Why Are Artists Poor? Part 16

The Government Serves Art 1 See section 9.11.

2 Artists' gifts and those received from artists' families are not included. In main-land Western Europe about twice as much money as in the us .ows from gov-ernment agencies to the arts, while Britain appears somewhere in between these two extremes. O'Hagan (1998) 139. The large 'subsidies' in the form of tax de-ductions in the us has been taken into account. The considerable indirect subsi-dization of the arts by American private and state universities is not included however. If these .gures were to become available and were added to public ex-penditures the difference between the us and mainland Western Europe would probably be much smaller.

3 On lottery money as a form of subsidy, see note 7 of Chapter 2. Not all govern-ment conduct with consequences for the arts is included, however. This applies for instance to legislation that guarantees artistic freedom or enforces copyright laws. Although countries vary, the general aims of the legislation are based on notions of justice. Therefore, such legislation is usually not an instrument of art policy. The same applies to numerous general tax measures, which have an im-pact on the arts. Only when such measures apply speci.cally to the arts and are an exception to existing regulation, like a special tax deduction or a lowered vat tariff, does this need any explanation in the context of this chapter. Because the vat measures cost public money, they will be treated as subsidies to the arts. O'Hagan (1998) 73-129 addresses all these subjects; he presents a general trea-tise on the impact of all sorts of regulations and taxes on the arts.

4 Abbing (1978), Abbing (1980), Austen-Smith (1980), Cwi (1980), Fullerton (1991), Peac.o.c.k (1969), Robbins (1963), Scitovsky (1983). O'Hagan (1998) 21-47 presents a useful survey including recent references. Other Dutch refer-ences can be found in Puffelen (2000) 14-36.

5 The relative success of welfare economics can in part be explained by the fact that its notions are close to common wisdom. Welfare economics describes a hy-pothetical situation of a free market economy where there is 'maximum wel-fare'. In the real world, activities that survive in the market also appear to serve the general interest. In other words, 'free markets serve the general interest'. This is most notably evident in the fact that obsolete businesses tend to go out of business while other necessary businesses emerge to take their place. 'Only those activities, which can sustain themselves, because people are prepared to pay for them, have a right to exist.' This is the 'logic' of the market that every-body understands. Welfare economics departs from this logic.

6 Social philosophers, like Blokland (1992) and Laermans (1992) reject the wel-fare economic interpretation of the general interest. Rushton (1999) rejects the outcomes of welfare economics because it is based on methodological individu-alism.

7 Although all three arguments can be seen as referring to forms of market failure, the term 'market failure' is sometimes reserved for the third argument because the inability to sell certain goods appears to be the most direct failure of mar-kets.

8 I ignore the dif.culties welfare economics has in the case of meddling prefer-ences. Cf. Sen (1970).

9 Pots (2000) 272-78.

10 There are economists who argue against the merit argument. Because of their preoccupation with free markets and consumer sovereignty these economists prefer to see as little interference with the consumer preferences as possible and therefore they warn against the development of merit goods. Nevertheless, it is a matter of political choice, whether general interest is served best by safeguard-ing consumer sovereignty or by allowing interference on the basis of responsi-bility. Economics has little to say about that. Personally, I would .nd it strange if people with better educations and more money didn't 'care' or feel responsible for others. Individuals express their sense of responsibility with all kinds of ac-tions, including gifts, and collectively they employ the government to further these ends. Responsibility does not stop with the family nor does education stop at the age of eighteen. Therefore, merit policies exist in every responsible socie-ty. What concerns me in this chapter, however, is this question of whether subsi-dies are effective and whether sel.sh motives are hiding behind the merit argu-ment.

11 Cf. Pots (2000).

12 For the Netherlands see Pots (2000) 177-82.

13 For the Netherlands see Pots (2000) 295-326.

14 Swaan (1988).

15 Abbing (1992) treats the comparison between art and the other sectors more extensively.

16 Levine (1988) and Peterson (1997). Pots (2000) describes the importance of the phenomenon in the Netherlands.

17 See note 43 of Chapter 7.

18 Cf. Swaan (1986).

19 Different forms of direct and indirect a.s.sistance in various countries are de-scribed in O'Hagan (1998). IJdens (1999) presents examples from the Nether-lands.

20 The Dutch government, which has been particularly generous to poor artists, nevertheless has always tried to keep social subsidies for artists separate from art subsidies. Pots (2000) 262 and 319.

