NATIONAL SUPERSTRUCTURES

for Publicly Funding the Fine Arts

Harry Hillman Chartrand ^© 
Nordic Theatre Studies Vol. 14, 2001 (pending)

Preface

This paper began as a response to a request from the Editors of Nordic Theatre Studies to update my 1989 monograph: "The Arm's Length Principle & The Arts: An International Perspective - Past, Present & Future" (Chartrand, McCaughey 1989).  Given the dramatic changes of the decade past as well as the fruits of my own ongoing research a simple update led to an entirely new monograph: Publicly Funding the Fine Arts in a Global Knowledge-Based Economy.  The monograph is intended to provide the arts community with a 'strategic' overview of public funding in a rapidly changing world.

This paper is an excerpt from the monograph.  In addition to "National Superstructures for Publicly Funding the Fine Arts" (the subject of this article), the monograph provides consideration of:

• Art as Knowledge relative to Science;

• Alternative Legal Foundations including intellectual property rights such as copyright, Status of the Artist and Public Lending Rights that provide the publicly recognized trading floor on which works of fine art (art-for-art's sake - literary, media, performing, visual and/or heritage works) in different countries are bought and sold; and,

• Alternative National Facades: External Public Funding & International Cultural Relations

I hope to publish the complete monograph in the Fall 2001 issue of the Journal of Arts Management, Law & Society of which I am an executive editor.  A draft edition of the monograph will be posted later in the year on my Cultural Economics website at http://www.culturaleconomics.atfreeweb.com. 

I thank the Editors of Nordic Theatre Studies for providing the incentive to weave together many strands of my research conducted in the last ten years as well as the opportunity to document the dramatic changes that continue to affect the fine arts especially in North America and Europe.

Introduction

In 1986, while serving as Research Director for the Canada Council for the Arts, I prepared, together with my Research Officer Ms. Claire McCaughey, a research monograph entitled: The Arm's Length Principle & The Arts: An International Perspective - Past, Present & Future (Chartrand, McCaughey 1989).  In 1989, the American Council for the Arts published the monograph in a widely read compendium entitled: Who's to Pay? for the Arts: The International Search for Models of Support edited by M.C. Cummings Jr. & J. Mark Davidson Schuster (Cummings, Schuster 1989).

In the monograph I identified alternative modes of public support of the fine arts in North America and Europe - both western and eastern Europe.  I also identified trends current at that time that seemed, at least to me, to point to the future of public support.  In this article I first set forth public funding of the fine arts within the broader context of government fiscal policy.   I then consider the objectives of public support and summarize the four basic roles government may play.   Finally, I sum up trends identified in 1989 and then present a new set of trends for 2001.

The Fiscal Argument

Public funding is a political decision.  The overall strategy of a government involves reification (making concrete that which is abstract) of the 'platform' of the governing political party or coalition subject to political 'exigencies'.  In tactical terms, government confronts a constituency (geographic or non-geographic) that exercises sufficient political power to elicit an increase, decrease or constant payment of public monies, year over year, collected from a targeted set of, and/or, all taxpayers.  In logistical terms, the government chooses which institutional mechanism - ministry, agency, foundation or nonprofit/nonpolitical institution - to distribute public funds.  The annual budgetary cycle by which government sets its goals and decides:

• who or what will be taxed (and by how much); and,

• who or what will benefit (and by how much) from public revenues;
  constitutes what in macroeconomics is called 'fiscal policy'.

Business Economics

One exigency that influences fiscal policy is the economic size and importance of a given industrial sector.  If large amounts of national income and/or a large number of jobs are involved there is, all things being equal, a greater likelihood that government will choose to support that sector. In both respects, the fine arts are tiny.  Not many jobs, relatively speaking, are involved and little national income.

From a business economics perspective, the fine arts are one of the last sectors a government would want to 'invest' public money.  Confirmed in studies conducted around the world, the fine arts (both live and recorded) suffer an inherent cost disease. In the live arts it takes the same time to rehearse and perform a Mozart concerto today as in his time.  In other industries, new technology can substitute, complement or motivate workers increasing the productivity of labor and allowing wages (per worker) to rise without increasing the price of a good or service (Baumol, Bowen 1966).  In the live arts, substituting technology for artistic labor is usually not possible and usually not desirable.  Consider examples from classical music.  In the case of physical technology, a 17th century Stradivarius out performs any contemporary violin and Carnegie Hall is a better venue for Mozart - with respect to sight line and sound - than the Kennedy Center.  Similarly, conservatory training takes the same time today as during Mozart's life -allowing for the randomness of genius.

