October 24, 2014

Public Funding for the Arts

Public Funding for the Arts

Many communities such as Charlottesville identify themselves as an arts community. This image translates into passionate support for public funding of the arts. But the common justifications for public funding don’t hold up under careful scrutiny.

Emotionally the choice is presented as saving the arts or cutting them. However the arts are not in question. The issue is government funding of the arts. Should we take money from the most productive forces in the economy to subsidize certain artists chosen by committee?

Supporters claim that subsidizing the arts pays for itself. They suggest that the arts drive the economics of businesses within a community.

There are two problems with this idea. First, if the art is commercial, it is already being funded. And if the art is justified by supporting other businesses, it is also being funded. To the extent a coffee shop can increase its traffic via art exhibits, musical offerings or poetry readings, it is already encouraging artists to perform.

Second is the unseen cost of taking money from the economy that could be used for other purposes. Because of our progressive tax code, the marginal burden of subsidizing art falls largely on the highest tax brackets populated by small business owners and entrepreneurs. This group is the most productive at putting money to work.

If money spent in the arts truly had a multiplier effect, the arts would be naturally well endowed. But the class we are taking the money from does have that multiplier effect. That is why they are in the top tax brackets in the first place.

Claiming that subsidizing a committee’s selection of otherwise unfundable art projects is better for the economy is highly unlikely. Where there is a free market, capital naturally flows to the most productive venues.

We often hear an anecdote about a brilliant artist recognized by the arts community who isn’t yet successful commercially. This situation is perceived as tragic, demanding action like providing the artist with a government subsidy. But there are two difficulties with this point of view.

First, there is no guarantee that government funding would offer faster recognition than crowd sourcing. Production and distribution costs for art have dropped to a fraction of what they used to be. Without this barrier to competition, more people are willing to share their art for little more than the joy of being recognized. What is lacking is no longer a funding issue but rather sufficient demand for all the art being produced.

Even artists and art enthusiasts spend more money on electronic programmable gadgets than they do on art. That’s why we rarely hear about struggling computer programmers or electrical engineers.

Second, this view assumes there are identifiable artists worth funding that few people would be willing to patronize. To say an artist is great but most people don’t appreciate it is the same as saying a wine is excellent but few people are willing to drink it. Should we subsidize great wine that no one wants to drink?

On what basis can we say an artist should get paid more than society is actually willing to pay? There are more of us who would like spend our lives creating art than there are consumers willing to pay for us to do it. And what measure of the value of art to society do we have except the value society is willing to pay for it?

The view that the arts are good for society again implies some type of subsidy is required, which isn’t the issue. The arts will thrive regardless of subsidy. Artists don’t need funding. They need the attention of pivotal art mavens to lift them from obscurity to a measure of fame. But the struggle to be one of these art connectors is also highly competitive. Should winning an Academy Award or the People’s Choice Award have a greater impact on sales? These are also issues best left for the market to decide.

With reduced costs of production and distribution, access to artistic endeavors has never been higher. Most artistic guilds recognize they are one generation away from extinction and naturally support interest in the next generation. These are laudable missions for a host of private charities.

Economically, subsidies hurt the art industry. Consider the health of other subsidized industries. Fannie Mae and Freddie Mac controlled about 90% of the secondary mortgage market. Their subsidy did not encourage a healthy loan market. Government funding of our current school system leaves little room for innovation or competition by private schools. Bank bailouts rescued institutions with the worst practices. Government programs steal market share from economically more viable artists.

The health of art organizations are too important to depend on government. Politics kills goodwill and development skills atrophy. Art thrives on delighting its audiences and developing a loyal fan base. Ensuring that should not be outsourced to government coercion. An identifiable pool of patrons is far superior to a vague cloud of resentful taxpayers.

Some people claim art subsidies are inexpensive. The 2012 National Endowment for the Arts (NEA) budget was only $146 million. Unless you earn over $200,000, you don’t pay your fair share. The top 1% pays $55 million, and the top 10% pay $102 million. The spending doesn’t stop at the federal level.

By federal statue, NEA grants can’t be used to reduce a state’s funding of the arts. To receive federal block grants from the NEA, a state must spend more money on the arts. A state is required to have an officially designated arts agency and support it financially. There are a host of requirements for fairness, public access and serving underserved communities. And the state must match any federal funds received.

