Unionism

1.74  The fine arts, particularly the media and performing arts, are a highly unionized sector of the economy.  The high degree of unionization is the combined result of the historical exploitation of creators, performers and technical support staff, craft traditions in many technical professions and nearly a century of adapting to significant technological change, e.g., the impact of recording technologies on the employment of musicians .

1.75  The industrial relations system in the fine arts tends to reflect the nature of the production process in the individual art forms (Chartrand, 1977).  In the literary and visual arts, production tends to be individualistic and artists tend to form relatively loose professional associations such as the Writers' Union, and Canadian Artists' Representation.  Through professional associations artists bargain and negotiate standard contracts with publishers, visual art dealers and gallery curators. In the performing and media arts, which have collective production 'processes involving a mix of skills, unions such as Actors' Equity, the Association of Canadian Television and Radio Artists (ACTRA), International Alliance of Theatre Stage Employees (IATSE), and the National Association of Broadcast Employees and Technicans (NABET) represent most artists and technicians.

1.76  There are three major characteristics of the production process in the media and performing arts. First, the product - a play, film or television program - is highly unique and artistic.  This results in unions establishing minimum terms of employment with a significant degree of flexibility in individual negotiations with managements for terms in excess of these minimums.  Accordingly the "star" system in motion pictures and the "crown system" in the performing arts is compatible with a high degree of unionization. The collective bargaining process is also characterized by a high level of individual participation in negotiations.  The "professional" status of members make it difficult for union leaders to represent the rank-and-file and in obtaining their support for collective agreements.

1.77  Second, performers and technical personnel tend to organize along narrow craft or occupational lines.  Managements therefore have to negotiate with a number of different unions.  Furthermore there is a great deal of inter-union competition including "coercive comparison" of relative wage and salary levels as well as inter-union jurisdictional disputes. Each craft union is usually responsible for a particular function.  In the performing arts it is a general practice that theatres and concert halls are union shops which means the union can establish membership requirements, limit entry and control management hiring practices.

1.78  Third, most fine arts organizations operate as non-profit institutions in which artistic and professional standards are not necessarily related to maximizing financial remuneration.  The nonprofit nature of employers limits the effectiveness of strike action.  After the initial shock effect of a strike there is no real financial burden to an employer whose major costs are salaries. Furthermore the ephemeral nature of the "live" performance means that there is no inventory of performances that can be built up after a strike, and hence no overtime to compensate workers for wages lost.  The cultural nature of the arts also tends to place a moral obligation on both management and labour to behave in a mature manner - loss of the audience is as serious a matter for the performer as for the management.  Furthermore budgetary restraints faced by non-profit arts organizations serve to constrain the ability of a union to make significant salary or wage gains.

1.79   The ten largest unions in the arts industries had a total of 78,121 members in 1980 of which 80% were men and 20% were women (Statistics Canada, 1980).

Efficiency

1.80  The fine arts are an extremely "employment efficient" sector of the economy.  A 1980 comparison of the twenty largest manufacturing industries and the performing arts reveals that of every revenue dollar earned by manufacturing companies only 20 cents was spent on salaries and wages.  In the performing arts, on the other hand, 66 cents of every revenue dollar was spent on salaries and wages (Research & Evaluation, 1983a, 2-6).  Given that average wages in the arts are less than half those in manufacturing, the employment advantage of the arts is at least six-to-one.

1.81  There are three other significant characteristics of artistic employment.  First, artistic jobs provide "meaningful employment" in that workers receive a high degree of job satisfaction. Artistic workers also exhibit strong career commitment in spite of an average income second only to pensioners as the lowest paid occupational category recognized by Revenue Canada.

1.82  Second, employment in other sectors of the economy depends on depreciating physical capital.  Employment in the arts, on the other hand, depends on the "appreciation" of human capital and the increasing excellence of Canadian artistic production. Appreciation of cultural capital is reflected in the increasing international success of Canadian artistic enterprises such as the Stratford Festival, the Royal Winnipeg Ballet and the Montreal Symphony. Such enterprises take as much as ten years to mature to "world-class" status but can collapse in a single season (Bladen, 1971). Similarly the "maturation" of creative or interpretative artists such as Alex Colville, Maureen Forrester and Karen Kain generally takes decades of practice to reach world-class status.

