[Createquity Reruns] The Top 10 Arts Policy Stories of 2013

(This is it, folks – the final Createquity Rerun of the summer! A walk through short-term memory lane reveals a prolonged transition for the NEA, why we should care about the Edward Snowden revelations, and more drama in Detroit.

Hope you enjoyed this roundup of some of our favorite posts from years past. If your thirst for Createquity content still isn’t sated, and why would it be, I recommend checking out any or all of the following: On the culture clash between business school and me, Got Milk?, Is Disney World Art?, Deconstructing Richard Florida, Avoiding Success Disease: Building Trust in the Grantmaking Process, the “value and the sectors” series, Five Generosity Experiments, [deep breath] Get a (folk)life: How folklore research helped an arts agency, Emerging Ideas: Classical Music’s New Entrepreneurs, From Palate to Palette: Can Food be Art?, Artists and Gentrification: Sticky Myths, Slippery Realities, Free to a Good Home? Or For Sale to the Highest Bidder?, Arts Policy Library: How Art Works, What We Talk About When We Talk About Race, and the very first Around the Horn. Whew!

And with that, we’re going to take a little break. Back soon with an update on the relaunch date, which is just around the corner. Can’t wait to share with you all what we’ve been working on! -IDM)

The Thinker at the Detroit Institute of Arts - photo by Quick fix

The Thinker at the Detroit Institute of Arts – photo by Quick fix

Each year, Createquity offers a list of the top ten arts policy stories of the past twelve months. You can read the previous editions here: 2012, 2011, 2010, and 2009. The list, like the blog, is focused on the United States, but is not oblivious to news from other parts of the world. I am grateful to Createquity editorial consultant Daniel Reid for contributing the entry on the arts and the GDP.

This year provided us with a mix of hope and stress. While boasting its share of concrete triumphs and failures, such as the launch of several field-building initiatives and the very high-profile flaming out of the venerable New York City Opera, 2013 was most notable for providing us with markers along the path of longer-term trends. With the struggles of the Great Recession largely behind us, arts stakeholders increasingly turned their attention to non-financial matters, planning for the future and seeking to invest wisely. Yet the specter of fear and dysfunction in Washington, DC hung over the arts field to a degree not seen since at least the Bush years, sapping enthusiasm from even the most passionate of government idealists.

10. Changing of the guard at ArtPlace

As noted in last year’s top stories roundup, creative placemaking was cruising for a bruising in 2012. While a number of factors contributed to the backlash against the signature arts policy push of Rocco Landesman’s tenure as NEA Chairman, by many accounts, the brusque style of ArtPlace’s founding director Carol Coletta didn’t help. Under her leadership, ArtPlace – a private-sector collaboration between 13 of the nation’s largest arts funders initiated by Landesman and the Ford Foundation’s Darren Walker – came under fire for failing to disclose its funders’ geographic restrictions, missing opportunities to thoughtfully measure creative placemaking’s impact, being cavalier about gentrification and other social justice considerations, and supporting a project that alienated the people it was trying to help. In the midst of all this, Coletta decamped for a VP position at the Knight Foundation in March. Her eventual replacement announced in December, following an interim stint by former William Penn Foundation president Jeremy Nowak, was the NEA’s Chief of Staff Jamie Bennett, who had ingratiated himself with arts stakeholders across the country in his now-former position and earned widespread admiration in the process. Change is in the air at ArtPlace (the organization is moving with Bennett to New York, for one), and many eyes are watching the fledgling creative placemaking standard-bearer as we head into 2014.

9. City Opera bids farewell

Amidst near-death experiences far and wide, New York City Opera is the biggest and most famous U.S. arts institution yet to actually fail as a result of the Great Recession. The once-mighty company, which had visions of a $60 million annual budget as recently as 2008, had drastically scaled down its ambitions following a disastrous season during which it presented no full productions, lost its (brand new) general director, and managed to draw down or lose the majority of its endowment. By the time George Steel took over in 2009, most of the damage had been done, and City Opera could no longer afford its just-renovated home at Lincoln Center. A last-ditch effort to raise $7 million (including a first-of-its-kind-at-this-scale “save the opera” $1 million Kickstarter campaign) fell short, and the organization announced it was beginning bankruptcy proceedings in October.

8. Arts’ impact on GDP gets counted

Advocates at Americans for the Arts, the NEA, and elsewhere have spent years touting the arts’ economic impact, on the theory that legislators and executives will find this argument singularly compelling and respond by taking their fingers off the “defund” button. This year, their case got official recognition from the Bureau of Economic Analysis (BEA), which calculates GDP. First, in July, the BEA revised its methodology for calculating GDP to include the money businesses spend to develop intellectual property, including artistic work like music and film; this added 3% to our nation’s economy overnight and underlined the economic importance of investment in creative work. Then, in December, the BEA and the NEA jointly released the first-ever official tally of the value the arts add to the U.S. economy, which they will continue to track annually (note that this does not yet take into account the methodological changes announced in July). The total – $500 billion a year, more than the entire tourism sector – impressed some mainstream news outlets and was promptly put through the spin cycle by a few creative-industry advocates, especially in Hollywood. But the bigger surprise was how little excitement the story seemed to generate in arts circles – perhaps because of the report’s bad news about the arts’ post-recession recovery, the fact that commercial fields accounted for the bulk of the value, or the omission of ancillary spending (such as on dinner before the theater) that often figures prominently in more localized economic impact studies.

7. The arts (start to) get serious about diversity

Yeah, yeah, I know. Talk is cheap, and our field has been dithering about multiculturalism, demographic change, and the need to diversify boards, staffs, and audiences for decades. Looking beneath the surface of the blogosphere debates, however, one does get the sense that momentum for action is growing. 2013 was the year of the inaugural SphinxCon, a convening on (racial) diversity in the performing arts spearheaded by a man who was almost the next Chairman of the NEA (more on that below), and the leaders of numerous relevant service organizations showed up to put their views on the record. One of those service organizations, Theatre Communications Group, is now a year into an extensive and very public “diversity and inclusion” initiative and the conversation is bubbling up at other service organizations as well now that financial survival is no longer everyone’s first priority. Meanwhile, Grantmakers in the Arts had its entire board undergo training by the People’s Institute of Survival and Beyond, a leading purveyor of anti-racist thought. These are small steps in the grand scheme of things, and diversity is not the same as justice, but one can’t help but be encouraged watching the organizations charged with leading the field begin to walk and not just talk.

6. The arts research field makes halting progress toward field-building

Last year, I got so frustrated with the state of arts research that I blathered on for more than an hour to the University of Chicago Cultural Policy Center about all of its problems and how to fix them. Fortunately, it turns out that I’m not alone in seeing the need and opportunity for reform of our field’s research infrastructure. The first and easiest step toward a better future was always going to be a way for people working in this area to communicate more effectively with each other, and May’s launch of the Cultural Research Network goes a long way toward checking that box. This was also the year that the arts began to flirt in a big way with Big Data. We saw the launch of two immense arts data aggregation initiatives, Philadelphia’s CultureBlocks (building off of the work of Social Impact of the Arts Project researchers Mark Stern and Susan Seifert) and Southern Methodist University’s National Center for Arts Research (aggregating data from the Cultural Data Project, TRG Arts, and elsewhere). A third project, the Harvard-led Initiative for Sustainable Arts in America, is set to launch in Detroit and the Bay Area in 2014. Meanwhile, the aforementioned Cultural Data Project is taking a look in the mirror with a gigantic, year-long strategic planning process that looks like it will result in major changes for the organization and the field. We’ve got a long, long way to go, but the progress we saw in 2013 toward a smarter, more tech-savvy, and more collaborative knowledge management infrastructure in the arts is highly encouraging.

5. The NEA remains Chairless

When Rocco Landesman left his post as chairman of the National Endowment for the Arts in December 2012, there was no reason to think that the leadership transition would be anything but smooth. Senior deputy Joan Shigekawa, who had long been rumored to be the one running the agency behind the scenes anyway, became the acting head, and a search for a new director began immediately. Yet as the year dragged on, the process became murkier, and at this point no one seems to be sure when the Obama administration (which is in charge of the search) might get around to formally nominating a new leader. Sphinx Organization founder and National Council on the Arts member Aaron Dworkin is the only individual to have publicly confirmed being a candidate for the gig and was widely seen as the frontrunner for the post until he pulled his name from consideration over the summer; he would have been the Endowment’s first black chairman. NEA fans can take heart at least in the fact that they are not alone; the National Endowment for the Humanities has likewise been without an official leader since May.

4. A roller coaster year for the DIA

My goodness, where to begin? The Detroit Institute of Arts has had more ink spilled on it in the last two years, it seems, than Brad Pitt and Angelina Jolie. It was just last August that the DIA was triumphantly celebrating the passage of a millage, or property tax, in three counties providing the institution with ten years of guaranteed operating support, allowing it to build its endowment and place itself on secure footing for the future. But then in July the City of Detroit announced that it was filing for bankruptcy, placing the DIA’s art collection – much of which is owned by the city – in jeopardy. The city’s state-appointed emergency manager, Kevyn Orr, has reportedly asked the DIA to come up with $500 million to help appease creditors and lead Detroit out of the doldrums, which is about how much the auction house Christie’s has assigned to the value of artworks purchased with city funds. The most interesting potential outcome has the city and the DIA entering into a “grand bargain” involving an effort to raise the $500 million from a consortium of local and national funders, including the Kresge and Ford Foundations, and turn the DIA into a private entity, free from city control. Regardless of how this one turns out, it’s an object lesson in the potential pitfalls of direct government involvement in arts institutions.

3. Edward Snowden shows us we’re not as free as we thought

A 30-year-old former government contractor running off with four laptops and goodness knows how many hard drives’ worth of secret intelligence documents made for a compelling news story, but its connection to the arts wasn’t immediately clear. After all, the initial disclosure – that the United States National Security Agency was working with phone companies to collect metadata (information about calls, though not the calls themselves) en masse – seemed like it might be No Big Deal. It’s helpful for our national security apparatus not to have to wait for days to know who’s called whom, they still have to get a warrant to figure out what was actually said, and it’s all cleared by the Congress and our courts. Right? But as more and more revelations from Snowden’s treasure trove have come to light, the creepier this whole thing has gotten, and the more it’s become apparent that virtually nothing we do online is secret from the government. The NSA has intercepted the fiber-optic cables that carry Internet traffic to collect information on activities without the Internet companies even knowing; the agency “repeatedly broke surveillance rules,” and there have already been cases of “willful misconduct” like stalking love interests. Here’s what’s important to keep in mind from an arts perspective: the United States has always prided itself as a country of free expression. One of the most important ways in which that freedom of expression has been possible is that the government has intentionally held back from giving itself the means to control it, letting social norms and the marketplace have influence instead. There may be little reason to think that Uncle Sam would be interested in some random artist’s work today, but imagine a change in administration, another war, and a widespread movement for social change in which artists play a big role, and all of the sudden 2013 might start to look a lot like 1983.

2. Obamacare gets off to a rocky start

For years, advocating for health care reform was a major priority of a number of arts organizations. Once the Patient Protection and Affordable Care Act was passed, several of those organizations (including the one that I work for) took the opportunity to declare victory and go home. Pretty much no one considers Obamacare to be perfect, but the legislation had been widely praised and its rollout highly anticipated in arts circles because of its promise to better serve freelancers, particularly those with modest incomes (due to the subsidy provided). However, when healthcare.gov couldn’t process enrollments to save its life upon its October launch, it all started to look very, very fragile – particularly the already popularity-challenged individual mandate that is, according to economists, the linchpin to the entire system. It looks like the worst fears about Obamacare’s shaky launch have passed, but not before a small business exchange and the employer mandate were delayed for a year and other concessions were made to mollify angry citizens, many of which are arguably bad policy. Make no mistake, the Affordable Care Act is here to stay – but how much it’ll actually end up improving things is perhaps a bit more in question than it seemed a few months ago.

1. Wait, who elected these guys?

When the dust from the 2012 election cleared and Barack Obama was still president, the Senate was still Democratic, and the House was still Republican, we knew we were in for another two years (and most likely four) of divided government. But I don’t think too many people expected it would get this bad. The hyper-partisan environment, political infighting between conservative and establishment Republicans, petty power struggles between branches of government, and the determination to treat even the smallest difference of opinion as a virtual fight to the death all contributed to one of the least productive Congressional years in recorded history and a 16-day government shutdown that earned the ridicule of the world. As much as this sucked for all of us as citizens, it all but put the kibosh on any dreams of transformative arts policy coming from the Obama administration. With so many urgent national priorities getting in line to be ignored or gamed by a Congress that is far more adept at drafting press releases than passing legislation, maintaining the status quo is about the best that arts advocates can hope for in 2014.

Honorable mention:

Happy 2014 to all!

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[Createquity Reruns] The Top 10 Arts Policy Stories of 2012

(The 2012 top arts policy stories list brings us a real-life participatory museum, a participatory effort to secure another museum’s future, and a look at what might have been had Obama lost the 2012 election. One thing that jumps out at me is how many of the top arts policy stories are really multi-year, continuing sagas. Of this year’s list, fully half of the items had appeared in one form or another in previous years, and two others would return in 2013. Some of the more notable “story arcs” of this past half decade include the recession-induced fall and recovery of state arts council budgets, renewed culture wars threatening and ultimately failing to impact federal spending on the arts, and a gradual move in Western Europe toward American-style privatization. -IDM)

From Santa Cruz Museum of Art and History's Family Fallapalooza

From Santa Cruz Museum of Art and History’s Family Fallapalooza

Each year, Createquity offers a list of the top ten arts policy stories of the past 12 months. You can read the previous editions here: 2009, 2010, and 2011. The list, like the blog, is focused on the United States, but is not oblivious to news from other parts of the world. This year, for the first time, I opened up the creation of this list to Createquity authors past and present, and I am particularly grateful to Jackie Hasa for contributing the entries for orchestra labor strife and SOPA/PIPA versus the internet. If you’re interested in being a part of a growing and increasingly active team here, a reminder that the deadline for the Createquity Writing Fellowship is coming up on January 8.

