What do to with the NEA? Pull the plug?

Two opinion pieces were published this week giving different conservative takes on what to do with the NEA. I’ll talk about Mark Bauerlein’s New York Times Op-Ed in the next post; here I look at the Cato Institute’s Ryan Bourne’s briefing paper “End the National Endowment for the Arts”.

To begin I’ll skip all the way to his last paragraph, which begins:

There is no robust economic case for direct taxpayer funding of art.

And, as I wrote in chapter two of my book on arts funding (an ungated working paper version of the chapter is here), it’s hard to disagree. That doesn’t mean there is no case for public funding; it just means that economic analysis isn’t where you are going to find it.

In general, the mainstream economics approach – what you might call “neoliberal” – to questions of public subsidies for anything starts from the premise that markets on their own are mostly pretty good at directing our labor and investments and consumption to their most valued uses, but sometimes they are not, and so regulations and taxes to discourage those goods and services that are overproduced, and subsidies to encourage those goods and services that are unproduced, can be a useful, if still imperfect, nudge in the right direction. Claims have been made, by academics and by people working in the arts sector, that the arts are one of those places where markets on their own fail to do enough, and so subsidies are called for.

But here’s the hard part: economics as a method is one that takes consumer tastes as given: there is no judgement over whether people have good or bad taste, and as such there is no economic argument for saying that policies should try to change people’s tastes. Policy can inform people – “here are some things you might not have heard of” (it is not paternalistic government policy to put a sign on a hiking trail that says “watch out, there’s a really steep cliff right beside you”) – but there is no economic argument for telling people that they would live a better life if they listened to this music instead of that, or that they should listen to more music at all.

What does Bourne, who (like me) is an economist, say?

• “Great art doesn’t need subsidies”. The NEA doesn’t fund individual artists (except writers) anyway, and we have a rich enough economy that musicians, filmmakers, live theatre and visual arts can and do create great things without subsidy.
• “Art has never been more accessible”. True. Americans can access all manner of art at really low cost. The “barrier” to people reading good books or listening to recordings of great music or watching interesting films is not price or access, it is lack of interest. For live arts, if you live driving distance from a college campus you’ll find all sorts of offerings there with either free admission or just a few dollars for a ticket.
• “Art is not a public good”. Economists define a “public good” in a very particular way – it is both non-rival (an extra person using it doesn’t impose any costs on anyone) and non-exclusive (once provided, it is hard to keep anybody out, and, in turn, from collecting an entrance fee). The small park near my house where I walk my dog is a public good – there is always room for more people to walk their dogs, and it would be very impractical to set up fences and ticket booths around it. Markets won’t provide such goods, since there is no way to collect revenue, but they are collectively valued by the public at an amount more than it costs, so it makes sense for city governments to give people green spaces like this. But art is exclusive (and, for small venues, rival as well). Museums and performance spaces can and do collect entrance fees from visitors. There are a few exceptions, but we don’t need an NEA to fund the uplifting mural on the side of your local parking garage – your city council can handle it.
• “Art is not obviously a merit good”. Bourne is slightly conflating two ideas here – “merit goods” are ones where we doubt whether people make good choices regarding their consumption (“eat your Haydn, it’s good for you”), and “positive externalities”, which (as I elegantly illustrate in my drawing above), involve benefits from the consumption of any good that go beyond the individual consumer, to broader society (“you didn’t attend our performance of Haydn’s Nelson Mass, but you benefit from the fact that other people did”). Economists dismiss merit goods as paternalistic. They take externalities more seriously as a market failure, but … (1) the supposed externalities from the arts are pretty vague, and rely on quite a bit of hand-waving argument, and (2) because we don’t question tastes, it means that externalities only exist if people think they do. In other words, it would require people agreeing to the proposition “I am glad you went to the Haydn performance; I didn’t go, it’s not my jam, but I benefit from your having gone, to the point that I would welcome higher taxes on me to fund such performances.” But you can’t just assume people think that.
• “Art subsidies don’t produce huge economic multipliers.” No kidding. We all agree on this by now, right?
• “Arts subsidies crowd out private activity”. The idea here is that donors cut back on donations if they think the public sector is covering it. Research on this is mixed – as the NEA begins to restrict some grants on the basis of anti-DEI hysteria, it will be an interesting natural experiment to see the degree to which private charity steps up to fill gaps (of course there will be anecdotes of positive cases, but I wonder about the country as a whole).
• “Arts subsidies are industrial policy”. That’s an odd phrase to use, but he clarifies “A reliance on government grant panels can foster conformity and mediocrity. Arts organizations are incentivized to tailor their proposals to fit whatever is likeliest to win NEA approval, rather than pursuing original ideas or controversial performances.” I don’t doubt this is true, though I’d say it applies to grant applications for large charitable foundation funding as well.
• “Art subsidies politicize art.” In the same vein – presidential administrations will not be able to resist directing funding away from programs they don’t like in favour of ones they do (I’ll be returning to this when I take on Bauerlein’s op-ed). Trump has not chosen to end the NEA (I thought he would, tbh), but instead wants it to fund patriotic (in his definition of the term) art. I am old-school enough to think that a public arts council should focus on the excellence of the art itself instead of favoring political priorities of the left or right, but Bourne is not wrong that a public arts council can be at the mercy of an interventionist executive.
• “It’s immoral to force individuals to fund art.” Bourne is vague here, going to back to the cultural wars issues the NEA faced back in days of yore. But then he concludes more simply: “Any government selection of art is likely to please some and anger others. The simplest resolution is for the government to exit the role of arts patron, leaving funding decisions to the pluralism of the private sphere, where no single viewpoint has coercive power over others’ money.” If I could tighten his argument from an economic perspective: it is always more difficult to fund public goods or subsidize positive externalities where people’s preferences over these goods varies widely than when people are more or less agreed. We don’t have vigorous debates at our city council meetings over whether the city should provide sidewalks, because there is general agreement, even in a town full of academics who never agree on anything, that sidewalks are a good thing. When preferences vary, you get a greater number of people saying “I don’t want my taxes paying for this.” Now, you can’t win them all – there are all sorts of things our governments spend money on that I wish they wouldn’t, but we recognize in a democratic republic that this is going to be a fact of life. But with arts grants, the disagreements are going to be a lot bigger than they are for sidewalks.
• “NEA funding is not an effective redistributive tool.” I agree, and said so here, whilst at the same time saying that this did not matter very much – the goal of arts funding should not be to try to alleviate the problems faced by the poor, we have much better policy instruments for that.

And so he concludes. As I say at the start: one can haggle over some of the details of the piece, but for the most part he isn’t wrong – the economic case for public funding of the arts is weak. The strongest case for public funding involves trying to go against the grain of the immediately popular and entertaining, which is available in more abundance than could possibly have been imagined in 1965 when the NEA came into being. But if our working model is de gustibus non est disputandum, there is not much can be done.

Cross-posted from https://michaelrushton.substack.com/