In the US, in 1900, over 40 percent of the workforce was devoted to agriculture. Agriculture’s share of GDP was 7.7 percent in 1930, 6.8 percent in 1945, 2.3 percent in 1970, and is less than 1 percent today, according to this study from the USDA.
According to this study from Peterson-KFF, health care in the US, as a percentage of GDP, has risen from around 7 percent in 1970, to 13.3 percent in 2000, to 18.3 percent in 2021.
These numbers are certainly interesting in gaining an understanding of economic trends. Baumol and Bowen’s theory of cost disease carries at least some of the explanation – agriculture is amenable to labor-saving technological change in ways that much of health care (and the arts) are not.
But can we judge the success or failure of these sectors by their share of GDP? Would we say that over the past five decades American agriculture has fared poorly whilst the health care sector is an unparalleled success?
This week new stats were released on the creative sector’s share of US GDP for 2021 – you can listen to or read an interview with our friend Sunil Iyengar from the National Endowment for the Arts, about the newly-released stats, here.
The numbers are worth looking at, in terms of short run patterns of adjustment during Covid, and in trying to gain an understanding of long run trends in income and in employment. All cultural sector researchers should be grateful for this partnership between the NEA and the Bureau of Economic Analysis.
But care must be taken in the interpretation of the numbers. What constitutes “good news” and “bad news” in aggregate cultural sector statistics misses changes that we would expect to occur in any case owing to technological change, and misses the larger point, understood since Adam Smith, that the point of production in any sector is the benefits we gain from consumption, and not the generation of employment. That we have an abundance of food produced by a very small number of people is not a bad thing…
You are right. Thank you for this reminder. I’m sure you could say a lot more about all those frequent studies on the “economic importance” or the “economic size” or the “economic contribution” or the “economic significance” of the arts, with their figures on the share in GDP, the turnover, the level of employment, and so on. These studies are supposed to impress and often aim to motivate public support or more public support –– but economists are not fooled. 🙂 I would love to read a series of several posts from you on this subject!
Thanks for reading! For starters…:
https://www.artsjournal.com/worth/2020/11/economic-impact-a-quick-and-dirty-critique/
As always, Michael, I also appreciate you posing the question. It’s very important, especially in juxtaposition with politicians, i. e. Rick Scott who de-funded Florida’s state arts agency to less than $1 million and constantly denounces the importance of arts and culture, even though we know they are 4.4% of the GPD.
I also chafe at justifying the arts via economic indicators, but in a capitalist society it’s the lingua Franca and the coin of the realm. And the GDP is an easier number to obtain than the benefits of consumption of art—how do you quantify that? We try, by pointing to improved test scores for children who are involved in the arts, but it’s hard to disentangle all the other factors that may account for that improvement.
I remember hearing Aaron Dworkin cite the fact that the city of Berlin spends more per capita on the arts than the entire U.S. That was back in 2017, so I’m sure the gap is greater now.
We lose the battle to win support for the arts when we fight with economic data. People value something when it means something to them. It just seems that the arts, even though we are surrounded by it, don’t mean that much to a lot of Americans. Some of that is culture, but at least some of it is due to artisan class not providing something consumers with what they want—stories, pictures, etc. of-by-for the communities in which they live. We artists need to balance our drive for self=expression with the expression of other selves. And involvement in the arts should allow for any and all—not just the gifted and talented. When we separate out the “good” artists from the average, and the professional from the amateur, we are saying THIS art/artist is better than you. That might work in competitive sports, but art is a game in which everyone can win. We just don’t play it like that in the U.S..
Comparing the U. S. funding scheme to other countries’ seems like comparing apples to pears because folx typically compare direct government support completely ignoring the indirect support nonprofit cultural organizations benefit from because they don’t have to pay taxes, unless it’s on UBTI. I wonder, in dollar amount, what is the value of not paying taxes? And with a more holistic view of direct and indirect government support could we then have the ability to conduct apples to apples comparisons.
Lastly, identity based human suffering subverts true capitalism and free market thinking in the U. S. People with disabilities, people of the global majority, LGBTQIA+ folx, nonbinary folx, women, and even poor people all have buying power. Yet, in the U. S. we pay a heavy toll for discriminating against them. And for what?