2012 was a year of cautious optimism for the arts. As the economy continued its slow recovery, for the first time in four years, government funding at the state level did not see a decline, and the slash-and-burn tax-cutting fervor of political conservatives seemed to be blunted by November’s election results, at least temporarily. There were stories of individual organizations making good, and ambitious initiatives seemed to be around every corner. And yet in certain contexts, the arts were still or newly facing dark days. Arts communities in much of Europe and the Western world struggled with austerity measures, as did orchestra musicians in the United States. And in many Muslim countries, art and artists found themselves in the middle of (or even the target of) oppression, strife, and violence. One comes away from this list with the sense that things are going to be interesting in 2013.

10. Nina Simon reboots the Santa Cruz Museum of Art and History

I don’t normally include innovation stories from rank-and-file arts organizations on this list, but Nina Simon’s transformation of Santa Cruz MAH has been so far-reaching and impressive that its broader fieldwide significance is hard to deny. It’s not just about the numbers, though Simon has those too: attendance has more than doubled, the busiest day drew triple the participants over previous years,and there’s now a $350,000 cash reserve. More interesting, however, is the combination of Simon’s fame and her daring programming that has put the MAH “on the map” in a way that simply wasn’t the case before. Simon is the rarer-than-you-might-think example of a consultant who has successfully transitioned into an executive role, and in the process she has eagerly seized the opportunity to reshape a struggling institution into a playground for her (and the community’s) ideas. Through new programs like the You Can’t Do That in Museums Camp, an exhibition-as-exhibition, and more, Santa Cruz MAH is charting the frontiers of what it means to be a participatory museum, and we get to have a front-row seat by virtue of Simon’s long-running and admirably transparent blog, Museum 2.0. Simon’s approach may not be right for every arts organization, but it surely presents one very clear vision of the future, one to which attention must be paid.

9. The European funding model shows more cracks

Let’s be clear on this one: the core Western European philosophy of seeing culture as an essential arm of government is not on the verge of dissolving, and the wealthy countries that have historically been most faithful to this notion–including Germany, France, and the Scandinavian nations–have so far shown little willingness to abandon it in favor of American-style privatization fever. At the fringes of the European Union and beyond, however, government-centric cultural policies underwent substantial stress in 2012. In Bosnia-Herzegovina, for example, the national museum closed due to lack of funds provided by a non-functioning government; in Greece, spending on the arts has dropped 35% since 2009, and in Italy, Rome’s MAXXI Museum has been put into receivership. Arts Council England, having already suffered major cuts two years ago, is looking at a potential loss of 150 staff, while cities like Newcastle are looking at even more drastic cuts. This is a trend to watch in 2013.

8. SOPA/PIPA vs. the Internet

In early 2012, an enormous Internet protest caused both houses of Congress to indefinitely postpone voting on the Stop Online Piracy Act (SOPA) and the PROTECT-IP Act (PIPA). These bills sought to regulate Internet content in the name of fighting piracy, which split arts organizations into two opposing camps—those with a vested interest in strong copyright protections, which included many major entertainment industry unions and associations, and those concerned that the bills’ more draconian regulations would dampen creative exchange, which included a broader range of organizations, from McSweeney’s to Fractured Atlas to Dance/USA. After tabling SOPA/PIPA, Google and other major tech companies helped Congress draft the Online Protection and Enforcement of Digital Trade Act (the OPEN Act) as part of a more balanced approach. Public comments on the OPEN Act are encouraged, even as its sponsor, Darrell Issa (R-CA) pushes for a 2-year moratorium on Internet regulations. Efforts to control the web also failed on the international stage, when a U.N. committee charged with rewriting Internet rules couldn’t get buy-in from the U.S., U.K., Canada, and dozens of other nations due to concerns over censorship. Lawmakers may not resolve these debates in 2013, but in the years ahead, we will doubtless see continued efforts to regulate Internet behavior.

7. The arts face violence and turmoil in the Middle East and North Africa

Where to begin? In Syria, where the ancient city of Aleppo has been devastated by that country’s civil war? In Mali, where a fundamentalist group called Ansar Dine has destroyed world-famous heritage sites in Timbuktu and threatened musicians with bodily harm? In Somalia, where some 18 media figures, including a popular poet and playwright, have been assassinated by the Al Qaeda-aligned Al Shabab, for daring to mock the militants in public? In dozens of countries where mass protests broke out, some turning violent, in response to a video made by an American filmmaker and con artist with insulting depictions of the prophet Muhammad? In the midst of all the tragedy, we also had uplifting stories like the role that young artists had in galvanizing Egyptian dissent during the Arab Spring. From our comfortable perch in the US, it can sometimes feel like the arts are a frill, a plaything for the privileged, or simply inconsequential. It seems fair to say that in this part of the world, today, the arts matter.

6. State arts councils turn the corner

State arts councils reversed a four-year slide in 2012, finally coming out of the annual budget appropriations process in the black. The National Assembly of State Arts Agencies reports that total appropriations rose 8.8% in the aggregate to $282.9 million, although most of this change is attributable to substantial increases in Florida, Michigan, and the District of Columbia, each of whose appropriations more than doubled over the previous year. (Michigan’s budget grew an astounding 366.8%, albeit after having sustained equally astounding cuts in previous years.) In addition, two anti-arts governors found themselves with egg on their face this year, as the recently vanquished Kansas Arts Commission made a triumphant return as the Kansas Creative Arts Industries Commission, and the South Carolina Arts Commission fought off yet another veto threat from Governor Nikki Haley. Other states with budget increases of $1 million or more included Connecticut, Minnesota, New York, and Ohio. (Update: See comments for info about Connecticut.) And while the Arizona Commission on the Arts continues to receive no legislative appropriation from its state government, it did win a ten-year re-authorization against the odds. The year was not completely free from bad news, however, as the arts councils in Louisiana, Missouri, New Hampshire, and Utah all suffered double-digit cuts, continuing a trend in the first three states.

5. Labor strife reaches new heights in orchestras and beyond

This year was rife with labor unrest in the arts, most notably among orchestras. Driven by fundraising shortfalls and sometimes debt from capital projects conceived in flush times, musicians walked out—or were locked out—all over the U.S. Unions in Chicago, Atlanta, Milwaukee, Spokane, Louisville, New York, Philadephia, San Antonio, and Indianapolis all successfully reached deals that ranged from modest raises (San Antonio) to 32% wage cuts (Indianapolis). The strife will continue in 2013: in the Twin Cities, both the St. Paul Chamber Orchestra and Minnesota Orchestra have been locked out for months, with no resolution in sight. We’re also seeing some signs of resilience and cooperation, as the previously disbanded Syracuse and Utica Symphony Orchestras vowed to return for the 2012-2013 season. In 2013, we may see more attention paid to the Colorado Symphony as a potential model. Following their own labor conflict in 2011, they revised their contract to allow for more organizational flexibility. For instance, the orchestra can now play in smaller groups, allowing them to perform in communities around Denver in minor venues.

4. Rocco steps down

It wasn’t a surprise, but it was news nonetheless: Rocco Landesman left the National Endowment for the Arts (NEA) after three-plus eventful years as Chair. During his tenure, he set the agency on a technocratic course with more explicit attention paid to the instrumental benefits of the arts, particularly their economic value. His highest-profile accomplishment while in office was the creation of two new grant programs to encourage “creative placemaking,” Our Town and ArtPlace (more on that below). His most enduring legacy, however, may turn out to be his work, along with Senior Deputy Chair (and now Acting Chair) Joan Shigekawa, to develop partnerships between the NEA and other branches of federal government and to set the research office on a more strategic path. Lastly, it was during his tenure that the NEA began more explicit efforts to welcome the public into its decision-making process, offering a series of live webcasts of convenings and meetings including those of the National Council of the Arts, the body that oversees the NEA. No hints as of yet as to who may replace him, but we won’t likely know until well into 2013.

3. The Detroit Institute of Arts gets a millage

The Detroit Institute of Arts (DIA) was in a pickle. The venerable museum was facing a financial downward spiral, and it was one of the few institutions of its kind not to receive funding from either its city or state. The solution? Advocate for a millage (a form of property tax) to support the DIA in Wayne, Oakland, and Macomb counties, in exchange for free museum admission for residents from those counties. The measure passed in an election on August 7, and will raise a whopping $23 million annually for the DIA over the tax’s 10-year duration. There are charitable and less charitable ways to interpret this development, and arts world response seemed to be divided between them. On the one hand, here was an example of a cultural institution demonstrating relevance to its community in the most direct, unimpeachable manner possible: a majority of residents in three counties, urban and suburban, voted to tax themselves so that this institution could survive and thrive. On the other, the DIA raised and spent an enormous sum of money – $2.5 million – getting a piece of legislation passed that benefits only one arts organization – itself. No matter how wonderful the DIA may be, that precedent is a bit worrisome.

2. The creative placemaking backlash

It was just last year that the #1 arts policy story was “Creative placemaking ascendant,” so it’s not surprising to see that the movement has come back to earth in 2012, facing public relations challenges on multiple fronts. Much of the discussion has focused on the way that the NEA’s Our Town program and its private-sector cousin, ArtPlace, plan to track and measure the impact of the grants they make – a dialogue begun here on Createquity with May’s “Creative Placemaking Has an Outcomes Problem” and continuing in the fall with further back-and-forth between researcher Ann Markusen and the NEA’s Jason Schupbach and Sunil Iyengar. But creative placemaking’s PR hiccups this year went much further than that. They started small, with the revelation that much of ArtPlace’s grant funding is geographically restricted, meaning that applicants in many parts of the country face longer odds than others, and a brutal exposé by the Los Angeles Times of problems within the ArtPlace-funded Watts House Project. By the summer it seemed that criticism and skepticism was pouring in far and wide, from sources as diverse as Thomas Frank (author of What’s the Matter with Kansas?) and Roberto Bedoya, and leading to trite headlines like “Hipsters won’t save us” in mainstream publications. To make matters worse, Richard Florida decided in the midst of all this to re-release his most famous and now-controversial book, The Rise of the Creative Class, prompting a rash of articles attacking the intellectual origins of creative placemaking work. Some of the criticism has been fair and some of it considerably less so, but there’s no sign as yet that the creative placemaking juggernaut is slowing down as a result of it.

1. Election 2012

This last item is unusual, in that it’s more about what didn’t happen this year rather than what did happen. As things turned out, the balance of power in Washington hardly changed at all and we can look forward (I guess?) to divided government for at least the next two years. By contrast, most analysts agree that if Mitt Romney had won the election and Republicans had regained control of the Senate, both of which were distinct possibilities through most of the summer and fall, what little arts policy infrastructure remains at the federal level would very much have been in jeopardy. Romney had made no secret throughout the campaign of his disdain for the NEA, the NEH, and the Corporation for Public Broadcasting, even bizarrely choosing to make Big Bird an issue in an otherwise well-received first debate with the President. And it doesn’t take much imagination to conclude that conservatives, fresh off a massive gain in Congressional seats during the previous midterm elections, would have felt empowered to take a hacksaw to domestic spending following even a narrow win. With these outcomes averted, it’s likely that funding levels will stay steady or suffer relatively minor cuts in the near future, though with the seemingly endless negotiations over the “fiscal cliff” and debt ceiling, anything could still happen. Election Day also saw the unfolding of some arts policy stories at a local level, most significantly the passage of an important new income tax in Portland that will fund arts grants and arts education.

Honorable mention:

Happy New Year to Createquity readers far and wide, and we look forward to what 2013 brings!

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[Createquity Reruns] The Top 10 Arts Policy Stories of 2011

(Today’s top stories list brings us the mainstreaming of crowdfunding – an item that should have scored a lot higher than #8 in retrospect – along with the ultimately temporary axing of the Kansas Arts Commission and the woes of recession-aftermath orchestra union negotiations. Not to mention just about the most charming marriage of the arts and civic pride that you’ll ever see. -IDM)

GR Lipdub

Grand Rapids LipDub – photo by Rob Vander Sloot

Each year, Createquity offers a list of the top ten arts policy stories of the past 12 months. You can read the 2009 and 2010 editions here and here, respectively. In addition to the main list, I also identify my favorite new arts blogs that started within the past year. The list, like the blog, is focused on the United States, but is not oblivious to news from other parts of the world.

For the most part, 2011 saw the continuation of trends that had already been set in motion in previous years. The economy continued to be an issue for arts organizations worldwide, affecting government revenues in particular. The NEA moved in directions foreshadowed by its actions in 2010. And the culture wars, while not translating into meaningful policy change for the most part, were waged in the background once again.

10. Federal cultural funding dodges a bullet

The newly-elected Republican House of Representatives made a lot of noise this year about cutting funding to arts and culture, particularly the Corporation for Public Broadcasting after a forced scandal involving NPR’s then-vice president of development. Democrats refused to take the bait, however, and even amid multiple standoffs over the federal budget this year, cultural funding survived largely intact. The NEA escaped with a 13% decrease from last year’s originally enacted funding level, and CPB and the Smithsonian actually saw increases. Notably, the Department of Education’s arts in education budget was also saved (albeit with cuts) despite an Obama administration recommendation for consolidation under other programs. That said, the saber-rattling this past year leaves little doubt about the prospects for arts funding under a Republican Congress and President in 2013 and beyond, and it will surprise no one if the same battles are fought all over again in 2012.