1.83  Third, professional artists are highly educated. They are an important part of Canada's stock of highly qualified personpower and contribute to the evolution of a Canadian cultural heritage to be shared by generations to come.  Highly qualified personnel combined with employment intensity suggests that support to the fine arts can be a cost-effective employment strategy complementary to a high technology industrial strategy which, by its very nature, leads to declining employment in traditional sectors of the economy.

Taxation

1.84   Economic principles of taxation require that taxes should be collected in a manner such that those in "like" circumstances bear "like" burdens (horizontal equity), and that those in "unlike" circumstances bear "unlike" burdens (vertical equity).  The relative burden of a given taxpayer should also reflect "ability-to-pay" and/or "benefits" received from the provision of public goods and services.

1.85  In practice, taxation often operates with little reference to these theoretical principles. Commentators have suggested that taxation of individual artists is a case where there exists a serious conflict between theory and practice (Touche Ross & Co., 1978, 1984).  This conflict has recently attracted a great deal of attention in Parliament (House of Commons, 1983).  Three interrelated issues of equity are involved including the right to average income, deduct expenses incurred in the practice of an artistic profession and access to social insurance benefits.

1.86   It is in the nature of arts that a long period of work is often required before significant income can be realized. For example, in any given season an actor may be able to obtain only a small number of supporting or character roles. In the following season chance and/or talent may provide a succession of leading roles and consequently, significantly higher income.  Other occupations which experience significant "seasonality" in employment, specifically farmers and fishermen, are permitted to "block average" their income over a five-year period and to use a modified form of accrual or cash accounting.  This special averaging provision is intended to take account of the risk of significant fluctuations in annual income.  While artists are exposed to significant seasonality and fluctuations in income, they are only permitted to use the general "forward" averaging provisions available to the average taxpayer.

1.87  Under current tax practices and procedures artists are classed as either employees who work under a contract of service, or as self-employed professionals who work under a contract for services. Classification materially affects individual artists.'  If classed as an employee, the artist is strictly limited in his or her right to deduct expenses incurred in the practice of an arts profession, e.g., make-up, costumes, instruments, etc.  However, he or she is eligible for coverage under the Unemployment Insurance Act.  If, on the other hand, the artist is classed as a self-employed professional then he or she can deduct all expenses incurred in the practice of an arts profession. As a self-employed professional an artist is not eligible for coverage under the Unemployment Insurance Act.

1.88  The nature and range of working relationships in the fine arts is such that the tax status of an individual artist can be very difficult to determine.  For example an artist's status may be perfectly clear under a given contract.  At the same time he or she may have several other engagements in process but under different arrangements.  Accordingly for many artists uncertainty exists as to how tax officials will treat deductions and eligibility for unemployment insurance coverage. Most artists have neither the time nor resources required for a formal appeal against a decision made by tax officials. Further, no matter the result of such an appeal it would not be regarded as a binding precedent unless the terms of the contracts were identical. The inevitable result is uncertainty.

1.89  Thus high levels of uncertainty result from the administrative policies of National Revenue which insists on a consistent distinction between employee and self-employed status. In other countries including Denmark, Finland, Sweden and the United States such a distinction is not enforced.  Artists, whether employees or not, are permitted to deduct all expenses incurred in the practice of their profession.  In France artists are defined as "wage-earners working intermittently for multiple employers" (Touche Ross do Co., 1978).  They are permitted to deduct a fixed 25% of their income.  Of the seven countries studied it is only in Australia, Canada and the United Kingdom that the tax status uncertainty is a significant problem for the artist.

1.90  Eligibility for social security, including unemployment insurance, is defined by reference to three pieces of legislation.  These are the Income Tax Act, the Unemployment Insurance Act and the Canada Pension Plan Act.  The Department of National Revenue has adopted the administrative practice of determining an individual's status so that it is consistent under all three pieces of legislation.

