Arts, Culture and the Economics of Cannibalism

I was going to write a blog in response to the funding allocation made to the Arts, Culture and Heritage sector in the recent budget, until I remembered that the allocation is actually irrelevant. Even if we got to the almost mythical level of 0.6% of GDP (difficult given the near fictional nature of our GDP) we still wouldn't create the kind of sector we all dream about, we still wouldn't create meaningful careers or alleviate the systemic poverty and its associated illnesses.

Here's a fact that nobody's acknowledging: the vast majority of Artists across Europe (and the world) are poor - regardless of the levels of state subsidy. Its possible - as leading Cultural Economist Hans Ebbing points out - that subsidy itself is responsible for the poverty.

As we all know - and as Ebbing points out in his book Why are Artists Poor - the Culture sector survives on a massive hidden subsidy - primarily from artists who continue to produce work for next to no personal financial reward, and frequently use their own meagre resources for material and production costs. Some lucky few are supported by the subsidy from their family or long-term partners. This massive hidden subsidy is seldom acknowledged and never addressed.

There's also a bizarre internal subsidy that amounts to a kind of cannibalism. How absurd is it for subsidised arts organisations and local authorities to charge - albeit at competitive market rates - rent for studio, office, rehearsal and performance space from individuals who seldom earn in excess of €10,000 per year? How absurd is it for a unsubsidised theatre (and I used to run one) to charge rent to unsubsidised individuals and companies when the actual (as opposed to the dreamed for) potential box office is barely equal to that rent? Sure, the theatre can't function without the rent but the artists and crew don't get paid and the company can't accumulate any wealth. How absurd is it for festivals to offer "commissions" that can never cover the costs of producing the work, or to offer fees to their highly subsidised headline acts but operate a pay to play policy for everybody else? Perhaps even more absurd is the proliferation of marketing and business courses for artists that charge money from people who really don't have it to spare? And how absurd - and perhaps immoral - is it for a major soap opera to charge aspiring writers for "training"? This is cannibalism - a sector desperately eating itself in an attempt to survive, and in doing so accentuating the poverty that bedevils it.

This systemic poverty, hidden subsidy and cannibalism are all part of what Ebbing calls the "Exceptional Economy" of the arts.

There is a point to this, as Ebbing says. The vast amount of struggling, poverty bound artists adds economic value and "glitter" to the handful of successful ones. They feed the myths of struggle, success, excellence, creating an assurance that only "the best" make it in from the outer darkness.

Ebbing also points out that the research clearly demonstrates that the apparent increases in available state funding has created a deceptive and disappointing career path, attracting more and more people into the arts (and in so doing diluting the value of the available subsidy) in the belief that they will be the next big grantee. Which of course is a nonsense.

The other dilemmas in the grant based, personally subsidised economy are that artists lose their sense of their economic value, and the state (or its agencies) become the arbiter of national cultural identity as they get to pick and choose who succeeds and who doesn't - who is excellent and who is not. (Personally I think that this centralisation of the means of production of cultural identity is a serious democratic and ethical concern).

I'm not suggesting that any of this is intentional, by the way, it's just institutional inertia - but it is wrong and damaging to the artist, to the community and to the society.

So how do we address it? Not by pouring more money into the centralised, hierarchical system of state subsidy (international evidence suggests that this doesn't work). But we can begin to address it through three very simple pieces of legislation:

1. Positive tax relief on donations skewed toward lower-income earners
2. Foreign artists withholding tax
3. A culture tax on tourist bed nights

The trick in this trilogy of actions is that the exchequer can use the income generated from the latter two to offset any losses incurred by the first.

The last two are a simple revenue generator for the exchequer, so I won't talk about them here (you can follow the links for more information on them). The real meat is in the first one.

First, if you use tax relief to stimulate investment in artists and organisations then you will - according to the multiplier principle - increase returns to the revenue! However, most politicians and bureaucrats in this country laugh openly at the multiplier effect - they quite simply don't believe it, so we'll ignore that aspect of it.

However, if you imagine a world where anybody with an idea and ambition - regardless of their social class - can raise the money from their family, friends, and local businesses to realise that project , and in doing so make money for those people, then we have a world where we acknowledge the "hidden subsidy" and reward that subsidy via tax breaks.

The moment we do this then we are creating incredibly valuable social capital and promoting awareness and interest in the arts (a key objective of the Arts Act). The people who take advantage of this tax incentive and invest in their local artists will talk about what they have done, will develop an interest in the work of the artist, will bring their friends, family and colleagues to experience the event they have supported. Perhaps more important than that we will witness an invaluable exchange of skills between artists and their backers, we will promote local employment, facilitate the flow of money through the economy, we address the poverty of artists, democratise the practice of patronage, stimulate production, raise quality and put the selection process of what culture should be supported into the hands of everybody.

Essentially, what this legislative trilogy does is use the tax system as a democratic arts and culture funding distribution system, ends the tyranny of artist poverty, ends the cannibalism in the system, builds social capital and decentralises the decision-making process that decides what is and is not our cultural identity.

What's not to like?

I would argue that if we must lobby then don't look for more centralised funding for culture (which will flow in response to the increases in production and quality anyway), lobby for these pieces of legislation, lobby for reform of the system, explain to politicians how the economy of culture actually works (because they genuinely don't understand it), and explain to them that we can all win without committing more funding. Change the rules of the game.

Politically speaking the only obstacle to this is fear. Fear of losing control over what art thrives and what art doesn't. Fear of what the cultural identity actually is.