Running out of Monet

Friday, October 01, 2010

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The visual arts have been long been regarded as merit goods. Their consumption by society is seen as desirable and socially beneficial. The Guardian screams that ‘cuts would destroy the artistic landscape’ as the Culture Secretary reviews the budgets of The Arts Council and other bodies. But is there a danger of government failure?

The widening fiscal deficit in The UK has forced The Coalition Government to reconsider most areas of state spending, and funding for the arts is not exempt from the proposed cuts. Although an art exhibition can bring in foreign tourists, their spending on catalogues, postcards, and posters can have a multiplier effect on sales and revenues for museums, galleries, hotels and coffee shops. The overall marginal costs and benefits of the arts are hard to compute with certainty.

Cuts Would Destroy The Artistic Landscape

The language used by the 100 eminent artists is emotive; they want to gather the support of other economic agents, you and me, to encourage The Coalition to change its economic policy. The proposed reductions in state spending are “destroying the country’s “remarkable and fertile landscape of culture and creativity.” Needless to say, the artists are using their canvasses, brushes, paint, digital technology and reputations to highlight their opposition to this review of priorities. It is an exercise which highlights the normative nature of economic arguments, as well as the possibility of government failure.

The Spending Review means that choices are being made. Every pound allocated to the Arts, means one pound less for something else. “Well tough - there’s no cash left, so its art or the hospitals.” That comment below the Guardian article highlighted opportunity cost abruptly and succinctly.

In any case setting a budget is not about funding a wish list of projects. A budgetary process is about identifying priorities, trying to weigh them up, and then making a choice. Would you reduce the allocation to galleries in London or that of the small gallery or arts project in Folkestone? On the other hand is there a case for charging visitors more at exhibitions. Visitors to galleries are more often drawn from above average income earners. Do they really need state subsidies for their leisure? If the arts are exempt from The Spending Review, it means cuts in other government funded services; every pound for The Arts is a pound less for school budgets.

Merit goods are deemed to be beneficial for us to consume, but is there a risk that the pleas from artistic lobbyists are no more self interested than calls by trade unions for government intervention to save jobs at a car plant. The 100 eminent artists are rational economic agents; they see that government support is a way of enhancing or even maximizing their opportunities to make money. But are the siren voices calling out that the visual arts will be destroyed selfless, and high minded paragons of economic virtue, or are they as selfish as any other pressure group trying to define merit goods and the direction of government spending. After all culture is a good whose consumption provides them with an income, rent or profit.

There is also a danger that the policy makers in Government may favour the arts because they too enjoy the output, such behaviour was satirised by Anthony Jay in Yes Minister Series 3. The Middle Class Rip Off. He was exploring the notion of government capture and public choice theory in relation to Arts Council subsidies and Government policy.

Yes Minister and Public Choice Theory

Sir Humphrey: “Bernard, subsidy is for art…for culture. It is not to be given to what the people want, it is for what the people don’t want but ought to have.”

Tags: opportunity cost, subsidies, government failure, merit goods, choice, normative economics

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