1.91 While these administrative policies simplify matters for Revenue Canada it does not insure that artists are treated equitably. Individuals performing like artistic functions are not treated in a like manner.  Those who are classed as self-employed are permitted to deduct expenses. They cannot, however, claim Unemployment Insurance benefits.  Those classed as employees can claim Unemployment Insurance benefits but cannot deduct expenses from taxable income.

1.92  In Belgium, Denmark, Finland, France and Sweden artists are entitled to unemployment benefits and other social security privileges without regard to employment status.  In the United States, where coverage for unemployment benefits varies from state to state, artists are generally entitled to social benefits without regard to employment status. Of the seven countries studied it is only in Australia, Canada and the United Kingdom that eligibility for social security privileges represents a serious problem for the artist.

Capital

1.100  Successful professional activity in a given city tends to be translated into national culture, i.e., the city is the testing ground from which national artistic goods and services emerge.  In turn, national culture tends to set the standards of excellence against which regional. culture is judged.  Thus an intimate linkage exists between regional and national culture which, in turn, connects with multinational culture.  The arts therefore transcend regional and political boundaries of cities, provinces and nations.

1.101 National and multinational cultures tend to be exclusively professional in nature.  Generally, national culture is the concern of national, and to a lesser extent, multinational audiences and production companies.  By definition, national culture tends to reflect the distinctive themes, motifs and concerns of a given nation.  Multinational culture tends to reflect the themes and concerns of those who share a common language. Thus one can identify distinctive English, French, Chinese, German, Portuguese and Spanish multinational cultures.  It is around language that multiculturalism, particularly among urban immigrant communities, has its source.  Ethnic or linguistic communities can be both importers of the cultural products from a mother country and exporters of cultural products crafted in their new homeland.

1.102  As with most cultural definitions, however, these linguistic distinctions and boundaries are tendencies rather than absolute differences or barriers.  A given national or multinational culture can, through widespread acceptance or translation, influence other national and multinational cultures.  The immense international influence of the United States in the post-war years on non-English-speaking countries and cultures is a notable example of the ability of a nation to project its image and exercise a dominating and long-term influence on other national and multinational cultures (3).  The success of British popular music such as that of the "Beatles" and British films such as "Chariots of Fire" also reflects the ability of one nation to exercise significant influence on other cultures.

Repertoire

1.103  It is the "creative" artist who is the wellspring of artistic growth and development (Bruce, et al, 1974).  There have been many Hamlets but there has been only one Shakespeare.  The composer, playwright, author and choreographer, particularly in the pre-media age, was able to transcend his or her age because the primary material - the written word or musical symbol - continued as a living record to future generations.

1.104  The contemporary creative artist is engaged in a permanent struggle with his predecessors.  The work of long dead colleagues has the advantage of being known and having been shifted by ongoing comment and criticism.  Historical works, therefore, have a greater chance of performance because of fame and acclaim.  The same advantage is held by foreign works that have already received production abroad.  Furthermore the costs and risks of producing new works is significantly greater than those associated with a proven work.

1.105  The accumulated scripts, scores and images of the past are all part of the repertoire of the contemporary arts.  It is within the context of past achievement that the contemporary creative artist struggles.  While some creative artists are immediately recognized by their contemporaries, e.g., T.S. Eliot, Wordsworth, Handel and Bach, others are not so fortunate.  If the creative artist is truly experimental and creative then his or her work may never jump the hurdle of existing taste patterns.  The contemporary artist may, however, eventually contribute to a cultural transfer to subsequent generations despite current taste. The inability of Van Gogh to sell his work during his life highlights the potentially ephemeral nature of current taste. But to the living artist there is no assurance that the future will be kinder than the present, and as the aphorism goes "in the long run we are all dead".

1.106  There is accordingly an existing stock or repertoire of works bequeathed to the present by the past as well as a flow of new works created in the present, some of which will flow into the future having passed the test of time.  There is no estimate currently available concerning either the stock or the flow of art works including novels and poetry, paintings and sculptures, plays, musical scores or choreographic works.

