which case, it is rejected. Moving on, to the world in which we live, the first questions have to be about art as a public good or a product/service with postive or negative externalities.

Aretino February 11, 2011 at 6:51 am

Depends on what you think the function of government should be. In Germany they have the concept of the Kulturstaat, that the function of the German state(s) is to be the successor of ancient Greece, and to produce high culture. Hence the emphasis on the arts as culture and not mere highbrow entertainment, and as THE primary responsibility of government.

Yancey Ward February 11, 2011 at 6:55 am

As an aside, why do authoritarian regimes suppress the Arts if they have no value in a free society?

Unintentionally funny. Authoritarian regimes are often big subsidizers of the arts, mulp, just not the arts you might like, but rather, arts that serve as propaganda or glorify the potentates and their regimes. There is a world of difference between subsidizing certain expression and suppressing it. I think you might have the two confused.

Andrew February 11, 2011 at 7:07 am

Not sure about the lingo but it seems a tax credit is a subsidy a relative sense but not necessarily in an absolute sense. It might be interesting to have a flat minimum tax with completely unfettered tax deductions for whatever you want to list on the form.

IVV February 11, 2011 at 7:17 am

Do we have a list anywhere of where art subsidies have been spent on?

dirk February 11, 2011 at 7:27 am

"Why doesn't the market work in supporting the arts?

What is the market failure that requires a public subsidy, either in the form of a tax deduction or a direct state subsidy?"

Here's a failure: you can't improve the productivity of an orchestra, so it necessarily becomes more expensive relative to other things over the centuries.

dirk February 11, 2011 at 7:37 am

Perhaps one reason why rock succeeded and classical and big band music failed is that a rock band takes fewer members and uses modern technology and thus is more productive.

dirk February 11, 2011 at 7:56 am

@DK — sounds like a good argument for not taxing any businesses. Or individuals for income. I'm not particularly enjoying the detailed, intrusive IRS audit I'm going through right now. These people are so stupid I feel like I live in a third world country.

dirk February 11, 2011 at 8:02 am

Germans are genetically predispositioned to be ruthless bureaucrats. I say we get rid of them all. Unload the clip.

mulp February 11, 2011 at 8:27 am

Authoritarian regimes are often big subsidizers of the arts, mulp, just not the arts you might like, but rather, arts that serve as propaganda or glorify the potentates and their regimes. There is a world of difference between subsidizing certain expression and suppressing it. I think you might have the two confused.

When have Republicans called out as anti-American the NEA grants to support the music of those authoritarian funded arts? I think especially of NEA support for performances of Richard Wagner< Hitler's favorite?

Where is the outrage over these NEA grants, from google:

Nashville Civic Design Center garners NEA grant | Nashville City Paper
Nov 22, 2010 … K grant to fund program targeting inner-city youths
Nashville, Tennessee chamber music – ALIAS Chamber Ensemble » Blog …
For more details about other Nashville arts organizations that received part of the $1.1 million NEA grants, please click here for a link to the full story …
Hall of Fame Receives NEA Grant : MusicRow
Jan 26, 2011 … This generous grant from the NEA, however, will allow us to take Words & Music directly into Metro Nashville Public School classrooms. …
Nashville Symphony Receives $90000 in NEA Grants To – Nashville …
Return To Press Release Listing. Nashville Symphony Receives $90000 in NEA Grants To Support Education Outreach and a New Recording Project. April 22, 2010 …
Nashville Civic Design Center garners NEA grant – Nashville Metro …
Nashville Civic Design Center garners NEA grant. News 3 months ago on Nashville City News · Share. Subscribe to the Daily Local Newsletter .-

Isn't Nashville commercially successful as a center for the arts?

But why no outrage over NEA grants to institutions in Nashville? Maybe because Nashville produces the conservative establishment music?

Or these for Austin:

Ballet Austin awarded NEA Grant to create World Premiere of "The …
Ballet Austin awarded NEA Grant to create World Premiere of “The Magic Flute”

VORTEX Theatre Receives First-Ever NEA Grant for Sleeping Beauty …
Dec 17, 2009 … The musical theatre adaptation by Bonnie Cullum and Content …

Aren't these NEA grants in Austin subversive liberal attempts to undermine society?

Yancey Ward February 11, 2011 at 8:41 am

Mulp,

LMAO! You are making my point for me.

biffpow February 11, 2011 at 9:44 am

"Most of the benefit of arts subsidies goes to the relatively wealthy and well-educated."

Do you have any evidence of that? I'm willing to let you define "subsidies" as whatever you want, but you are responsible for defining "the benefit" in your explanation, as well as "arts" for that matter.

I would also question your point about Kansas vs. New York. It implies that art's value is linked more essentially to tourism rather than education, cultural awareness, and general appreciation. If anything, I would reverse your arrangement–people in Kansas are in much more in need of first-person exposure to the arts than people in NY. New Yorkers have an embarrassment of riches in that arena (a great deal of it privately and/or commercially funded I would add). People in Kansas are more isolated culturally and may better benefit from arts funding that would bring them experiences they would otherwise never have.

Moreover, seeing a photo of, say, one of the Waterlillies paintings is a much different (and lesser) experience than standing in front of one of the actual paintings. Relegating an entire bunch of people to "youtube", as you put it, basically reinforces the stereotypes about who cares about art and who doesn't. The truth is that if you expose people to art first-hand, they appreciate it more and want it more in their lives.

As an economist, you may have no real way of knowing this; go volunteer at an arts center and you'll see the veracity in that, though.

AnotherPhil February 11, 2011 at 11:11 am

"Religion is just another business. Please someone come up with a good reason why Joel Olsteen's business shouldn't be taxed."

A religion is defined by the tax code (ordained ministry, creed, regular place of worship, etc). Osteen meets the requirements, because if he didn't, you can bet the IRS would send an audit notice. He is also required to pay personal income tax and if his organization earns moneys outside is exempt purpose, he pays unrelated business income tax (UBIT).

There is no requirement that clergy take a vow of poverty or have no outside business interests. Also, unlike other businesses, he may not endorse candidates for office or engage in lobbying.

Again, we see how specious use of the federal income tax "Religion is just another business" allows it to be used to suppress things people find disagreeable.

If you disagree with Joel Osteen, you are free not to support his ministry, to find one that you do want to support, or to do nothing. You are guaranteed freedom OF religion, not freedom FROM religion. The tax code is not and should not be a forum for theological disputation, even if your theology is atheistic or irreligious.

Funny how all the indignation about the tax exempt status of theistic religions and organizations never seems to be directed at ATHEISTIC organizations.

dirk February 11, 2011 at 1:36 pm

"Funny how all the indignation about the tax exempt status of theistic religions and organizations never seems to be directed at ATHEISTIC organizations."

I don't like atheistic organizations either. The nihilist in me finds their more or less positive attitude annoying.

Troy Camplin February 11, 2011 at 10:44 pm
Dan February 12, 2011 at 12:37 pm

The problem with blogs is that they encourage thinking out loud and the disintegration of an argument.

TC says:

"I say these states are doing the right thing."

Oh, okay.

Then:

"I am against using such cuts to promote the idea that we are solving our budgetary problems."

Oh, okay.

Well since no one in the AZ legislature has read "Good and Plenty," I think the essential point is the latter.

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