9. Grand Rapids LipDub shows how creative placemaking is done

By now you’ve heard the story: city gets named on a top ten list of “America’s dying cities”; college-aged filmmakers galvanize the community to organize a coordinated response. The result: “the greatest letter to the editor of all time,” also known as the Grand Rapids LipDub. Involving thousands of people and requiring a near-total shutdown of the city’s downtown area, the video went viral over Memorial Day weekend and has received nearly 4.5 million views as of December 31. But more than the feat itself, the video is notable as an incredibly effective example of cost-effective creative placemaking. The mayor of Grand Rapids was very smart to give this $40,000 production (mostly raised through sponsorships from local businesses) his complete support: it is just about the best advertising for his city one could possibly ask for, conveying a completely unforced and compelling charm while fostering community pride among local residents along the way.

8. Crowdfunding goes mainstream

Just two years ago, Kickstarter was a novelty and no one had heard of IndieGoGo. Now, these and other “crowdfunding” platforms that connect creatives with fans and financial backers have become an indelible part of the artistic landscape, particularly for grassroots, entrepreneurial projects. This July, Kickstarter alone reached the milestones of 10,000 successful projects and $75 million in pledges over slightly more than two years, numbers that compare favorably with major private foundations’ support for the arts. Meanwhile, crowdfunding is fast becoming a, well, crowded market, with new entrants lured by the profit-making potential of serving as banker for the creative economy. RocketHub, USA Projects, and the Power2Give initiative are just three of the more significant new entrants of the past two years, and similar platforms are popping up to serve technology startups and the broader charity market.

7. Orchestra unions take it on the chin

The recession has been not been kind to arts organizations of any stripe. But it’s been particularly hard on orchestras, those most tradition-bound of arts organizations, forcing musicians’ unions to cough up big concessions. The resolution of the Detroit Symphony’s six-month strike in April had minimum salaries dropping nearly 25% and a partial incentive pay system introduced. The same month, the Philadelphia Orchestra filed for bankruptcy, seeking to avoid its unfunded pension obligations, and won 15% salary reductions from its musicians in October. The Louisville Orchestra also filed for bankruptcy late last year, hasn’t played since May due to negotiation impasse, and has started advertising for replacement players. The NYC Opera, after abandoning its longtime home at Lincoln Center, is threatening to turn its orchestra into a freelance outfit and cut its choristers’ pay by 90%. The New Mexico, Syracuse, and Utica Symphonies all bit the dust, costing musicians hundreds of jobs. The craziest story was perhaps the resignation of two-thirds of the Colorado Symphony Orchestra’s board because musicians took too a few days too long to accept a 9% pay cut. Breaking with tradition, the League of Symphony Orchestras this year sounded the alarm bells with a plenary session titled “Red Alert” at its national conference.

6. Another tough year for state arts agencies

The big headline, of course, was Kansas (see below). But state arts agencies, having already suffered big losses in 2009 and 2010, slipped backwards once again this year. More than twice as many saw decreases as increases, and in total appropriations dropped 2.6% as of August. Horror stories included Arizona Commission on the Arts, which lost its entire general fund appropriation (the agency stayed alive thanks to business license revenues); the Texas Commission on the Arts, which lost 77.7% of its funding; the Wisconsin Arts Board, whose budget was gutted more than two-thirds by controversial governor Scott Walker; and the South Carolina Arts Commission, which made it through with a 6% shave only because the state legislature overrode Governor Nikki Haley’s veto of the entire agency’s budget. Nevertheless, as in previous years, a few states and territories had clear victories: the Ohio Arts Council avoided a cut proposed by the Governor and instead achieved a $1 million increase, and the Utah Arts Council and Institute of Puerto Rican Culture saw increases of 50% or more. Still, state arts agency appropriations remain 40% below their 2001 peak levels – and that’s not even taking inflation into account.

5. Western Europe blinks on government arts funding, while South America and Asia embrace it

Already reeling from the UK’s decision to institute major cuts from Arts Council England and broader pressures on financial markets, Europe continued to see a move toward a leaner, more American-style cultural policy. The wave of change caught up the Netherlands this year, as Holland cut a quarter of its cultural budget. Meanwhile, as with the economy more generally, the balance of power is starting to shift toward former Third World nations. Hong Kong announced that it had hired starchitect Norman Foster to design a $2.8 billion, 40-hectare cultural district in West Kowloon; Abu Dhabi is building a $27 billion mixed-use development on Saadiyat Island featuring two gigantic museums and a performing arts center; and Rio de Janeiro has doubled its cultural budget in anticipation of the 2016 Olympics. Singapore and Shanghai are also seeing gigantic government investments in the arts.

4. Cultural equity #Occupies the conversation

It started small: just a poster in the magazine Adbusters, a ballerina dancing on the Wall Street Bull. But by the time October rolled around, Occupy Wall Street was a household name, changing the national conversation from one obsessed with austerity and the national debt to one that took a serious look at who benefits and suffers from our nation’s economic policies. Around the same time, the National Committee on Responsive Philanthropy, a philanthropy watchdog organization that promotes social justice, published Fusing Arts, Culture, and Social Change by Holly Sidford, a broadside against the longstanding funding practices in the arts that make it hard for organizations representing communities of color to build a strong base of support. It didn’t take long for people to make the connection within both the arts community and the Occupy movement. And when news of the San Francisco Arts Commission possibly cutting its Cultural Equity Grants program hit during a national Cultural Equity Forum hosted by Grantmakers in the Arts – well, let’s just say it’s the most digital ink this topic has had spilled on it in a long time. I suspect, like so many times before, this particular conversation will dissipate without leaving behind any lasting change on a large scale. On the other hand, it’s a good bet that pressure will only continue to build on longstanding cultural institutions to justify the massive resources they have built up over the years.

3. Irvine Foundation gets engaged

About a year ago, I posted a comment on the myth of transformative arts experiences that struck a chord with readers. In it, I told my own “getting hooked on the arts” story and observed that “none of it involved being in the audience for anything….Getting out and seeing a show now and then is always nice. But getting to be in the show – that’s what’s truly transformative about the arts.” It turns out I’m not the only one who’s been thinking along these lines: in June, the James Irvine Foundation announced a wholesale change to its arts strategy that emphasizes audience engagement, including active participation. To support the new strategy, Irvine set up a new Exploring Engagement Fund that serves as “risk capital” for organizations to experiment with new programming strategies that are designed to increase engagement. Irvine is certainly not the first funder to focus its attention on audiences – the Wallace Foundation, for example, has made cultural participation a priority for years, and many have been happy to fund efforts to place cultural programming into context (“talkback sessions” and the like). But Irvine takes the concept much farther by explicitly encouraging programming that places the audience at the center of the experience, offering participants the opportunity to create, perform, or curate art themselves. It’s really quite revolutionary given the history of arts funding, and a lot of eyes will be on this initiative as it develops.

2. Kansas Arts Commission loses its funding

Proposals to eliminate state arts councils have become a dime a dozen in recent years. Just since 2009, Pennsylvania, South Dakota, South Carolina, New Hampshire, Texas, and several others have staved off threats of demise of varying seriousness. Experienced arts advocates, while taking each individual case seriously, tend to brush off the trend as a whole, seeing it as an inevitable part of the game. Except this year, the unthinkable happened: for the first time since the state arts council network was created in the 1960s, one of them actually had to close down shop completely. Kansas Governor Sam Brownback, fighting negative media coverage and his own legislature tooth and nail, followed through on his vow to destroy the Kansas Arts Commission and transfer its activities (but not its funding) to the nonprofit Kansas Arts Foundation. In doing so, he actually cost his state more money in federal matching funds than it saved in direct expenditures. National and local advocates are optimistic that this decision will eventually be reversed, but until then, Kansas has the dubious distinction of being the only state without a functioning arts council.

1. Creative placemaking ascendant

When Rocco Landesman was chosen to lead the National Endowment for the Arts in 2009, he almost immediately signaled his interest in the role of the arts in revitalizing downtown public spaces. Two-plus years into his term, “creative placemaking” has emerged as his signature issue, and the lengths to which he and Senior Deputy Chairman Joan Shigekawa have gone to promote it have been remarkable. Beyond the NEA’s Our Town grants, the inaugural round of which were announced this past summer, the big news this year was the formation of ArtPlace, a consortium of major foundation funders designed to extend Our Town’s work into the private sphere. Headed by former CEOs for Cities head Carol Coletta, ArtPlace has already distributed $11.5 million in grants and has an additional $12 million loan fund managed by Nonprofit Finance Fund. Its recent solicitation for letters of inquiry drew more than 2000 responses. Our Town’s future at the NEA is by no means assured, but by spurring the creation of ArtPlace, Rocco has guaranteed that creative placemaking will be part of the lexicon for quite a while.

Honorable mention:

And here are my choices for the top new (in 2011) arts blogs:

  1. Lee Streby
  2. New Beans (Clayton Lord)
  3. ArtsFwd (Karina Mangu-Ward and others)
  4. Creative Infrastructure (Linda Essig)
  5. ArtPlace blog (various) – note the RSS feed on this one is impossible to find, it’s here.
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[Createquity Reruns] The Top 10 Arts Policy Stories of 2010

(Today, our review of the top arts policy stories from the past half decade brings us the birth of “creative placemaking,” the Fine Arts Fund’s transformation, copycat arts funding models from across the pond, and more. As an exercise in trendspotting, this list from 2010 actually holds up pretty well, I think. The ramifications of Obamacare for the arts community will take a while to fully unfold, but it seems like a good bet that they’ll be significant. -IDM)

Painting the Street in Cincinnati

“Paint the Street” event hosted by ArtsWave, image by Rrrrred

Everybody likes a Top 10 list, right? Especially the nerdy ones! So here’s my contribution: the second annual list of the top ten arts policy stories from the past year. You can check out the 2009 edition here.

10. Intrinsic Impact Research Marches On

WolfBrown’s groundbreaking work on measuring “intrinsic impact” (the intangible, hard-to-define effects that arts experiences have on patrons) got a major boost in 2010, with a large project to bring the research to 15 theater companies in five cities around the country. Led by Theatre Bay Area, the endgame of this project involves a web-based toolkit that will allow rank and file arts organizations to adopt some of these methods themselves, without having to pay WolfBrown a pretty penny first. Audience surveys are already underway, and the final report and toolkit will be up and running by the end of next year.

9. Fine Arts Fund Reinvents Itself

In January 2010, a longstanding Cincinnati-based fundraising and grantmaking organization known as the Fine Arts Fund announced the results of a very interesting research study examining the attitudes of members of the public toward shared responsibility for (and benefit from) the arts. The political science perspective used in the study may have been a first for the field of arts research, and the results suggested that the field would be better off if the economic-impact- and arts-education-focused arguments that have characterized arts advocacy efforts over the past couple of decades were discarded in favor of a focus on vibrant neighborhoods and connected, engaged communities instead. Not satisfied with simply releasing a study and going about its business as usual, Fine Arts Fund took the additional, and frankly astonishing, step of wholly transforming its name (to ArtsWave), branding identity, and grantmaking priorities to bring them in line with these findings. (Disclosure: Fractured Atlas will be working with ArtsWave in early 2011 as part of this last initiative, though it had no role in the research or the strategic planning process that led up to this point.) ArtsWave’s very public metamorphosis shows that even an 83-year-old institution can still be on the leading edge.

8. Dance Theatre Workshop and Bill T. Jones Merge (And They’re Pretty Much the Only Ones)

Two years after the stock market crash of 2008 led numerous observers to predict a rash of mergers and closures in the nonprofit sector, the greatest carnage in the ranks of arts organizations has come not from the market but from the IRS (see item #7). While virtually every arts nonprofit has suffered stress in the wake of the economic recession, most have survived intact, with only a few exceptions such as the Honolulu Symphony, NYS Arts, and the Baltimore Opera — and that last one might even have been a good thing. DTW’s romance with Bill T. Jones/Arnie Zane Dance Company is without doubt both the most high-profile and the most interesting arts merger to come out of the recession so far, as the choreographer-led company joins forces with a presenting/service organization to create New York Live Arts. In the process, Bill T. Jones gets a dedicated space, and DTW gets access to greater financial resources. It looks great on paper, but then mergers often do…

7. IRS Revokes Exemption for up to 300,000 Nonprofits

This story went virtually unreported this year, but those who continually bemoan the rise in the number of nonprofits in this country had a bone thrown their way this year. The Pension Protection Act of 2006 required that all nonprofits, even those with budgets of less than $25,000 per year who had previously never been asked to file annual returns, complete the 990-N “postcard” form requesting basic information like addresses and website URLs. Those who failed to file for three years in a row risked having their tax-exempt status revoked by the IRS. Well, it turns out that nearly half of the 714,000 organizations in this budget category in fact failed to file, and after a number of temporary delays and reprieves, an unknown number were thrown overboard (the IRS will publish a complete list early next year). While most of these were likely dead organizations (indeed, some of them may never have been alive in the first place), an examination by yours truly of some of the organizations “at risk” for revocation in the San Francisco Bay Area revealed that a disproportionate number were arts organizations, and their ranks included a few that were observably still active.