1.107  While there are no direct measures of the value of the existing fine arts repertoire, there are indirect measures of appreciation in value of the visual arts.  It is possible, for example, to compare the appreciation in the market value of "collectible" works in the visual arts with the return on corporate stocks. T he rate of return on works of art including modern paintings and prints, Old Masters, Impressionist paintings, books and manuscripts, glass and ceramics and other collectibles, exceeded the rate of return on industrial share stocks seven times out of ten between 1960 and 1979 (Butler, 1979).

Copyright

1.108  In the time of Shakespeare, the Bard could not stop publication of his work by those who paid nothing for the product of his genius.  Thus while art works are highly valued by society, they can be easily copied by others and often cannot be marketed in the conventional sense of the word.  Ideas and images in art are by nature free as the air.  To be marketed many works of art must be transformed through public mechanisms before value-in-exchange (Garnham, 1977) can be created, and thereby free-riders excluded. In modern society, creative effort is transformed and more or less protected from piracy through intellectual property legislation.  In the natural sciences and engineering, legislation creates patents and registered industrial designs.  In the arts, social sciences and humanities, legislation creates copyright and trade marks.

1.109  Intellectual property legislation is justified as a protection of and incentive to human creativity.  In return for this protection, society expects creators will make their work available to society as a whole, and that a market will be created in which such work can be bought and sold. But while society wishes to encourage creativity, it does not wish to foster harmful market power.  Accordingly, society builds in limitations to rights granted to the creator.  Such limitations embrace both time and space.  Rights are granted for a fixed period of time, and protect only the fixation of human creativity in material form.

1.110  Copyright and related neighbouring rights such as "moral rights", "rights of following sale" and "performance rights" are the unifying economic principles which tie together the component arts industries. Each is based upon the buying, selling and production of copyrighted works. Each is related to its fellows by the sale, licence or other exercise of copyright. An extreme example, more common in the United States than in Canada, will serve to illustrate the point. Consider a literary work (publishing) which becomes a play (performing arts) through the exercise, licence or sale of the author's right to adaptation. In turn, the play becomes a film (motion pictures) which, in turn, is spun-off into posters (visual arts), toys (crafts) and a sound track (recordings). Both the film and sound track are broadcast on radio and television (broadcasting). Eventually a book (publishing) is made concerning the making of the movie (motion pictures) and a sequel of the movie is then produced.

1.111 Even museums and archives have a relationship to copyright in that most artifacts and documents, contained therein, are within the public domain, i.e., copyright has lapsed through time.  The copyright crossovers, in conjunction with the transferability of many skills and equipment between component arts industries, are so great that one can speak meaningfully of the arts industry as a distinct and recognizable industrial entity.

1.112  Extension and development of copyright and neighbouring rights is a dynamic process which accelerates with the development and introduction of new technologies which provide new ways to fix the product of human creativity in material form and which in turn create new ways to pirate such products.  The process is also accelerated by the conceptualization and introduction of new forms of rights which can evolve inside and outside the constraints of international covenants and conventions, e.g., the Berne Convention and the Universal Copyright Convention).  New, or reemerging rights, currently being discussed or applied in various parts of the world include public lending rights (publishing), performance rights (motion pictures, performing arts and recordings) and droit de suite and droit moral (visual arts). It is within this dynamic process that the evolution of the arts industry takes place.

1.113  Protection of works of art outside international copyright conventions is a means of avoiding "national treatment" of foreign artists, i.e., treating foreign artists the same as domestic artists and thereby providing special protection to Canadian artists.  California has passed several pieces of legislation designed to protect and encourage California artists (Kibbe, 1980).  They have been declared "constitutional" even though they do not apply to artists in other states. Legislation includes: the Transient Occupancy Tax  (1961) which supports artistic activity at the community level by taxing hotel rooms; the Fine Print Law (1971) which establishes rules and regulations for the sale of prints; the Artistic Resale Royalty Act whereby a California artist receives a 5% royalty on the resale of his or her work, provided the resale price is at least $1,000; the Artist-Dealer Relations Law (1976) which defines the consignment relationship between artists and art dealers; amendments to the Health & Safety Code (1979) which authorizes local governments to adopt alternative standards for the conversion of commercial and industrial buildings into joint living and working quarters for artists; the Artist's Income Tax Deduction Law (1980) which allows artists a fair market deduction for art work donated to galleries, museums or charities; and the Art Preservation Act (1980) which protects an artist's claim to authorship and prevents damage to his or her art work after it has been sold.