In effect, the live arts are a 'non-productive' industry in which an income gap opens up between what can be reasonably charged at the box office and the rising costs of production (Baumol, Baumol 1984).  One factor filling this gap has been artistic labor that traditionally has worked for less than other professions with similar years of 'tertiary' education and training. Low wages have been offset, somewhat, by what economists call 'psychic income', i.e. love of the job.

Non-artistic personnel, however, including administrators, backstage artisans, office workers, technicians and other support personnel must be paid competitive wages.  Eventually ticket prices increase unless the gap can otherwise be filled.  In the past, princes, popes and prelates filled the gap, so-called 'patrons of the arts' who today have become government and the philanthropic sector.

Put in the darkest terms, to fiscal conservatives the fine arts are a 'black hole' into which public monies endlessly flow simply to stabilize an inherently unproductive industry - unproductive in terms of traditional economic growth and development.  It needs to be pointed out, however, that public funding of research and development (R&D) in the science industries is accepted as an 'investment' by most governments even though there are no 'empirical' studies proving that publicly and privately funded R&D actually lead to economic growth.

There are, however, a number of indirect economic arguments justifying public funding of the fine arts.  In essence, these deal with:

1. the contribution of the fine arts to other sectors of the arts industry, e.g. the amateur, applied, entertainment or heritage arts; and, in turn,

2. the contribution of Art, as an entire and distinct industrial sector of a knowledge-based economy, to the competitiveness of nations (Chartrand 1984, 1989, 1992, 2000).

Political Economics

The 'political' constituency for the fine arts consists of the audience for and producers of the fine arts.  On the demand-side the audience tends, on average, to be 'elite' and 'effeminate', that is, it is highly educated, financially well off and slightly more female.  On the supply-side, producers tend, on average, to be 'elite', highly educated, financially not well off and slightly more male.

On the demand-side, a financially affluent, numerically small and predominantly female audience presents political problems for publicly funding the fine arts.  Is it welfare for the rich?  Is it politically productive to subsidize upper-class women rather than working class women, particularly in predominantly 'jock' or male sports-oriented cultures?

On the supply-side, the fact that the fine arts are led by an 'avant-garde' that is ruthlessly critical of the 'Powers-that-Be (Bell 1976) also presents political problems.  Since the middle of the 19th century and birth of the 'arts-for-art's sake' movement, social criticism has been an established part of the creative arts community (Henderson 1984).  Such 'opposition', including 'egalitarian realism' in the visual arts, is not viewed kindly by the typical government of the day (Chartrand 1991b).  Why should government fund its critics?

Welfare Economics

In welfare economics, the economic sub-discipline concerned with the balance between equity and efficiency, fine art can be considered a 'merit good'.  A merit good is a good or service whose consumption or production is encouraged based upon non-market value judgments.  It is the opposite of a demerit good or service, e.g. smoking or, at the extreme, criminal activity. As with 'public goods', of which merit goods are a subset, the private market cannot profitably provide the quantity or quality that a society considers adequate.

The definition of what constitutes a merit good, at any point in time, is dependent on social and historical circumstances and is often controversial.  Today, for example, education is often described as a merit good because it not only improves an individual's career prospects but also makes a person a better citizen.  Thus well-educated citizens are less likely to be involved in criminal activity.

To individual patrons and many within the corporate sector and government, the fine arts are considered a merit good . The merit audience is as old as the fine arts themselves.  The aristocratic or ecclesiastic patron of past centuries funded the fine arts.  Today, through grants and donations, public and private sector patrons support the fine arts to insure a larger supply is available and accessible to the general public than what the market is able to provide.  This tradition of "multiple funding sources", i.e., box office revenue combined with public and private donations also serves a guarantee of the independence of the fine arts.