6. Net Neutrality Has a Bad Year

This is a story that is very much still being told. For several years now, technology activists have been raising awareness of the issue of “network neutrality,” warning that without legislation to codify existing practices, there will be nothing to prevent internet service providers in the future from selectively crippling or blocking entirely websites that compete with their own business interests. Many see net neutrality as particularly important to the arts, given their usual position outside of (or even in opposition to) the corporate sphere. With the 2008 election of President Obama, a supporter of net neutrality legislation, there was hope that such legislation might become a reality with the current Congress. But things got complicated in 2010. First, a federal court ruled earlier this year that the Federal Communications Commission did not have authority to tell Comcast that it had to treat bittorrent transmissions on its networks the same way as everything else. While not the final legal word, it provided a strong negotiating hand to anti-net-neutrality forces. Then, Google, one of net neutrality’s staunchest supporters in the corporate arena, got into negotiations with Verizon, one of its most trenchant opponents, and came out with a compromise that left most neutrality advocates unsatisfied. Finally, just last week, President Obama’s FCC announced new guidelines that hew fairly closely to the Google/Verizon compromise, prohibiting discrimination on “wired” services but leaving the increasingly important mobile universe a veritable Wild West. (This hasn’t stopped Verizon from making noises about a legal challenge right out of the gate.) We’ll have to stay tuned to see what happens next, but with a Republican House and little evidence of broad-based passion for net neutrality among the populace, the chances for a legislative solution (the surest means to the outcome that advocates desire) seem slim for the moment.

5. State Arts Agencies Continue to Struggle

After a disastrous 2009, this year saw little respite for beleaguered state arts agencies. Despite a few success stories, such as in Rhode Island where the governor tried to cut the budget of the state arts council by over 50% only to have the cuts fully restored by his own legislature, these remained the exception rather than the rule. States and territories suffering double-digit cuts in 2010 (i.e., to their FY 2011 appropriations) included Arizona (down another 28.9% after a brutal 54% cut last year), DC, Georgia (which nearly had its council eliminated but “escaped” with only a 66% massacre), Kansas, Louisiana (where Gov. Jindal finally succeeded in squeezing nearly half the money out of the coffers), Missouri (where state officials are raiding a fund intended to provide dedicated support to the arts and humanities), New Hampshire, New York (with the largest total dollar decrease of the year by far), Northern Marianas, Oklahoma, Pennsylvania (already reeling from an exhausting and only partially successful advocacy campaign last year to save the agency), South Carolina (another state council to overcome near death in 2010), Texas (28%), Virginia, and Washington. Only Arkansas, Florida, Indiana, South Dakota, and Wyoming saw increases of a comparable magnitude.

4. Culture Wars Simmer

Ever since the 2008 election, there have been signs that the American right wing might return to the hostile stance it had adopted toward public subsidy of the arts starting in the late 1980s and continuing through the 1990s. Some of the evidence is in item #5 above: massive cuts or threats to zero out funding to arts councils by Republican governors in “red” states like Arizona, Georgia, Louisiana, and South Carolina; last year’s brouhaha over former NEA Communications Director Yosi Sergant’s attempt to involve artists in President Obama’s United We Serve initiative comes to mind as well, as do Glenn Beck’s occasional editorials on artwork associated with perceived enemies. With the election of a majority of Republicans to the House of Representatives has come new pressures on the funding of NPR, which got into an unfortunate fight with conservatives over the firing of right-wing commentator Juan Williams a few months ago. The most dramatic confrontation yet took place just last month, when a conservative news service publicized a gay-themed exhibition at the National Portrait Gallery that included a video by deceased artist and AIDS victim David Wojnarowicz with images of a crucifix covered with ants. After the controversy found its way to the ranks of Republican House leadership, the director of the Smithsonian ordered the video removed, even though the footage in question occupies only 11 seconds of the four-minute video, which itself was not a centerpiece of the exhibition. The action, unlike previous skirmishes, has produced a gigantic backlash in the visual arts community, with dozens of museums and other institutions around the world showing Wojnarowicz’s work in protest. The Andy Warhol Foundation, a major supporter of the exhibition, has also threatened to deny future funding requests from the Smithsonian. The situation seems to be under control for the moment, but don’t be surprised if things start heating up again in 2011.

3. The UK Tries American-Style Arts Funding

Feeling pressure from the economic recession, the new conservative government in England imposed cuts of 100 million pounds on the primary grantmaking agency for high-profile arts organizations on the island. The UK’s arts system has been described as a “hybrid” between the near-total private-sector dominance of American arts funding and the near-total government support seen throughout continental Europe. These cuts, totaling more than 22% of Arts Council England’s appropriation, represent a clear move toward the American side of the equation, especially when coupled with ACE’s decision to require prospective grantees, for the first time, to submit applications for funding (previously they had simply been selected by the agency though a noncompetitive process). The development is significant not only for its implications for England’s arts scene, but also as a potential bellwether for the rest of Europe, where politicians have been making noises for years about cutting back historically generous government support of artists and arts organizations and moving in the direction of greater privatization.

2. The NEA Charts a New Path

We knew that when Rocco Landesman arrived last year to take over the reins of the National Endowment for the Arts that, whatever the results, they would certainly be interesting. On that score, the agency has delivered in 2010. “Creative placemaking,” the role of the arts in revitalizing local communities economically and otherwise, is emerging as Rocco’s signature issue, with a raft of urban-focused Mayors’ Institute on City Design grants given out in 2010 and more coming in 2011 under the rubric of a new program called Our Town. The NEA has pursued a public engagement strategy beyond any in the agency’s previous history, webcasting the meetings of the National Council on the Arts (the NEA’s equivalent of a board), accepting questions via Twitter during panel discussions, and inviting a huge bevy of service organizations to take in the announcement of its strategic plan for 2012-16. It’s gone on a hiring spree, bringing marquee names like the Commonwealth of Massachusetts’s Jason Schupbach into the fold. A revitalized research department is pumping out new publications at a rapid rate, incorporating new media elements into some of them, and embracing its role as a convener, having brought together an A-list group of practitioners to consider how to measure “livability” this summer. What may turn out to be Rocco’s most far-reaching project, however, is his efforts to make inroads with heads of other federal agencies around ways in which the arts intersect with their work. Given that the budgets of departments like Agriculture, Housing and Urban Development, and Transportation dwarf the NEA’s and that the Endowment has continually been vulnerable to attacks on culture-war battlegrounds, this attempt to break down silos and “embed” the arts in other arms of the federal government is one of the smartest gambits we’ve seen in a long time.

1. Patient Protection and Affordable Care Act Passes

For years, the high cost of health insurance, especially for freelancers in our employer-centric system, has been identified by researchers and advocates as one of the biggest impediments to a thriving artist workforce. In 2010, after decades of failed attempts, Congress finally passed a comprehensive health insurance reform bill designed to counter some of the worst excesses of insurers while sharply reducing the ranks of the uninsured. To do this, everyone will be required to purchase insurance, even healthy individuals (although this mandate is currently being challenged in the courts). Fractured Atlas has a primer on the implications of the health care reform act for artists here; the short version is that by 2014, insurance companies won’t be allowed to discriminate or charge you a higher rate based on your gender or health status, take away your coverage after you get sick, deny you coverage based on a pre-existing condition, or set annual or lifetime limits on benefits. Although you will be required to buy insurance, if your income is in the low 40s or below, you’ll qualify for government assistance in paying for it. And if you’re a small business (like a theater company or gallery), you’ll likely be eligible for tax credits for giving your employees health insurance. While the full impact of the law won’t be known for years, if not decades, its provisions should disproportionately benefit artists and faciliate a significant improvement over the status quo.

Honorable mention:

  • Low Power FM Radio bill passes
  • Americans for the Arts introduces the National Arts Index

And as a bonus, here are my picks for the top five new (in 2010) arts blogs:

5. NYFA Blog (Michael Royce)
4. ArtsAppeal (David Zoltan)
3. 2am Theatre (various)
2. Your Town Performs (Craige Hoover)
1. Jumper (Diane Ragsdale)

(Note: had Devon Smith started 24 Usable Hours a couple of months later than she did, it surely would have made this list.)

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[Createquity Reruns] The Top 10 (U.S.) Arts Policy Stories of 2009

(With the last week of summer upon us – yes, it’s technically still summer – our season of reruns is about to come to a close. To finish out with a bang, we’re republishing our Top 10 Arts Policy Stories list from each of the past five years. Every December since 2009, we’ve attempted to highlight the most significant trends and important developments of the past year. Looking back on this list from the end of last decade, I’m struck by how some things that seem like a really big deal in the short term are quickly overshadowed by shifts that take place more gradually but have much farther-reaching implications. Who remembers, for example, the tempest in a teapot that led to the forced resignation of NEA communications director Yosi Sergant? As with any set of predictions, ours contained both hits and misses – see if you can spot which was which! -IDM)

OK, so I know I’m a little late to the party with the year/decade-in-review lists, but since no one other than me apparently cares enough about arts policy to make a top 10 list about it, I’m happy to be the doofus who takes the plunge. 2009 featured no shortage of tumultuous and game-changing events in arts policy, and it was a pleasure (though sometimes an exhausting one) to cover them here on the blog. Here are my picks for the year’s top ten:

10. The L3C Gains, Loses Momentum

Last year, many in the arts who found themselves frustrated with the limitations of the 501(c)(3) nonprofit business model looked to the Low-Profit Limited Liability Company, or L3C, for an answer. An L3C is basically an LLC that has pledged to pursue a social mission as its first priority, even though it still intends to make a profit. The new legal form has been hailed as a potential panacea for businesses that serve an important social function but have trouble attracting capital because they can’t generate profits at market rates, such as newspapers, small biotech firms, and even North Carolina’s furniture manufacturing industry. Spearheaded by a foundation president, Mary Elizabeth and Gordon B. Mannweiler Foundation head Robert M. Lang, the L3C scored some early victories this year as Michigan, Utah, Wyoming and the Crow Indian Nation all passed it into law within a span of two months. However, things hit a snag in August when a technocrat from the IRS told everyone to hold their horses at an accounting conference (aside: I know I shouldn’t make fun, but an accounting conference? seriously?), claiming that “no one has really signed off” on the legal form at the federal level, which sparked an angry exchange between L3C Advisors and the agency. Since then, Illinois has been added to the list of states in which L3C formation is possible (Vermont was already there in 2008), but absent a federal mandate it’s unclear how far the movement will go.

9. NEA Webcasts Cultural Workforce Forum

The National Endowment for the Arts has had a research unit for a number of years. It’s published a number of important contributions to the literature in that time, most notably its recurring series on public participation in the arts and on artists in the workforce. This year, however, instead of simply releasing its studies in print and online, the NEA went one step further: it gathered an impressive coterie of researchers and arts organization representatives to react to the study and share perspectives from similar studies with which they had involvement. The real game-changer, though, was the agency’s decision to broadcast this forum to the public via the web so that anyone could follow along and participate. (A second forum focusing on the most recent Survey of Public Participation in the Arts took place in December.) This is what field-building looks like: bringing a mishmash of parties together around a nexus of common interest so as to move forward together. Research is at its best when it’s a team sport, and I am extremely heartened to see that our Endowment understands that as well as it does.

8. Changing of the Guard at Hewlett, Irvine

The West Coast arts funding landscape changed dramatically in 2009, as California’s two largest grantmakers in the arts found themselves in the midst of leadership transitions at a time of drastic transition in the field as a whole. Things kicked off with the impending departure of the Hewlett Foundation’s Moy Eng, who came to the end of her eight-year term as Director of Hewlett’s Performing Arts Program in November. As the search for her replacement drew to a close, her successor was identified as none other than Irvine Foundation arts program director John McGuirk, who had previously worked under Moy at Hewlett earlier in the decade. This, of course, opened up a new vacancy at Irvine, which has yet to be filled to date.

7. GIA Opens the Gates

I hope you’ll forgive me for including something in which I directly participated, but I really do feel it’s important (and the fact that I was the one participating is not what made it important). The annual Grantmakers in the Arts Conference, the only national convening of the folks who collectively have more influence over the future of the arts in America than just about anyone else, has traditionally been a closed-door affair. While you don’t have to be a member to attend, you do have to be staff at an arts grantmaking institution unless you’ve been offered a specific invitation to speak or perform. With one exception, the conference had never had press at any of its events and even then, they only covered the full plenary sessions, not any of the individual panels. In other words, if you weren’t there, you didn’t know what was happening, and you couldn’t participate in any way. This year, under the new leadership of Janet Brown, GIA has taken steps to open things up. In addition to inviting a blogger (me) to cover the conference, including workshops and breakout sessions, for the public, the organization has started two blogs of its own (authored by Brown and deputy director Tommer Peterson) and just unveiled a new website with an eye towards dramatically increasing the possibilities for substantive interaction online. Given the oft-heard criticism of funders as being too isolated and risk-averse, I can only say that this represents a giant step in the right direction.

6. The NEA Gets Stimulated

This was a big year for the NEA, as evidenced by its inclusion on this list four times. The first big story of the year involving the Endowment was the fight to include money for it in the American Recovery and Reinvestment Act, better known as President Obama’s economic stimulus package. It was initially expected that the biggest fight over the NEA would be among Democrats, as Americans for the Arts and other advocates urged the administration and Congress to include as much as $1 billion for the agency in the bill. But it wasn’t until after the stimulus package passed the House with what at the time seemed like a disappointing $50 million for the NEA that the real fireworks started. Republicans, who had voted as a unanimous bloc against the legislation despite numerous compromises on the part of Democrats in the name of bipartisanship, began decrying “waste” in the bill and using the arts to draw media attention to their cause. Senator Tom Coburn, whose daughter is an opera singer, actually succeeded in passing an amendment that would have barred any of the stimulus money from going to museums, theaters, and arts centers. Fortunately, the $50 million was restored in conference committee, and the NEA had a small but real pot of money to help the arts community weather the storm. If only that had been the end of it…

5. Grand Dreams for Federal Arts Policy Fail to Materialize

It may be unfair to give the Obama administration anything other than an “Incomplete” on this one. Nevertheless, it does seem clear that artists’ hopes for a dramatic reorganization and integration of cultural policy at the federal level, manifested most obviously in the hugely popular Quincy Jones-inspired petition to create a Cabinet-level Secretary of the Arts, are not going to be realized anytime soon. Despite running the first Presidential campaign in memory to pull together a committee to advise on arts policy, since taking office Obama has mostly kept the arts at arm’s length as he (understandably, for now) focuses on frying bigger fish. Rather than the Arts Czar many were hoping for (and some were dreading), the only real effort to reform the system to date has been the appointment of two officials in the Office of Public Engagement with seemingly limited, ill-defined roles, both of whom have been virtually invisible since the summer.