New Technologies

1.114  The dynamic relationship between the arts and technology stretches back to the beginning of human society.  In the Middle Ages the greatest engineering feat of the age, the Gothic cathedral, was built by artists and craftsmen who had no formal scientific, engineering or technological training.  During the Renaissance many of the most outstanding artists, e.g., Da Vinci and Michelangelo, were at one and the same time outstanding scientists. The artist used existing technologies to create art, but also used art to create new technologies.

1.115 According to Harold Innis (Innis, 1950 & 1951) there is a relationship between culture and communications media.  A culture is limited in space but extensive in time to the extent its dominant communications medium is durable, e.g., stone, clay or parchment. Alternatively, a culture is extensive in space but limited in time to the extent its dominant communications medium is non-durable, e.g., papyrus and paper.  Using this hypothesis Innis tried to explain the rise and fall of empires through history.

1.116  Today a series of new communications technologies have emerged which are radically transforming the nature of the economic process.  These new technologies combine and integrate two earlier communications media - telecommunications and the computer. Integration has resulted from two parallel and related developments (Fox, 1983).

1.117  First, telecommunications and computer systems have begun to speak the same digital or binary language.  This development means that any and every form of information - words, numbers and pictures - can be encoded in the same language and transmitted over long distances with no loss of fidelity, then altered, manipulated and processed, and then translated back into words, numbers and/or pictures. The second development leading to the new information technology has been the development of the integrated circuit or the microchip. The microchip has permitted the distribution of information processing capacity to small scale, portable information systems.

1.118  The new communications or information technologies exhibit both Innisian characteristics.  First, the new information hardware including direct broadcast satellites, fiber optics, magnetic recording technologies etc., are based upon silicon and iron oxide, i.e., stone, which will endure for more than a century.  Second, the messages conveyed through the new technologies, e.g. broadcast signals, are as ephemeral as a ray of sunshine, but can cover the globe in an instant. This combination of Innisian characteristics suggests the emergence of a new culture unlike any in human history.  Like previous communications revolutions, emergence of these new media of communications is accompanied by the breakdown of old ways of communicating, and by a heightened sense of societal "dis-ease".

1.119  The new information technology has profound implications for employment and productivity in economic production and profound cultural implications for consumption.  In production observers have noted that the new information technology is a key or "heartland" technology, i.e., those which can give leverage over the whole (economic) system and raise its level of performance. Steam power and electric power were such key technologies in their time. Today electronic information technology represents this "heartland" technology ... (and is) now the critical technology for advanced industrial countries (Freeman, 1978).

1.120  The new information technology has generated what is called the information economy (Porat, 1977) including all working activity involving the collection, processing and application of information.  It is estimated that in 1981, 50% of GNP was contributed by the information economy (Valaskakis, 1981).  While most analysis has focused on the implications for economic production, there are equally profound implications for consumption, particularly of artistic goods and services - the largest single component of final consumption of information.

1.121  In consumption the new information technologies increasingly pervade every aspect of contemporary life.  The Home Entertainment Centre (HEC) is emerging as the most important single mode of cultural consumption through the integration of television including cable, pay-TV and direct broadcast satellite with audio and visual recorders. It can or shortly will provide access to a range and diversity of programming unheard five or ten years ago.  The spatial extension of programming from the national to the world level through direct broadcast satellites portends the emergence of a truly world culture. Cultural consumers, widely distant in space, will soon be able to consume the same mix of cultural programming, if they so desire and if their governments do not jam access.