Objectives

For whatever reasons - merit or utilitarian - government in publicly funding the fine arts, targets one or more of three objectives:

•  to promote the process of creativity and/or excellence (as defined by the arts community itself);

•  to foster production of works of a specific style, theme or purpose, e.g. socialist realism or 'commercial' success; or,

• to support specific producers, e.g., a budgetary 'line item' appropriation for 'flagship' arts institutions.

Alternative Superstructures

To achieve its objectives, government may erect one or more of four alternative national superstructures acting as:

• the Facilitator;

• the Patron;

• the Architect; and/or,

• the Engineer.

The Facilitator

The Facilitator State funds the fine arts through 'tax expenditures', i.e. taxes foregone or forgiven. Government can choose not to tax certain types of income and/or expenditures made by citizens because related activities are considered merit goods. A charitable donation made by an individual or an organization is an expenditure example.  In this case government mandates that a donation to a 'recognized' charity should, in whole or in part, be subtracted from income tax due to the government.  The exemption from income taxation of copyright income by resident artists in the Republic of Ireland (Eire) is an income example relevant to the arts.

The Facilitator supports diversity rather than specific types or styles of art. Specific standards are not supported because the Facilitator relies on the preferences and tastes of corporate, foundation and individual donors.  The policy dynamic of the Facilitator State is random in that public funding reflects the changing tastes of private donors.  In the Facilitator State the economic status of the artist and fine arts enterprise depends on a combination of box office appeal and the changing tastes and financial health of private patrons.

The strength of the Facilitator lies in the diversity of funding sources. Individuals, corporations and foundations choose which art, artists and arts organizations to support. The Facilitator also has weaknesses. First, standards of excellence are not supported, and the State has no ability to target activities of national importance. Second, the valuation of private donations in kind, for example, a painting donated to a museum or art gallery, can be problematic.  Third, the Facilitator cannot necessarily restrict benefits to the domestic arts community, e.g. reconstruction of the Versailles palace was funded in large part through tax-exempt contributions made by American taxpayers to the Versailles Foundation in New York City (Le Figaro 1980).  Fourth, it is very difficult to calculate the cost of tax credits and expenditures to government (Wilson 1987: 17).

In the United States, government plays the role of Facilitator, promoting the fine arts through tax expenditures channeled by donors.  The Facilitator role has its origins in three American traditions: the separation of church and state, the competitive market economy, and private philanthropy, which before and after imposition of income tax has represented the single most important source of support for the fine arts.

The Patron

The Patron State funds the fine arts through arm's length arts councils.  The government determines how much total support to provide, but not which organizations or artists should receive that support.  A council is usually composed of a board of trustees appointed by the government.  Having been appointed, however, trustees fulfill their grant-giving duties independent of the day-to-day interests of the party in power, much like the trustee of a blind trust.  Granting decisions are generally made on the advice of professional artists working through a system of peer evaluation.

The arts council supports creativity with the objective of promoting standards of professional artistic excellence.  The policy dynamic of the Patron State is evolutionary, responding to changing forms and styles of art as expressed by the artistic community.  The economic status of the artist and the artistic enterprise depends on a combination of box office appeal, the taste and preferences of private donors, and grants received from arm's length arts councils.

The very strength of the arm's length arts council is often perceived, however as its principle weakness.  Fostering artistic excellence is often seen as promoting elitism, with respect to both type of artwork produced and audience served.  Support of artistic excellence may result in art that is not accessible to, or appreciated by, the general public, or by its democratically elected representatives.  In most Patron States there are recurring controversies in which politicians, reflecting popular opinion, express anger and outrage at support for activities that are, for example, perceived as politically unacceptable, pornographic or appealing only to a wealthy minority.

With an arm's length council, however, politicians can claim neither credit for artistic success nor responsibility for failure.  Great Britain is the prime example of the Patron State. Government adopted the role of Patron during World War II by creating the Committee for Education, Music and Art for raising morale during the Blitz (Glascow 1975). After the war it created the Arts Council of Great Britain and its sister agencies in Scotland, Wales and Northern Ireland.  The role of Patron evolved out of traditional arts patronage by the English aristocracy.  The government continues the Patron role, even though various task forces and committees of Parliament have recommended incentives to enhance charitable giving (Education, Science and Art Committee 1982).

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