4. The Conference Call Heard ‘Round the World

It all seemed so innocent at the time. Yosi Sergant, newly installed as the head of communications for the National Endowment for the Arts after a successful stint mobilizing artists, designers and other creative types for the Obama campaign, had an idea. He wanted to build a bridge between the NEA and the President’s United We Serve initiative, involving artists across the country in local community service projects — thus increasing the profile both of service and of the arts. His hope, as he explained it to me one warm June night in Seattle, was to make the NEA look good through this association, to be able to say to Congress, “look what we can accomplish just on a volunteer basis; now see what we can do if you actually give us some money!” So he organized a conference call with some of his old friends from the campaign, with the help of colleagues from the Office of Public Engagement and the Corporation for National and Community Service, which ran the United We Serve program, to try to get the word out about his idea. And being that the call largely featured old friends, and that he’s a blustery person in general, he indulged himself in some blustery praise for the President which sounded, well, a little over the top if you didn’t share his political views. Just one problem: one of the people he’d invited was Patrick Courrielche, a marketing professional who most definitely did not share his political views…and wouldn’t you know it, the two of them also used to work together. Courrielche took it upon himself to secretly record the entire exchange and bring it to Andrew Breitbart’s ultra-conservative Big Hollywood blog. Courielche’s widely-circulated piece cleverly presented actual information only in bits and pieces, woven together throughout with a paranoid vision of how the call might, just might, have really been an attempt to coerce artists into becoming ideological slaves for the government. Though the original essay retained some degree of humanity and had the decency to frame the title with a question mark at the end, the conspiratorial frenzy of the Big Hollywood/Big Government community soon had Courrielche playing investigative reporter, “discovering” more and more pieces of a puzzle that ultimately fit together into something not at all like what he was describing. The damage was done, however; under intense pressure from conservative media outlets, Yosi Sergant was first reassigned from his post, then resigned from government altogether. After nine months of trying, the NEA bashers on the right wing had finally drawn blood.

3. State Arts Agencies Decimated

The numbers say it all: New Hampshire, down 32%. Ohio, down 47%. Illinois, down 51%. Arizona, down 54%. Florida, down 94% in three years. It was a terrible year for state arts agencies as the sluggish economy opened up yawning holes in many states’ financial registers. South Dakota, Pennsylvania, Connecticut, and Michigan all faced the serious prospect of closure of their state agencies and in some cases the loss of all state funds for the arts. (With the exception of Michigan, the former prospect was averted.) Hawaii’s briefly lost its executive director position; New Jersey’s governor actually ignored a law in order to cut his agency’s budget to the bone. The lone bright spot was Minnesota, where a new Constitutional amendment is expected to triple the total available for the arts in that state. Many state arts agencies had just recently returned to funding levels, in non-inflation-adjusted terms, seen prior to the last recession; it will take them a long, long time to recover from this one.

2. Rocco

For most of the first half of the year, the hottest arts policy question on everyone’s minds was the identity of the next Chairman of the National Endowment for the Arts. The LA Times ran a memorable feature in which thirty artists and celebrities were asked what they would do if they found themselves in the position. Many names were thrown around, including those of Michael Dorf, Claudine Brown, Caroline Kennedy, and Bob Lynch. Even so, Rocco Landesman’s nomination seemed to take everyone by surprise. The brash director of Jujamcyn Theaters was known for running his mouth, and sure enough he got himself into trouble almost from the moment he entered the spotlight by insulting Peoria’s theatrical community in an interview with the New York Times. (Rocco and Peoria have since become “best friends” after he kicked off his Art Works tour in that city.) Loose lips aside, though, many in the field are eager to see what comes of the Landesman chairmanship; he’s signaled an admirable understanding of and enthusiasm for the economic dimension of what the arts do, and the efforts to open up the NEA’s research to public comment have his stamp all over it. The NEA even has a new blog, Art Works, which opened with two posts from the Chairman himself. If nothing else, Landesman will keep things interesting over the next three years, and early signs suggest that his leadership may well take the agency in promising new directions.

1. The Great Recession

Rarely has a single event had so dominating an effect on the arts community as the stock market crash of September-October 2008 has had on the field this year. The Great Recession thoroughly reshaped the landscape in 2009 and served as the lens through which every decision was made and every strategy was considered. In addition to its impact on state arts agencies mentioned above, its influence was felt among the ranks of private foundations, where the Hewlett Foundation cut grantmaking by 40%, the Ford and Robert Wood Johnson Foundations offered buyouts to huge proportions of their staffs, and the Wallace Foundation let go of longtime program officers; among cultural institutions, a number of which (such as the Baltimore Opera and Los Angeles’s Museum of Contemporary Art) either closed for good or required extraordinary rescue; and among artists themselves, who despite occasionally finding creative inspiration in poverty nevertheless suffered through fewer work opportunities. Unfortunately, there isn’t much talk anymore of a swift recovery; indeed, some observers actually think 2010 will be even worse. That doesn’t mean we’re powerless, though: there are things we can all do to beat this recession together.

Honorable mention:

  • White House Social Innovation Fund
  • Michael Kaiser’s Arts in Crisis program
  • The Rise of the Twitterverse

And as a bonus, here are my picks for the top five new (in 2009) arts blogs:

5. <100K Project (Scott Walters)
4. Better Together (Janet Brown)
3. Unquiet Thoughts (Alex Ross)
2. Real Clear Arts (Judith H. Dobrzynski)
1. Arts, Culture and Creative Economy (Gary Steuer)

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[Createquity Reruns]: Arts Policy Library: Arts & Economic Prosperity III

(Arts Policy Library week at Createquity finishes up with this monster review of Americans for the Arts’s flagship economic impact report, Arts & Economic Prosperity III. Written in 2009 during a brief moment between graduating from school and starting my present job when I actually had lots of time on my hands, this is the longest post we’ve ever published and the one that famously prompted Rob Weinert-Kendt to declare Createquity “so amazingly good it’s almost in its own category of resource; ‘blog’ hardly does it justice.” You’ll want to set aside an hour or so for the full effect, but if you’re short on time, you can also check out the Cliffs Notes. -IDM)

Arts & Economic Prosperity III

Perhaps no arts-related research study is cited as frequently in the mainstream media these days as Americans for the Arts’s gargantuan economic impact survey, Arts & Economic Prosperity III. Its key message, that the nonprofit arts sector is responsible for $166.2 billion in economic activity nationwide, has been hammered home relentlessly to policymakers, politicians, grantmakers, and arts managers around the country since the report’s initial publication in 2007. Americans for the Arts clearly sees the report itself, along with the general theme of economic relevance, as central to its overall advocacy strategy: as AFTA’s Director of State and Local Government Affairs, Jay Dick, put it while speaking at the 2007 Wyoming Arts Summit,

In the past, when we went to do funding for the arts, we said, “fund the arts, it’s good for the soul.” […] That’s true, [but] it doesn’t work anymore. You know, we have to have a business argument for it. So, “fund the arts because it’s good for the soul—and they bring to the jobs to the economy and they bring taxes back into the [government].” That’s what we have to do.

Not everybody, however, is convinced. For one thing, the dual role that AFTA assumes as impartial researcher and impassioned advocate renders the report vulnerable to criticism on the grounds of bias, criticism that the report itself goes to great lengths to counter. Moreover, even assuming the numbers are accurate, thinkers from Tyler Cowen to Greg Sandow have assailed the very concept of economic impact studies and their utility in advocacy discussions. Indeed, when last we paid a visit to the Arts Policy Library, the authors of Gifts of the Muse: Reframing the Debate About the Benefits of the Arts argued that relying too heavily on economic and other “instrumental” arguments for the arts is a trap, pointing out that that economic impact studies

…receive criticism because most of them do not consider the relative effects of spending on the arts versus other forms of consumption—that is, they fail to consider the opportunity costs of arts spending. Some economists dispute the validity of the multipliers used in economic studies because they assume that spending on the arts represents a net addition to a local economy rather than simply a substitute for other types of spending.

The tension between the two approaches led journalist John Stoehr to set up a kind of debate between the AFTA and RAND texts in a 2007 article for the Savannah Morning News, a debate that in Stoehr’s mind Gifts of the Muse ultimately won.

As always, though, much is lost in a public debate about a study when most of the participants have only read the press release. The full Arts & Economic Prosperity III report contains some 314 pages of findings, facts, and figures, including 27 multipage data tables and one of the most thorough explanations of methodology I’ve ever encountered in a research report. So let’s dive in and find out what Arts & Economic Prosperity III actually has to say about the economic impact of nonprofit arts organizations in the United States.

Summary

The first thing to understand about Arts & Economic Prosperity III is that it is comprised of many studies in one. It makes use of an innovative distributed data-gathering strategy that involved partnerships with organizations and agencies in some 156 study areas across all 50 states and the District of Columbia. The study areas included 116 cities and counties, 35 multi-county regions, and five entire states. These 156 partners were tasked with identifying and coding the universe of nonprofit arts organizations in their area, using the Urban Institute’s NTEE codes as a guide; disseminating, collecting, and reviewing organizational expenditure surveys; conducting audience-intercept surveys at a minimum of 18 representative events in the area; and paying a modest cost-sharing fee (though the study authors take care to note that no community was turned away out of inability to pay this fee). The partners collectively produced 6,080 completed organizational surveys1 and interviewed some 94,478 audience members about their spending over the course of 2004 and 2005.

Americans for the Arts then collected this data and created four sets of numbers with it. First, it tabulated the total organizational expenditures in each community, noting the breakdown of artistic versus administrative versus capital expenses, and calculated the averages for each of six community cohorts based on population size, labeled A-F (0-49,999, 50,000-99,999, 100,000-249,999, 250,000-499,999, 500,000-999,999, and 1 million and up). Second, AFTA tabulated the audience expenditures related to arts events in each community (excluding the cost of admission), and calculated the averages in the same way. Third, researchers at the Georgia Institute of Technology ran both the organizational and audience expenditure numbers through a sophisticated econometric tool called an input/output model to estimate the cumulative local transactions that those expenditures might cause in each community. Though those results aren’t reported in the study directly, the researchers ran them through another set of models to come up with estimated resident household income, employment figures, and state and local government revenue that could be attributed to the organizational and audience expenditures. Finally, taking the averages for each of the six population groups, AFTA calculated national estimates for all six of the metrics listed above by mapping the averages on to the populations of the 12,662 largest cities in the United States. (Note: only the 116 cities and counties, the smallest unit studied, were used in the calculation of the national estimates.)

The resulting figures will look familiar to anyone who’s read a news story about arts funding lately. Nonprofit arts organizations account for $63.1 billion in organizational spending and $103.1 billion in audience spending nationally, for a total annual industry footprint of $166.2 billion. Collectively, these expenditures support an estimated 5.7 million full-time equivalent jobs, $104.2 billion in annual household income, $7.9 billion in local government revenue, $9.1 billion in state government revenue, and $12.6 billion in federal income tax revenue.

The study reports that the typical attendee forked out $27.79 per event on top of any cost of admission—what the study calls induced spending—on things like meals, refreshments, clothing, lodging, souvenirs, child care, and transportation. As one might expect, the numbers vary dramatically between local and nonlocal attendees (nonlocal defined as traveling from outside the county). Tourists spent more than twice as much on average as residents on event-related items ($40.19 vs. $19.53), the biggest increases coming from single-night lodging (more than tenfold) and transportation (nearly threefold). Tourists also spent 40-50% more on average than residents on meals/refreshments, gifts/souvenirs, and “other.”

Arts & Economic Prosperity III is, as the title implies, the third study in a series. (A fourth is planned for launch next year.) Comparisons to the previous edition, using data collected in 2000, show a growth of 24% in the five years between studies—a rate that sounds impressive at first, but was actually outpaced slightly by growth in overall US GDP during the same period. Twenty-five communities were represented in both the second and third editions of the study; this group grew more than twice as fast as the national estimates.

Some of the most interesting statistics from the study aren’t the ones that usually make it into the press release or the media alerts. For example, the 6,080 participating organizations reported an average of 125 volunteers who donated a mean of 45.3 hours each in a year. That’s a simply astounding level of volunteerism. The total of 191,499 hours is valued at $3.4 million using Independent Sector’s 2007 valuation of volunteer time. Those hours have no economic impact as defined by the study (and are not included in the national estimates of economic activity), but the study authors take care to note that they add much value to artistic communities anyway. In addition, 71% of responding organizations received in-kind support of one kind or another, valued at an average of $47,906 per organization. The largest source of such support was corporations at 61%, with the balance from individuals, local and state government, local arts organizations, and other.

Though not reported in the study text, the audience demographics (Tables 25-27) are worth a look. Women consistently outnumbered men by nearly a 2:1 margin in almost every community. Assuming the survey samples were representative, we can conclude that arts audiences are VERY well-educated (more than 83% reported having a college degree, and fully a third had one or more graduate degrees) as well as quite affluent (30% reported a household income of more than $100,000). More than 80% of audience members are 35 or older. These results tracked quite consistently between urban and rural areas and between residents and tourists, with the exception that audiences tended to be a bit richer and better-educated in big cities.