21 People who do not pay cannot be excluded from these goods and effects. This approach is based on the so-called non-excludability criterion for collective goods and external effects as formulated by, among others, Musgrave (1959). Samuelson (1954) (who speaks of public goods rather than collective goods) de-veloped another well-known criterion for collective goods and external effects based on non-rivalry: one person's consumption does not necessarily diminish the amount of a collective good or external effect left for another. Theoretically, the latter de.nition is the only relevant de.nition within the welfare economic approach. For the explanation of public expenditure, however, the use of the ex-cludability de.nition is the only relevant de.nition. (Combining the two serves no purpose.) 22 Because this book treats the explanation of art subsidies rather than their legit-imization, I only touch upon the subject of collective goods and external effects in the arts. Readers interested in the effects of economic legitimization of subsi-dies for the arts on welfare arguments can consult many articles and books that treat collective goods and external effects in the arts. Abbing (1978), Abbing (1980), Abbing (1989), Austen-Smith (1980), Cwi (1980), Fullerton (1991), Grampp (1989), Peac.o.c.k (1969), Robbins (1963), Scitovsky (1983) and Thros-by (2000). A useful survey including recent references is presented by O'Hagan (1998) 21-47.

23 See references in note 4.

24 Cf. Throsby (2000).

25 Attempts have been made to measure the willingness to pay for intangible col-lective goods in the arts by, among others, Throsby and Withers (1986). The outcomes of such a.n.a.lyses should be treated with care. Because valuations are not part of a continuing valuation process, they can be shots in the dark. Abbing (1989) 21-22. Therefore, the 'measurement' of the preferences for collective goods and external effects is a matter of political debate.

26 Cf. Throsby (2000). In his chapter on artistic innovation, Throsby speaks of quasi-public goods.

27 In the latter case copyright applies.

28 This subject is treated more extensively in the sections 9.9 and 11.7.

29 The situations with and without intervention are not completely the same, be-cause subsidization changes collective goods and effects, but this does not imply that by taking into account the cost of the intervention the situation with inter-vention is necessarily superior to the situation without intervention or vice ver-sa.

30 As indicated in the previous chapter, the free-rider problem is a less important obstacle for collective actions than economists used to think.

31 In a welfare economic sense there is a waste of human resources. Cf . Frank and Cook (1995) 102-3 and 107-10.

32 Cf. Klamer and Zuidhof (1999).

33 I do not agree with Hutter (1997) 171 who states that in the cla.s.sical cultural heritage 'we .nd the typical conditions of underinvestment'.

34 I refer to the common impact study that is based on consumer spending. Cf. Seaman (1987) and Abbing (1989) 218. Puffelen (1992) and Puffelen (2000) 64-71 present a more extensive discussion of impact studies.

35 If the price of petrol goes down, more cars are sold. Similarly, if hotel accommo-dations become cheaper or more attractive, more people will go to the Rijks Museum. On the other hand, if the Rijks Museum lowers its prices or becomes otherwise more attractive, more people will stay in the aforementioned hotels. Therefore, these are price effects instead of external effects. (Abbing (1989) 218 presents a few exceptions.) 36 Although the term 'collective good' is sometimes reserved for consumer prod-ucts, in this case I prefer collective good rather than externalities or a 'common good' so as not to complicate matters. The term 'collective good' can be used because excludability is limited in the sphere of production.

37 Frank and Cook (1995) 102-3 and 107-10 demonstrate that from a social point of view there tend to be too many partic.i.p.ants in these markets. They evidently disagree with Adler (1985) who has tried to provide a scienti.c basis for the ne-cessity of the big pond in the arts. Towse (2001) 484 speaks of an expensive ef.-ciency bene.t. (The normative conclusions of Frank and Cook rest on so-called Pareto-optimality.) 38 Average tastes have changed. This does not mean that the taste of individuals has necessarily changed as well. Cf. section 7.8.

39 This information was supplied by Bas de Koning at the Dutch nvpi.

40 The Dutch musical award, 'the Edison', was an early entry among awards, but it never became really prestigious.

41 As noted before, an investigation, commissioned by the French Foreign Min-istry and reported on by Charles Bremner in the internet edition of The Times of June 132001, emphasizes the negative effects of state patronage on contempo-rary French visual art. 'French contemporary artists are being pushed out of the world market because of sti.ing state patronage.'

42 In this respect it is not amazing that a social right to art never developed as not-ed in section 9.4. A right to art just can't be compared with the aforementioned basic social rights to education and health care as a.n.a.lyzed by Swaan (1988).

43 Goudriaan (1990).

44 See section 9.11.

45 Frey and Pommerehne (1989) 184-5 and Goudriaan (1990). Experiments with vouchers are rare. Price discrimination is not unusual. For instance, students or young people often pay lower prices. But they also pay lower admission prices at unsubsidized art inst.i.tutions. Moreover, the quality offered is often lower. (For instance, the reduction may only apply in last minute purchases of tickets.) Therefore, existing price discrimination is largely a commercial instrument. The only plan that might serve merit policies is much stronger price discrimina-tion or vouchers.