1.122  The HEC also offers the potential to "time shift" programming to the convenience of the consumer, and thereby changes the traditional dominance of producers in timing cultural consumption.  In fact the new information technology even affects the traveling behaviour of citizens through the "car stereo" and the "walkman" portable cassette recorder which shields an increasing number of citizens from the noise and congestion of what has become a "construction site" society.

1.123  Within the fine arts, however, there is a reluctance to adopt new technologies which can be expressed as a "classical/revisionist controversy".  The "classical" school places primary emphasis upon the "live" nature of the fine arts. It considers other media as entertainment, not art. To proponents of the classical school the distinction between "live" and "canned" is fundamental.  They believe that the interactive relationship or gestalt between artist and audience is a characteristic feature of the fine arts which media extension simply cannot realize. While there is little question that the advent of mass media has had a cataclysmic effect on the performing arts (Baumol, Oates, 1976), classical school proponents believe that this impact results mainly from rising real wages due to competition with new media, and a decline in both the quantity and quality of "live" theatre.

1.124  While not "Luddite", the classical school is suspicious of the new technologies because they tend to dilute what is considered true art and detract from excellence.  From a policy perspective, the classical school would prefer independent funding and development of the classic arts with limited consideration or interaction with the new technologies.

1.125  The opposing school of thought can be called "revisionist". Essentially the revisionists argue that the fine arts must adjust, adapt and evolve with the new technologies if they are to survive as living art forms. Gordon Tullock in his longrunning debate with William Baumol argues

Both of us would agree that a new technology is in the process of replacing an old one. The new technology is not only cheaper, it has technical superiorities; but does not involve "live" performances.  I would simply say that, although the advent of television and motion pictures has had a "cataclysmic" effect on live performances, it has massively expanded the amount of "theatre" consumed by the average citizen (Tullock, 1976).

1.126  From the revisionist perspective, new technologies which foster and promote media extension of the fine arts are a natural and desirable development. While overt disruption of the live performing arts should be avoided, the new technologies must be embraced if there is to be a future for the performing arts.

1.127  Increasingly, however, a synthesis is emerging which recognizes that the new technologies can be used to educate and stimulate the general public to consume the "live" arts.  This media extension of the fine arts occurs in all art forms.  In a sense media extension represents the new form of touring of the fine arts.  Thus a single broadcast of an opera reaches more viewers than the live audience which has ever seen it on stage. This stimulus to consumption of the live arts has been evident for many years in classical music where increasing record sales have been matched by increased attendance at live concerts.  Furthermore experimental film and video as well as integrated media art, i.e., attempts to apply and combine various new technologies in creative and artistic ways, have led to recognition that the new communication technologies can, like the printing press and the motion picture before them, contribute to the development of new art forms with a new "aesthetic" of their own (4).

1.128  The new communications technologies have four interactive implications with the fine arts.  First, in the midst of the communications revolution resulting from the new technologies the fine arts serve to maintain the linkage with our collective cultural heritage and thereby provide some sense of continuity in a period of turbulent transformation. Second, the fine arts provide a cost effective testing ground for artistic products and services before they are commercially exploited through the new communications technologies.  Thus the cost of staging a live play is an order of magnitude less than the costs associated with exploiting untried artistic products through the new communications technologies.

1.129  Third, the fine arts provide artists and the general public, with the opportunity for creative and emotionally satisfying applications of the new technologies which otherwise will be dominated by the linear, commercial rationality of business and government, i.e., the fine arts can put a human face on the new technologies. Finally, as in the Renaissance, the artist will use the new technologies to create new forms of art. In the process, however, the artist will, through these emerging art forms create and develop a new generation of technologies in serendipitous response to the artistic motive, not in causal response to the pursuit of productivity and profits.

1.130  In media extension of the fine arts and in production of the fine media arts a major constraint is the cost of the sophisticated new communications technologies.  Improvements in microchip technology promise to significantly reduce the cost of access in the future.  At present, however, there remains significant barriers to entry. Increasing pressure on public and private sector donors for the media extension of traditional fine arts and the production of innovative media arts can be expected.