I also found Table 9 notable for its breakdown of organizational expenditures on artists. In almost all communities, artists themselves get a truly tiny slice of the money that goes to support the nonprofit arts. Their share was only 11% overall, and ranged as low as 7% in the group of the smallest cities and counties. In a few areas, like Lauderdale County, MS and the entirety of Northwest Minnesota, the total amount spent on artists in a year was not even enough to pay one person’s salary.

Analysis

Since there seem to be a number of misperceptions about Arts & Economic Prosperity III in the media and elsewhere, perhaps the most helpful step I can take at the beginning is simply to delineate what the study is and what it is not. I can tell you that Arts & Economic Prosperity III is:

  • A serious study. One thing that becomes clear from reading the entire report is that the people behind Arts & Economic Prosperity III invested significant time and care into getting the numbers right. As I mentioned earlier, A&EP III has one of the most comprehensive explanations of methodology I’ve seen in a research study – a full ten pages of information representing one-third of the non-appendix portion of the report. The authors even make a valiant effort to explain the mechanics of input/output analysis, an advanced econometric technique involving matrix algebra and other graduate-level technical sophistications. Time and again, as questions popped into my mind while I was reading along, I would find them answered in the next section or by the end of the report. Wary of any perception of bias on the part of an advocacy organization tasked with making the case for government funding of the arts, researchers took numerous steps to ensure that the final estimates would not be skewed too far in favor of that conclusion. These steps included large decisions with major implications—the country’s two largest cities, New York and Los Angeles, were excluded from individual study in part because of their outlier status among American arts scenes; areas with unusually high economic activity for their population group, like Teton County, WY and Laguna Beach, CA, were excluded from other national estimates—and small details—like the fact that the audience expenditure survey checked to make sure respondents were over 18, or that organizations collected data throughout the year in order to guard against effects of seasonality.
  • A legitimate estimate of total annual nonprofit arts organization and event-related audience expenditures in the United States. Even if you find yourself confused or unconvinced by the input/output model, that $166.2 billion number has nothing to do with it. The organization expenditure estimate is a direct extrapolation from the responses of 6,080 survey participants (which is quite a robust sample) based on the populations of the communities in which they operate. There’s nothing mysterious about this part of the study.Likewise, the audience expenditures—which don’t include tickets or admission prices—are extrapolations of the information from 94,478 survey respondents and everyone in their party (so, in actuality, a sample of nearly 300,000). By excluding airfare and more than one night’s worth or lodging, researchers did their best to limit their inquiry to expenditures directly linked to arts events that would mostly be staying in the local area.
  • Clear evidence that the arts are a big deal in this country. The core takeaway of Arts & Economic Prosperity III – that “the arts mean business” – is amply demonstrated by the data. $166.2 billion is a lot of money, well more than one-thousand times the direct support provided by the National Endowment for the Arts in 2005. The $63.1 billion represented by the organizational expenditures alone is more than the revenue figures for spectator sports, furniture stores, coal mining, or the hunting, fishing, and logging industries combined. And as the authors point out, most industries can’t claim the same kind of “induced” spending—related payments made by consumers to third parties in connection with a core purchase—that the arts can. Even if the numbers aren’t dead on—a possibility I’ll explore in a bit—the point is clear: nonprofit arts organizations play a far more central role in the nation’s economy than commonly believed.

 

On the other hand, Arts & Economic Prosperity III is not:

  • A perfect study. Despite the authors’ seriousness of intent, the study does contain a few errors, idiosyncrasies, and other less than ideal aspects of its construction. These range from embarrassing but ultimately unimportant mistakes like the mislabeling of the audience income demographics in Tables 25-27 (the last column in each table should read “$100,000 or More” instead of “$120,000 or More”) to potentially more significant issues like the inclusion of both Miami and Miami-Dade County among the 116 cities and counties used for the national estimates, which would lead to an over-representation of Miami’s organizations and audiences in the sample. Other issues will be examined when we take a look at the actual numbers.
  • A demonstration that the arts cause economic growth. This is perhaps the single most prevalent myth about Arts & Economic Prosperity III and economic impact studies in general, a myth that is in no way dispelled by language like “the nonprofit arts industry generates $166.2 billion in economic activity every year,” that often accompanies the report. Merely counting up the activity associated with the arts in that community doesn’t show that the arts created that activity. Indeed, they easily could have just pointed it in a different direction. If there were no arts, would the audiences who spent $40 to buy dinner across the street have gone hungry instead? Would the office bookkeeper for the local museum not have found another job elsewhere? As I understand it, the arts (or anything else) can cause a net local increase ineconomic activity under traditional definitions essentially in two ways: 1) if they satisfy an unmet need such that people are motivated to spend more money on the arts than they would have spent on other things, thus inducing demand and ultimately driving a higher standard of living; and 2) if they draw money into a community from outside of it. The arts can actually make a pretty decent case for the latter on a local level, thanks to cultural tourism. But once you combine all of those local communities together to make a national estimate, all of those “nonresidents” of your county—with the exception of international travelers—suddenly become residents of the good ol’ USA, and the economic activity associated with the arts is no longer being drawn in from outside the community but merely shifted around within it. As for the first way of creating value, it’s anyone’s guess as to whether and how much that really happens. Essentially, we would need evidence that the same people, on average, are willing to spend more money over the course of a year to attend arts events than they would if there were no arts events to attend. So willing, in fact, that they would take steps in their lives to ensure that they have more money to spend on such things, which (by economic logic) would mean that they would increase their own productivity and value to society, thus making us all better off. No one, to my knowledge, has conducted a study like that, though some researchers have made strides in showing a causal relationship between arts activity and other indicators like housing prices.
  • Particularly useful for policy decisions on its own. Let’s say I have some money to give out to improve the city, and I have to decide how to spend it. You come to me and you say, “you should spend that money on nonprofit arts organizations. Nonprofit arts organizations spend a lot of money.” I reply, “umm…okay, that’s interesting.” You go on: “nonprofit arts organizations employ a lot of people.” “So do our pharmaceutical and insurance industries,” I answer. “Should we subsidize them as well?” Finally, you bring out the big guns. “Nonprofit arts organizations produce revenue for your tax base.” “Well, clearly you are already doing a great job of that without my support,” I conclude. “I don’t see a reason why I should give you any.” Do you see how most of these arguments, in a vacuum, are kind of non sequiturs? If one is making an economic argument, policymakers need to know not just what the arts do now but what they can do in the future with an additional investment—their investment. And they need to know how that compares with other potential recipients for that investment. I believe that there are ways to do this, but unfortunately, this particular study is hardly…
  • A study of the arts’ “return on investment.” Out of all the report’s assertions, the only one I’d describe as downright false appears right there in the introductory letter on page one—and never again in the report:

    Our industry also generates nearly $30 billion in revenue to local, state and federal governments each year. By comparison, the three levels of government collectively spend less than $4 billion annually to support arts and culture—a spectacular 7:1 return on investment that would even thrill Wall Street veterans.

    It’s only a seed, but it’s been enough to sprout numerous other attempts to use this logic (like in this piece from earlier in the month in Miami-Dade County). This much is true—a 7:1 return on investment would indeed thrill Wall Street veterans. It’s too bad the examples aren’t remotely comparable. The $4 billion in government investment and $30 billion in government revenue are two different beasts, apples and oranges. As the report itself tells us, nonprofit arts organizational expenditures total $63.1 billion—which means that the $4 billion coming from the government only accounts for about 6% of this total. Take away that 6%, and you’d still have 94% of those expenditures left—and, presumably, something like 94% of the tax revenues. So, that $4 billion in government investment is really only “responsible” for that last 6%—which turns out to be about $1.9 billion, or considerably less than a 7:1 return (more like 0.5:1, for those keeping count). Now, in fairness, the real story is probably more complex than this—surely the government’s impact is not strictly linear, but makes certain projects possible where none had been before, and communities may be able to leverage that support in other ways. But to realize what a junk statistic this is, think about it this way: if a state, oh, let’s say Pennsylvania, were to get rid of its arts funding entirely, all of the sudden it would be able to claim an infinite return on investment from any arts-related tax or other revenues that come in after that! I’m not sure this is really the line we want to be pushing in these battles.

 

Now that we understand what A&EP III is trying to do, let’s take a close look at the numbers the researchers actually came up with. I’ll divide these into five categories: the organizational expenditures, the audience expenditures, the volunteer contributions, the input-output model, and the national estimates.

Organizational expenditures

The collection of the organizational expenditure data for each community was probably the simplest aspect of the study, so I think it’s reasonable to assume that, in most areas, the numbers represent decent estimates. A few caveats do apply, however, which I’ve listed with the direction in which they are likely to have skewed the totals (if any):

  • First, it worries me a little that the partner organization in each community was given the autonomy to implement the study themselves. While it was probably the key factor in making the scale of the study possible, this distributed approach opens up a number of quality control and consistency issues. For example, who from the organizations was conducting the surveys? Was it senior management? Program staff? Interns? LIKELY IMPACT: UNKNOWN
  • The report mentions that the Urban Institute’s NTEE designations were used as a starting point for identifying relevant arts nonprofits in their area. Hopefully, partners would have gone the extra mile to edit those lists, but I can tell you from experience that going by the NTEE codes will tend to result in missed organizations, sometimes important ones, that are coded incorrectly or not at all. LIKELY IMPACT: SKEW LOW
  • The study only counted the numbers for organizations that responded to the survey, which means that for communities that saw less than 100% response (which was most of them), there’s almost certainly an undercount. (It also means that communities that had higher response rates were over-represented in the national estimates.) Response rates ranged from 10.4% to 100%, with an average of 41.3%. LIKELY IMPACT: SKEW LOW
  • Though responding organizations were asked not to include grants to other arts organizations, any payments to other arts organizations (for example, a presenter paying a nonprofit chamber ensemble, or renting performance space from another nonprofit) could result in double-counting. LIKELY IMPACT: SKEW HIGH
  • When you get down to the itemized level, there are some bizarre oddities in the data that, taken together, throw a bit of a shadow on the rest of the numbers. For example, in Table 9, Allegheny County (Pittsburgh) arts organizations are shown as spending nearly eight times as much on artists as Philadelphia, despite having only a third of the total expenditures. Similarly, Jefferson County, AL (Birmingham) is shown as spending more than three times as much on artists as Baltimore, despite budgets only 40% the size. LIKELY IMPACT: UNKNOWN

Audience expenditures

A&EP III employed the audience-intercept method for collecting information about audience expenditures, which from what I can gather is similar to the method used for exit polling in national elections. The caution I mentioned above about the autonomy of the partner organizations applies even more strongly to this portion of the study, as administering survey instruments in person is something usually done by professionals. The survey asked audience members not to report expenditures on airfare, presumably because most of that spending would not impact the local community (also because it’s unlikely that most tourists had flown to the area specifically to see that one event, which is the rationale behind counting only one night of lodging). Other notes and caveats include:

  • Audience members provided information about their entire party, which might have decreased the reliability of the data since the practice assumes that respondents knew what other people in their party spent. I’d think this would be more likely to result in undercounting (missed purchases) than overcounting. LIKELY IMPACT: SKEW LOW
  • Any spending on concessions at the event (e.g., buying a glass of wine in the lobby at intermission) would be double-counted, since that money would become revenue for the organization and eventually show up in its expenditures. I believe the same is true for items bought at museum gift shops. LIKELY IMPACT: SKEW HIGH
  • Though audience members were instructed to report lodging expenses for the night of the event only, it’s a bit questionable how attributable some of these expenditures really were to the arts event. For example, if someone bought an outfit to wear that night, does that mean they wouldn’t have bought the same outfit on some other occasion? If someone was in town overnight, does it mean that they were there specifically for that event? LIKELY IMPACT: SKEW HIGH

Volunteer contributions

As mentioned in the previous section, the volunteer hours reported by nonprofit arts organizations are extraordinarily high. According to the study, volunteers supply the labor equivalent of two full-time staff positions to the average arts organization each year. Upon closer examination of the numbers, I couldn’t find any obvious red flags—while there’s some variation, nearly all communities reported a higher level of volunteerism than I would have expected, even when considering the contributions of board members, etc. I can think of only two plausible explanations. One is that organizations must be counting unpaid internships. The other is that some, especially smaller, organizations may be counting uncompensated time put in by founders or artistic/executive directors, which is likely to be substantial in many cases. These are not the kinds of things that normally come to mind when I think of “volunteer work,” but of course that is what they are, so I guess I’m inclined to take the results at face value. The valuation of volunteer time at $3.4 million comes from Independent Sector’s Giving and Volunteering in the United States 2006, which pegs the value of an average volunteer hour at $18.04 in FY05.

Input/output model

As explained by the report, an input/output model consists of “systems of mathematical equations that combine statistical methods and economic theory” that trace “how many times a dollar is respent within the local economy before it leaks out” and quantify “the economic impact of each round of spending.” The ”economic impact” in question is no more and no less than transactions: if I pay you $20 to serve me food, I have increased economic impact by $20 according to this definition. I won’t attempt to recreate the report’s detailed and extremely technical explanation of how the input/output model works; you can read it for yourself if you like. The basic idea is that for each community, a team led by the former chair of the school of economics at Georgia Tech, Bill Schaffer, constructed a matrix of the dollar flow between 533 industries based on data from the Department of Commerce and local tax records. After adjusting to include only local transactions, this table was then simplified to a matrix of purchase patterns of 32 industries plus households. The table was then run through an iterative model that, at each stage, sought to calculate the local requirements in terms of output to make possible the numbers seen in the previous iteration of the table. After a certain number of rounds (I think 12, but it’s a little hard to tell from the description), the numbers are all added up to get the total cumulative transactions made possible by an infusion of the amount of money represented in the organization and audience expenditures.