46 Grampp (1989), Grampp (1989a), Frey and Pommerehne (1989), Abbing (1992) and Cordes and Goldfarb (1996). Rent seeking is emphasized in the pub-lic choice approach in economics.

47 Among others Lindblom (1959) toyed with the idea that the in.uence of the various groups is largely offset by one another. Therefore, the actions of these groups primarily informed governments and so could potentially improve a democracy. Later Lindblom and others revised their opinion. The notion how-ever, that pressure groups also inform the government is still essential to public choice theory.

48 Cf. Buchanan (1962).

49 Grampp (1989a) presents a thorough discussion of the rent seeking theory as applied to the arts. Grampp adds two conditions I do not mention, because they are too technical in the context of this chapter. In Grampp (1989) 205-31 a less technical treatment of rent seeking in the arts is given.

50 The average price of theatre with subsidization mentioned in the text is proba-bly lower than one may have expected. The large number of free tickets is the cause of this.

51 Visitors not only receive subsidies because art companies are subsidized, but also because accommodations are subsidized. Therefore, in calculating these price increases, I a.s.sume that it's not just art companies but also accommoda-tions that lose their subsidies. The price rise irrespective of accommodations is derived from ocw (1999) Appendix 2, table B. I increased the subsidies per visi-tor by 60% to cover the subsidy per visitor that comes in via accommodations. I derived this percentage from the table in section 3 of Schouwburg- en Concert-gebouw Directies (2001).

52 Given subsidization performing arts patrons enjoy an income advantage that they receive from the average taxpayer. In the Netherlands, the upper-income half of the population receives 73% of the performing arts subsidies. The upper 10% income bracket receives 29%. Pommer and Ruitenberg (1994) 167. These .gures in theory show that it pays for current consumers of the subsidized per-forming arts to put pressure on the government to support subsidies for the per-forming arts. They are candidates for rent seeking. (Incomes are secondary in-comes. These are 1991 .gures. More recent .gures are unavailable. Compared with earlier .gures, the advantage upper-income brackets gain from performing art subsidies increases over time. Also, when the differences in tax rates are tak-en into account, the advantage of the richest 10% is considerable and it is much larger than in the case of other forms of subsidization.) 53 Grampp (1989a).

54 Art lobbies in one form or another probably exist in most countries with consid-erable levels of arts subsidization. With respect to arts training Towse (1996b) 319 points to rent seeking by the 'training lobby'.

55 The Dutch minister Hedy D'Ancona and to a lesser extent, Aad Nuis were re-proached for their connections with and indebtedness to the art world.

56 A saying by the Dutch poet and visual artist, Lucebert. ('Alles van waarde is weerloos'.)

10 Art Serves the Government 1 The next step could be linking this chapter's approach to a political theory. Cf. Lindblom (1990), Dahl (1956), Dahl (1985).

2 Thorbecke gave cause to these different interpretations, which at times confused the political debate in the Netherlands. Cf. Pots (2000).

3 The approach of a neutral government is present in many textbooks on public .-nance, for instance Musgrave (1959). In modern textbooks, like Wolfson (1988) 308-13, some attention is paid to the possibility of a non-neutral govern-ment, but it is not emphasized.

4 Mueller (1997), Koopmans, Wellink et al. (1999) 49-58.

5 The concept of the State having an independent existence is eschewed by libertar-ian individualism, which is central to modern economics, as Throsby (2000) 2 remarks.

6 Since the acknowledgement of satisfying behavior (Simon (1982)) the notion of discretionary s.p.a.ce makes sense. With respect to the arts, The Financial Times (special survey, February 2000) Business and the Arts (www.ft.com, down-loaded July 7, 2000) reports many cases of business involvement in the arts that seem to rest on the use of discretionary s.p.a.ce.

7 See note 16 of chapter 3.

8 Among many others Buchanan (1962) and Wilson (1989) have emphasized rent seeking by magistrates.

9 Cf. Kempers (1994 ed.princ. in Dutch: 1987) and Pots (2000).

10 The term 'conspicuous consumption' was introduced by Veblen (1934).

11 Abbing (1992).

12 See note 10 of chapter 2.

13 Abbing (1989) 221-7.

14 Epstein (1967) and Lash (1968) 63-113. More references in: Guilbaut (1983) 237-8.

15 O'Hagan (1998) 8-11. The a.s.sistance offered artists in the thirties through the Work's Progress a.s.sociation, part of Roosevelt's New Deal is interesting.

16 For the Netherlands, see Pots (2000). He presents few .gures, but the tenure of his a.n.a.lysis con.rms the low level of support.