In Virginia, five full-time people work for the Virginia Commission for the Arts. Efforts to eliminate the agency were defeated, but its 2010 budget of $5.3 million from the General Fund was reduced to a 2012 appropriation just under $3.8 million.

Imagine all that effort just to get $863,000 of federal grants. If other states have the same 4.4 multiplier effect, the NEA is costing well over a half trillion dollars annually.

Art subsidies are no different than other needless expenditures. In conjunction with a simpler flatter tax, nearly all subsidies and industry expenditures should be eliminated.

Of course art is a vital part of our lives and culture. I asked a fellow art enthusiast if he paid the asking price for the art he purchases, and he replied that he pays more as a way of supporting the artists he loves. That’s a practice worth emulating.

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About David John Marotta

David John Marotta+ is the Founder and President of Marotta Wealth Management, Inc. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818...)

Comments

  1. Comment from Michael Buss:

    Oh dear! It seems our columnist really does not know much about the subject on which he has presumed to speak. Nobody really supposes that funding for the arts equates to funding for individual artists. This is to do with great museums and art galleries; it’s to do with art education in public schools. There are art teachers in my school district who have been given budgets for the year of under $100!! It’s to do with orchestras and ballet companies that constantly struggle to stay alive. In spite of private funding and endowments, it’s frequently the case that such arts organaizations can barely stay afloat. And it’s about great art in public spaces that ennobles and enriches towns and cities. Please take a trip over to the fabulous National Art Gallery in Washington DC. Find out how and why that place got built. And ask them from where they get their money today. And please get better informed.

    First you say that art funding supports great museums and galleries (2.3% of the NEA 2011 expenditures). Then you say it doesn’t fund individual artists (as though funding orchestras and ballet companies doesn’t support individual artists). And then you say it ennobles and enriches town and cities (even though no one is willing to support them privately or spend money on them commercially). And then you suggest I don’t know much about the subject?

    I probably support the arts monetarily more than you do. But we had beautiful art accessible to everyone long before we had the NEA. Please, get better informed!

  2. Jeff Anker says:

    According to an L A Times blog, http://latimesblogs.latimes.com/culturemonster/2011/01/congress-republicans-nea-neh.html, arts funding gets about $800 million. This amount represents about a week of costs of the U S being in Afghanistan. We have spent about 200 times $800 million in Iraq and Afghanistan. So you would rather cut out all of the funding for the arts versus a week less time in Afghanistan? Priorities?

    • Jeff, comparing funding the arts to anything else you think the government shouldn’t be funding is a ridiculous argument. I’ve written about many things that the government should not be funding, from prescription drugs to cash for clunkers. Your argument is like going to court on assault charges and pleading that you did not kill anyone. It is completely irrelevant.

      I picked the arts specifically because the arts are a beautiful wonderful thing. And if the government should not be funding the arts there are a lot of things it should not be funding.

      Your argument about priorities is equally misguided. You are like the drunk in a bar fight telling the police to go worry about the real criminals and pleading that you only hit the people who annoyed you most.

      You have to admit that the only reasonable assumption is that you think government funding of the arts is a social good, but you are not willing to just make that argument on its own merits so you revert to saying it is less wasteful than some other government program.

      • Jeff Anker says:

        Is it a ridiculous argument because YOU see it as such? My argument is NOTHING like your “assault charge” comparison. I am just saying that if you are worried about the government spending, wasting?, $800 Million why not save that money by NOT spending it in Afghanistan? David, straight up, do you think what we are currently doing in Afghanistan is worth $3.5 Billion a month.

        Arguing priorities is hardly misguided. Any budget, yours or that of the U S Government, has them.

        Regards,
        Jeff

  3. Michael Hines says:

    This argument is similar to many others being waged at this time. It really boils down to the purpose and role of government. The authors of our Constitution had a vision for government – providing central services for all – i.e. protection (fire, police, enemy). A very limited role.

    What we have instead is a vast redistribution of wealth – from the wealth and working class – to those who will not support themselves through gainful employment(churches and families used to be the ones who cared for those who could not work – but the government took that away also – with disasterous results).

    Interference of the government in free enterprise allows government to choose the winners and losers rather than a free market economy functioning to support winners and allowing losers to seek other gainful work.

    The TARP money, saving GM and Chrysler (fortunately Ford was smarter and stayed out of the game), saving Wall Street, and so many other areas where government has interfered has ruined us. It’s well know, through history, that government interference in free markets just makes things worse – not better.

    The evidence is all around us – just look around?

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