I don’t really have any complaint with the input/output model itself—it was constructed by a trained professional, and without having access to the actual spreadsheets and models used, there’s no way for me to verify its conclusions independently. The main issue is more conceptual: namely, that the model takes for granted that all of the money coming in as a result of organizational and audience expenditures is new money, money that would not have been available to the community otherwise. But of course this isn’t true: if people weren’t working as or for artists, and going out to see arts events, they’d probably be doing something else that would involve money—quite possibly more money than there is in the arts, given the high education levels of many in the field. One way to deal with this, at least on a local level, would be to simply exclude the spending of residents, figuring that what we care about is new money brought into the community by those outside of it. This methodology would break down significantly at the level of a national estimate, however. Perhaps this is why the study authors admit,

…as in any professional field, there is disagreement about procedures, jargon, and the best way to determine results. Ask 12 artists to define art and you will get 24 answers; expect the same of economists. You may meet an economist who believes that these studies should be done differently (for example, a cost-benefit analysis of the arts).

Indeed, I would have been very interested to see the results of a cost-benefit analysis, as it would seem to me to be a more relevant measure of the value of public investment in the arts. However, the input/output model is what we have, and so it is up to us to understand properly what it means. As with the expenditure totals, the impacts on things like employment, household income, and tax revenue are associations rather than causal links. The arts may account for 5.7 million jobs nationally, but that doesn’t mean that they’ve added 5.7 million jobs to the economy that wouldn’t be there otherwise.

National estimates

At first glance, one would assume that the national estimates of organizational and audience expenditures are almost certainly skewed low. As mentioned earlier, the study leaves out specific estimates for our nation’s two largest cities, New York and Los Angeles, instead assigning them the averages for the 1-million-and-up population group. This decision was made, according to AFTA’s Senior Director of Research Services, Ben Davidson, thanks in part to cost considerations as well as a desire to avoid overinflating the national totals. By how much does this downplay the overall national estimates of economic activity? Well, the average for the Group F (population 1,000,000+) bucket of cities and counties is $408 million in total expenditures by organizations and audiences. Two estimates for organizational expenditures alone are $5.8 billion for NYC and $1.5 billion for LA; assuming a similar spread on the audience side, we’re probably looking at a gap in the ballpark of $13 billion caused by not measuring those two cities directly. Furthermore, an untold amount of activity is left out because the study tabulated spending figures and estimated audience totals only from organizations that responded to the survey. One would hope that the most significant organizations in each community were more often than not in the responding column, but even so it’s likely that a fair amount of economic activity in the 156 study regions simply was not counted.

Despite the factors mentioned above, I think that there remains a pretty compelling reason to think that the national estimates are actually overinflated after all. The reason is simple, but easily missed. It is selection bias among the 156 study regions—and specifically, among the 15 communities in the smallest population category, that of cities and counties containing fewer than 50,000 people.

Think about it this way: in order to participate in the study, a community needed to have a nonprofit organization or government agency with the following attributes: a) a programmatic focus on the arts (preferably exclusively on the arts); b) the staff capacity, expertise, and interest to manage a research project that involved identifying and surveying all of the nonprofit arts organizations in their area and conducting in-person audience surveys at a minimum of 18 events throughout the year; and c) the financial capacity to participate in AFTA’s cost-sharing fee (note: though this fee was supposedly waived for any partners that couldn’t afford to pay it, it’s unclear to what extent partners who didn’t take the time to ask were aware that this was an option—the call for participants for Arts & Economic Prosperity IV, for example, does not mention the fee waiver.)

Out of the thousands of cities and counties in the United States with populations of less than 50,000, how many of them do you think meet these criteria? Do you think that there might be some important differences between the ones that did and chose to participate in the study versus the ones that didn’t? Like, for example, a LOT more arts organizations and arts spending?

Luckily, Arts & Economic Prosperity III studied a few different kinds of regions, including entire states, making some interesting comparative analysis possible. I put together a table below with the average economic activity per capita for each of the six population subgroups for the cities and counties, as well as the average for the 35 multi-county regions and the estimates for each of the five states studied. First, looking at the different population subgroups, rather than per-capita spending going down as populations get smaller and more spread-out as one might expect, there’s a big jump in both organization and audience expenditures from group B (50,000-99,999) to group A (under 50,000). More interesting, however, is the comparison between the cities and counties and the multi-county regions, and especially the entire states. A statewide count would not suffer from the selection bias discussed here: instead, it would incorporate urban and rural areas in proportions not all that dissimilar from the rest of the country. Similarly, some of the multi-county regions studied occupy large swaths of land, and their arts organizations could pool their resources to meet the requirements for participation in the study.

AFTA report numbers

The average expenditures in the smallest city and county population group are absolutely off the charts. Group A cities’ and counties’ arts organizations spent nearly two and a half times as much per capita as the regional average and more than three times as much as the statewide average. Their audiences spent more than five times as much as the statewide average.2 It’s not just group A, though—all of the city and county subgroups have per capita expenditures higher than those for the regions and states. In fact, the highest average for a state in the study was lower than the lowest average for a city/county subgroup. That’s not random. That’s selection bias.

So what happens when your national estimate is based on the city and county averages in Groups A-F (and especially sky-high group A) rather than the lower regional and statewide averages? Remember, the estimate is based on the populations of the 12,662 largest cities in the US—all the ones with populations of at least 500, according to Davidson—and more than 90% of those cities would have been in Group A.

Well, we can do a little exercise to sense-check the numbers. The total nonprofit arts organization expenditures nationally should be roughly equal to total arts organization revenues. I checked the Giving USA statistics for arts and culture, which include contributions from individuals, foundations, and corporations but not government support or earned income, and got an estimate of about $12 billion for 2006. Then I checked data from the National and Local Profiles of Cultural Support study that looked at the typical breakdown of income sources for nonprofit arts organizations and pegged the contribution of private donations from individuals, foundations, and corporations at 25% as of 1998. So if $12 billion accounts for 25% of arts organizations’ budgets, their total budgets should be around $48 billion—not outrageously off, but nevertheless only about three-quarters of AFTA’s $63.1 billion estimate. And 25% was the lowest estimate I found on the web of private contributions to nonprofit arts budgets. Now, this is not conclusive–it’s certainly possible that Giving USA itself undercounts the revenues of nonprofit arts organizations and foundation contributions. And maybe the breakdown of income sources was dramatically different in 2005 for whatever reason. But given the information we have, I think it’s fair to assume that AFTA’s expenditure numbers are probably not that conservative after all.3

Implications

So is Jay Dick right that we need “a business argument” for the arts? I think he is, and I think Arts & Economic Prosperity III is helpful in that regard—to an extent.

As I read Arts & Economic Prosperity III, I found myself coming back again and again to the theme of language. A&EP III is a serious study, one worthy of our attention and use for advocacy and research purposes. However, some of its potential impact is undermined by the hyperbolic language with which it is often presented to the press and politicians. The first several pages of the report are cluttered with spurious or misleading statistics and graphs that distract from the more strongly supported of the study’s findings. For example, on page seven there’s a graph that shows “jobs supported by nonprofit arts” apparently outnumbering several categories of specific professions, including lawyers, farmers, and computer programmers. Of course, there’s a crucial difference: the arts number includes all jobs supported by the industry (according to the study’s calculations–so, not just artists and arts organization employees but people at Staples, Guitar Center, etc.), rather than jobs in specific professions. Any of those industries—software, legal, agriculture—could likely draw up a similar graph to make itself look good. Or take the consistent use of the word “generates” when talking about the economic transactions associated with arts organizations and audiences, which clearly implies a causal connection that has not been shown to exist. There is a whole section entitled “Nonprofit Arts & Culture: A Growth Industry” that conveniently downplays the fact that the arts grew at rate slower than overall GDP between this study and the last one. And then there’s that bogus 7:1 “return on investment” figure that we dissected earlier. These overreaches ultimately provide fuel to the economic impact naysayers such as Cowen and Sandow, and may only encourage those with an axe to grind against the arts to sharpen their instruments.

That’s a shame, because I think there is a real case to be made for the economic impact of the arts. As we’ve seen in several smaller studies that focused on particular geographic areas, there seems to be strong evidence for a causal relationship between the density and proximity of arts providers today and growth in local real estate prices tomorrow. That, pure and simple, is economic impact right there. Furthermore, though I’ve spent much of this article talking about substitution effects and pooh-poohing the notion that all of the spending associated with the arts represents spending that wouldn’t have occurred otherwise, it would be equally foolish to assert that none of that spending represents new value being created, either through bringing money into the area via cultural tourism or improving quality of life such that people are willing to spend more than they would have otherwise.4 Even if the arts turn out not to be the absolute most surefire way to spur economic development in local communities in all cases, I think we can assume that they often represent one component of a successful growth strategy. And certainly we can argue with a clear conscience that the arts support real jobs, that they play a much bigger role in the economy than commonly assumed, and that public subsidization for the arts is not the same thing as a giveaway.

For the fourth edition of Arts & Economic Prosperity, which is in its planning stages right now, I hope Americans for the Arts will take advantage of its strong local partnerships and infrastructure to help fill in some of the gaps in what we know. The building blocks for causal analysis are already there. In fact, the audience questionnaire for A&EP III did ask audience members the reason why they were in town that evening, and one of the options was “I am here specifically to attend this arts event.” Alas, this information never found it into the data tables or the report itself. Another question on the survey could ask audience members what they would have done with their time and money instead that afternoon or evening if they had not attended the event. Even though this wouldn’t be the most reliable data in the world due to its reliance on self-reports of hypothetical situations, it would nevertheless get us a step closer to an understanding of the true economic impact of arts events. Finally, at the organization level, it seems obvious that government investment in the arts must have some return, we just have to be careful about attributing outcomes to it that would have happened anyway. So why not ask organizations where they would make cuts if deprived of government funds as part of the expenditure survey? If you really wanted to go nuts with it, you could literally ask them to submit a revised budget that doesn’t include government support and see what they end up cutting. This last approach, needless to say, would be difficult to pull off, but one wouldn’t need to do it everywhere to get some idea of what the overall picture would tell you. A few sample communities might be sufficient as a pilot.

We should be grateful to Americans for the Arts for investing as much time, capital, and seriousness of purpose into this research as it has. While there are a number of paths open for improvement of this work, the foundation upon which those improvements would be laid is solid. I look forward to finding out what Arts & Economic Prosperity IV will have in store for us.

 

1Since the study focused on nonprofit arts organizations, spending by for-profit creative firms and industries was excluded, as was any spending by individual artists. However, government-sponsored arts councils and presenting facilities were part of the study, and so were select programs embedded within non-arts organizations, such as university presenters.

2In fairness, the authors did exclude Laguna Beach, CA from the organizational expenditures and Teton County, WY from the audience expenditures when calculating the national estimates. However, even with this precaution in place, the averages still compute to $210.76 and $251.93 respectively–far above the next-highest number in each category.

3Part of the problem, really, is that organizational and especially audience expenditures just aren’t that strongly correlated with population. Looking at the data tables, one sees huge variances in nonresident spending totals between cities in the same category, like Miami Beach ($72.2 million) vs. Lauderdale County, MS ($502k), or Philadelphia County ($565 million) vs. Suffolk County, NY ($5.7 million). I’m guessing there are a lot more Lauderdale Counties in this country than Miami Beaches. (Indeed, according to Davidson, this is the reason why the cities with a population of less than 500 were not included in the estimates.) If it were possible to extrapolate the national estimates using local estimates of economic activity rather than population size, this approach might yield a more reliable result.

4While this study documents attendance at arts events by nonresidents, it does not do much to show that their travel plans were dictated by those events. However, it does point us to resources that go farther: a 2001 study by Travel Industry Association of America and Partners in Tourism found that 65% of adult travelers attended an arts and culture event while on trip 50+ miles away from home, and that 32% of these (i.e., about 20% total) stayed longer because of event. And of those that stayed longer, 57% (or about 11% of all travelers) extended their trips by one of more nights. So we can infer from this that arts and culture events were directly responsible for one or more nights of lodging expenses for approximately 11% of adult long-range travelers in 2001.

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[Createquity Reruns] Arts Policy Library: Fusing Arts, Culture and Social Change

(Holly Sidford’s “Fusing Arts, Culture and Social Change” is perhaps the most talked-about arts research publication of the past five years, and Createquity’s take on it went against conventional wisdom in several important ways. This review by Talia Gibas is a great example of the nuance we try to capture when we’re considering what research efforts have to teach us. -IDM)

FACSC Cover

(For a quick summary of this post, see “Fusing Arts, Culture and Social Change: the condensed version.”)

Holly Sidford’s “Fusing Arts, Culture and Social Change: High Impact Strategies for Philanthropy” calls for a major overhaul in arts philanthropy in the United States. It is one of a series of reports commissioned by the National Committee for Responsive Philanthropy (NCRP) as a follow-up to its 2009 Criteria for Philanthropy at Its Best: Benchmarks to Assess and Enhance Grantmaker Impact. NCRP established benchmarks for funders to strive toward in order to “maximize their impact and best serve nonprofits, vulnerable communities and the common good.” Those criteria, along with their associated benchmarks, are as follows:

  • Values: at least 50% of grant dollars provided to benefit marginalized communities (defined broadly using 11 categories, which include the economically disadvantaged; racial/ethnic minorities; victims of crime/abuse; single parents; and LGBTQ citizens), and 25% for advocacy and civic engagement
  • Effectiveness: providing at least 50% of grant dollars for general operating support and 50% as multiyear grants, and ensuring that application and reporting timelines are aligned to grant size
  • Ethics: maintaining a board that serves without compensation and includes representatives from the community it serves
  • Commitment: paying out a minimum of 6% of a foundation’s assets annually in grants, and investing at least 25% of those assets in ways that align with its mission.