17 Although in the Netherlands, the initiative to support music and museums usu-ally came from private people, the government usually joined forces at an early stage and soon began paying the larger share of the a.s.sistance. (Theatre was an exception.) Cf. Bevers (1993) 40-5. Nevertheless, until 1945 spending per capi-ta was small compared with for instance France at that time as well as with the Netherlands .fty years later.

18 A different but related opinion is presented by Bevers (1992). Bevers empha-sizes internal forces that promoted a degree of integration of the cultural, busi-ness, and political spheres.

19 The existence of national debts diminishes collective wealth, but because of the monopolies of the state, its power is still extraordinary.

20 Although it must be said that in general government display in the us, as in os-tentatious ceremonies, an election or an inauguration, pomp and circ.u.mstance are very present.

21 The origin of present cultural policies and the organization of government pow-er can be traced back to developments that took place many centuries ago, as Staay (1999) shows with respect to the Netherlands.

22 According to Pots (2000), who a.n.a.lyzed the history of government involvement in the arts in the Netherlands, Dutch art policy can be explained by noting two objectives: the wish to promote social coherence and the wish to educate or civi-lize people.

23 Some public broadcasting organizations like the bbc still receive considerable amounts, but less than they did in the past.

24 Bevers (1995) 422 also distinguishes cultural as an interest in and of itself or culture serving foreign policy.

25 Weil (1991) writes: "Not only do (the arts) provide a kind of social 'glue', but they also furnish a means by which society can identify and distinguish itself from others." In Weil's view however the second function becomes less impor-tant. (Also cited by O'Hagan (1998)).

26 Inez Boogaarts in (the Dutch paper) de Volkskrant 14-2-01.

27 Cf. Bevers (1995) 424.

28 Boogaarts (1999) discusses the actual ins and outs of Dutch cultural policy abroad since World War II. See also Bevers (1995).

29 Cf. Boogaarts (1991).

30 Janssen (2001) writes: "...it is clear that funding bodies are no more neutral than any social organization, and that the success of some artists in gaining sponsorship and the failure of others is likely to be related to the type of work they do." See also Pearson (1980).

31 At present, Dutch government of.cials are more aware of the limitations of gov-ernment choice. They admit that the government cannot be neutral, as well as that the government does not necessarily make better choices. At a conference at the Erasmus University in December 1999, the highest civil servant in charge of Dutch art-policy cited Commandeur (1999) who presented three lists of names of visual artists: one of artists favored by the government, another of artists favored by the market, and a third of artists favored by both. His posi-tion was amazingly modest. He emphasized that by having a taste of its own, the government could complement the market.

32 Quality judgments within an art form are sometimes changeable. For instance in the .rst ill.u.s.tration to Chapter 11 shows that in the eighties Dutch govern-ment bodies rather abruptly started to subsidize artists, who made .gurative work, and who could not get subsidies a few years earlier. Only the notion that a government has a taste and is not neutral can explain these phenomena.

33 Various histories contribute to differences in status. By generalizing greatly, the following can be noted. On the one hand, jazz and pop music developed outside the music establishment and so could not easily usurp the high status owned by cla.s.sical music. The chances of contemporary musicians were better, but they basically stayed submissive with respect to their predecessors. On the other hand, avant-garde visual artists developed their art from within the establish-ment and at the same time challenged their predecessors and so managed to take over their high status relatively easily.

34 Council (2000).

35 Swaan (1988) 230.

36 The arts experts regime covers approximately the same area as what Bevers (1993) 191 calls 'the specialists of organized culture'.

37 The latter regimes ensure the ful.llment of established social rights to health care, social security, and education. After centuries of collective actions, these regimes represent the most recent stage in the development of these social rights. Cf. Swaan (1988). According to Abbing (1992) the arts have no history of sub-stantial collective action and therefore no social right to art ever became estab-lished.

38 In this sense, governments joined the larger group of mediators who Bourdieu (1977) had already called 'co-producers' of the work of art.

39 Cf. O'Hagan (1998) 3-13 who presents a short historic account of the evolution of state involvement in Western Europe and the us.

40 Mulcahy (2000) 173.

41 Benedict (1991) 54.

42 Mulcahy (2000) 171.

43 Montias (1983). (Also cited by O'Hagan (1998)).

44 These companies also sponsor music, but this is less exceptional as they almost exclusively sponsor risk-free old music.

45 O'Hagan (1998) 139 and 156. O'Hagan, 104-30, presents an illuminating sur-vey of the many forms of tax concessions.

46 Mulcahy (2000) 178. In other words, the government indirectly increases the power of money and the power to de.ne art Chapter 3 of mainly the wealthy and the corporations. The us government sides with the power of money, while European governments sides with the 'power of the words' of experts.