“Fusing Arts, Culture, and Social Change” examines how current practice in arts funding holds up against the NCRP benchmarks, and calls on the field to refocus its energies and resources in a number of different ways.

Summary

The central argument of “Fusing” is that arts philanthropy, as currently structured, perpetuates inequality across the arts and culture sector, and across society as a whole, by disproportionately funding large institutions that focus on Western European traditions. According to the report, this practice is problematic for a number of reasons:

  • It “restricts the expressive lives” of a large swath of our society
  • It benefits institutions patronized primarily by the wealthy, and, by extension, benefits the wealthy themselves, flouting justification for the tax-exempt status foundations and arts organizations enjoy
  • It ignores emerging practices within the artistic landscape, threatening to render arts philanthropy irrelevant
  • It undermines the potential of arts and culture to be tools promoting democracy and social change

This practice is not new. Arts philanthropy, Sidford argues, was from its early days “not motivated by a desire to relieve suffering, help the poor or find systemic solutions to pressing social problems,” but to reinforce an elitist system in which wealthy individuals patronized museums and orchestras to signal their status. Arts and culture philanthropy was firmly divorced from any funding meant to address social inequity. To this day, “early arts patrons’ preference for the European high art canon, and for the institutions that reflect and support social elites, continues to frame funding patterns.” To support this claim, “Fusing” examines Foundation Center data on how many funding allocations for arts and culture are made with the specific intention of benefiting disadvantaged communities:

95% of the foundations analyzed gave grants with a primary or secondary purpose of arts and culture. But only 10% of these arts and culture grant dollars were classified as benefiting one of the 11 underserved populations included in the NCRP’s analysis, and only 4 percent were classified as advancing social justice goals.

Furthermore, the Foundation Center data suggests “the greater a funder’s commitment to the arts, the less likely it is to prioritize marginalized communities or advance social justice in its arts grantmaking… arts funders whose main focus lies outside of the arts appear to value the catalytic role of the arts in serving social justice goals more than funders with larger arts portfolios.”

GRAPH 9: The Greater a Funder's Commitment to the Arts, the Less Likely They are to Prioritize Marginalized Communities or Advance Social Justice

Sidford cites a number of present-day factors – demographic, aesthetic/artistic, and economic – that she believes make the case for change in philanthropic practice all the more pressing.

Demographics

“Fusing”’s demographic data, mainly drawn from the 2010 U.S. Census, centers on the changing racial and ethnic composition of the United States, the widening gap between the rich and poor, and persistent inequities in education, civic participation and health care. Each of these inequities, according to Sidford, is currently being addressed in some way by artist-activists and community-based cultural organizations that are not receiving the recognition or support they deserve. Their existence, and the fact that there has been an “enormous increase in the number of cultural organizations in the past two decades,” underscores the “universal desire for arts and culture in every community” – a desire that needs to be acknowledged with broader philanthropic support.

Artistic/Aesthetic

Despite being persistently undervalued and underpaid, artists play a vital role in preserving non-European cultural traditions, contemporizing and blending them to create new ones, and breaking new ground in finding ways to apply the arts toward social justice goals. “Fusing” cites Americans for the Arts’ 2010 “Trend or Tipping Point: Arts and Social Change Grantmaking,” which reports growing funder interest in supporting arts and culture projects that intersect with other social justice goals such as health and education. Many organizations engaged in this type of hybrid work, however, “do not fit the classic model of an arts institutions, operating more on a collectivist or community organizing model” that renders them difficult to assess or to assign to a particular funding category.

Cultural Economics

The report’s final case for change revolves around the distribution of funding, pointing to inherent inequities in large, mid-sized and small organizations’ access to private and public capital. According to data from the Urban Institute, organizations with budgets under $500,000 generated 51% of their revenue from contributions, gifts and grants, while the largest nonprofits with budgets over $5 million reported receiving just over 60% of their revenue from such sources:

TABLE 1: Arts Nonprofit Revenue Sources by Budget Size

The disparities appear even greater when looking at how all contributed revenue is distributed across arts organizations of various budget sizes. Only 18% of all contributions, gifts and grants made to arts nonprofits in 2009 went to organizations with budgets less than $500,000, despite the fact that these organizations represent 84% of the total. By contrast, 55% of contributions, gifts and grants go to organizations with budgets more than $5 million. Put another way, organizations that in number represent only 2% of the nonprofit arts sector receive 55% of public and private subsidy:

TABLE 2: Distribution of All Arts Nonprofit Revenue By Recipient Budget Size

Sidford suggests that these disparities are likely mirrored individual donor practice, citing a study by The Center on Philanthropy at Indiana University that found more than 70% of highly affluent households gave to the arts in 2009, compared with less than 8% of the general population. Artists and organizations serving marginalized populations, she argues, have more difficulty soliciting individual donations because their constituencies are less able to provide financial contributions. Recent drops in public arts funding (including a 20% decline in local government expenditures on the arts between 2008 and 2010) make circumstances all the more bleak considering that public funding has traditionally been moreaccessible to cultural groups serving marginalized populations. “Shifts in public sector funding,” Sidford writes, “have both immediate and long-term implications for the cultural ecosystem, particularly for the smaller, newer, edgier parts of that system and the artists and groups serving our least advantaged communities.”

Recommendations for Moving Forward

In light of these trends and challenges, “Fusing” asks that arts and culture-focused foundations “make equity a core principle of [their] grantmaking by paying more attention to the people who will benefit from [their] grants and the processes by which the arts and culture provide those benefits.” To assist in this process Sidford provides questions designed to help funders make equity a greater focus in their work. The questions are grouped under five broad purposes for arts philanthropy:

  • Sustaining the canons (defined as “important works from established traditions”)
  • Nurturing the new (including new artistic works and new audiences for that work)
  • Arts education (including media literacy, art appreciation, and advocacy for equity of access to arts education for all children)
  • Arts-based community development (“endeavors and organizations that intertwine artistic and community goals”)
  • Arts-based economic development (includes arts incubators, spaces for artists, cultural tourism, etc)

The questions under each category focus primarily on diversity (i.e. “Are we recruiting actively applications from artists and organizations working outside the European canon?” “Are artists from diverse cultural backgrounds involved in the programs we fund?”) and breaking down traditional silos between arts and non-arts funding (i.e. “Are we funding both arts and non-arts organizations doing this work?” “Do we recognize art and social change as a form of artmaking?”) “Fusing” concludes by challenging funders to re-examine longstanding assumptions about the role the arts can and do play in our society,“asking, in an authentic way, ‘What is the purpose of philanthropy in the arts today?’”

Analysis

As noted above, “Fusing Arts, Culture and Social Change” was written with the intent of applying the NCRP’s criteria for effective grantmaking to the arts. Those criteria generated a good deal of discussion and controversy when they were released. Members of the philanthropic community, such as then William and Flora Hewlett Foundation President Paul Brest, questioned whether funders should prioritize reducing poverty and discrimination over other social goals such as addressing climate change, pursuing medical breakthroughs, or supporting – you guessed it – the arts. “Fusing” takes NCRP’s criteria for philanthropy, and their underlying premise that serving disadvantaged populations should be a focus for all grantmaking, as a given.

Like the NCRP report, “Fusing” provoked strong and varied reaction across the arts and funding communities (GIA’s online forum on equity in arts funding provides a good sample) when it was originally released. It also provoked a strong and varied reaction in me. Reading it evoked frustration similar to what I feel when I read arts education reports that draw conclusions affirming my fundamental beliefs (i.e. that the arts are a powerful learning tool for children), without providing clear evidence for those conclusions. I understand and support the arguments the reports are trying to make, but wish they did a better job making them.

“Fusing” contains a number of such arguments – about the role of philanthropy and of art in society – that are more values-driven than data-driven. In many cases those values align with my own. I believe, for example, that the arts provide concrete social benefit beyond simple aesthetic pleasure. I believe that all members of our society do not have equal access to that benefit, and that is a problem the private funding community can and should address. “Fusing” does a very good job of affirming those beliefs for me, both by calling attention to organizations doing some very compelling work with arts and social change, and by raising important questions about the extent to which entrenched inequities in early arts philanthropy continue to the present day.

Unfortunately, “Fusing” does not provide a clear vision for how funders should redistribute their resources in response. Two questions loom over the report: 1) in which contexts are the arts the most efficient and effective means of addressing social inequity?, and 2) how can private grant resources most efficiently, effectively and sustainably address inequities within the artistic field?

I don’t think we have concrete answers to either question, and the report muddies the waters further by failing to distinguish consistently between the different segments of the arts sector it identifies as disenfranchised. Specifically, it conflates arts organizations (and individuals) pursuing social justice, arts organizations serving specific non-European ethnic communities, small arts organizations, and individual artists. Clearly, some organizations meet all these descriptors – they are culturally-specific, artist-led, justice-seeking and resource-starved. But rather than keeping consistent focus on the intersection of those qualities, the report treats them somewhat interchangeably. This is more confusing than illuminating, since many small arts organizations, individual artists and culturally-specific organizations have little in common beyond being ignored by mainstream institutional funding.

Collapsing together these segments of the arts sector makes it difficult at times to discern what the report is actually arguing for. For one thing, the report’s data doesn’t clearly align with its recommendations. By emphasizing large organizations’ share of foundation giving, for example, the report implies that funding should be redistributed to small organizations – but never specifically recommends this course of action. For another, its bold but largely unsupported assertions about the role of arts and culture in communities (like “these artists and arts organizations are powerful agents in the struggle for greater fairness and equality”) lump all such entities together without acknowledging their varying levels of quality, capacity, relevance, and impact. As a result, it’s difficult to know which practices deserve greater support, or how to identify them.

Below are some specific ways in which these issues manifest.

The 55%/2% statistic

One of the most jarring (and often cited) statistics from the report is that the “richest” 2% of arts organizations receive 55% of all contributions, gifts and grants made for arts and culture – reminiscent of the “99-percenters versus 1-percenters” divide that fueled the Occupy Wall Street protests this time last year. On the surface it doesn’t seem particularly fair that the largest 2% of organizations would receive the lion’s share of arts funding – but those large organizations tend to have large buildings to maintain, a heck of a lot more people to pay and a broader programming scope. Some of them may be incredibly efficient with the resources they are given, and others may be extremely wasteful – but without considering what their large budgets are being used for, it seems premature to jump to the conclusion that funding a large organization perpetuates inequity.

Moreover, redistributing private grant resources might not even make all that much difference. It’s a common misperception that the 55% number refers just to foundation funding. In fact, it also includes contributions and gifts from individuals, which are actually twice as important as foundation funding for arts organizations in the aggregate. Moreover, according to the report, the proportion of the revenue that large organizations receive from contributions, gifts and grants relative to their budget size (61%) isn’t much different from the proportion received by midsized (59-60%) and even the smallest organizations (51%). Essentially, this statistic is telling us simply that some organizations have larger budgets than others.

That revelation would be more compelling, and provide more cause for alarm, if it were accompanied by findings that culturally-specific organizations tend to receive a proportionally smaller percentage of their grant requests compared to their euro-centric counterparts, or of a substantial inequity in the amount of funding small organizations receive relative to the number of people they serve. But without such context, the most famous number coming out of “Fusing Arts, Culture, and Social Change” is not particularly meaningful.

Capacity and need

”Fusing” argues forcefully that past inequities, in arts funding and beyond, have created a caste system in which organizations that serve marginalized populations are at a disadvantage in obtaining capital relative to established institutions. But “Fusing” presents little evidence that small or mid-sized arts organizations are inherently better equipped to advance social justice than large ones – and that they have a concrete need for more funding in the first place.

Some large arts institutions already spend a substantial amount of money presenting, documenting, conserving and protecting works of art and performance from a wide variety of cultures for the benefit of present and future populations. Others, by virtue of the scope of their work, may be in a much better position to examine themes relevant across cultures, foster dialogue and exchange programs with artists in other parts of the country and the world, and so forth. If funders wanted to influence broad-scale change by reaching a large audience in a short amount of time, large organizations might actually represent an attractive return on investment. A substantial number of them already aim to engage a wide array of audiences, either through targeted outreach activities or by providing free or reduced priced events. For example, well over half of concerts by American orchestras, many of which were the earliest beneficiaries of “elitist” early arts funding practices, are now specifically performed for community engagement or education.

Many programmatic advantages large organizations enjoy are resource-based, of course, and redirecting funding toward small and midsized organizations would obviously allow them to do similar work. Why, however, should we assume that the small and mid-sized organizations would do a better job of advancing social equality if they had more resources? Sidford might argue that culturally-specific and social justice-driven organizations, which are mostly small, would advance equality simply by virtue of their very being. But if the need here is for more culturally-specific, social justice-driven organizations, their numbers appear to already be growing without substantial foundation support. Using the example of the Silicon Valley, Sidford writes, “in 2008, 70 percent of the region’s 659 cultural groups were less than 20 years old, and 30 percent of the new organizations were ethnically-specific… While Silicon Valley may be somewhat ahead of the national demographic curve, related changes are occurring in communities across the country.”

If the number of “artists and tradition bearers” is already on the rise as a natural result of demographic shifts, what additional role is there for private philanthropy to play? Should foundations support these artists and organizations to simply continue doing what they are already doing, or instead ask that they expand or shift their scope? How would the strings (justifiably) attached to traditional grantmaking practice affect what the report implies is a naturally occurring growth in artistic expression and exploration? “Fusing” provides few insights on these important but difficult questions.

Sidford writes,

“activist-artists, tradition bearers, and progressive cultural institutions are using their skills to illuminate our increasing cultural diversity, and to challenge our increasing social, economic and educational divides. They are helping disadvantaged groups give voice to their stories… They are assisting people to exert their political and civil rights… These resources are at every community’s disposal and, with greater philanthropic support, they can be deployed more extensively and effectively” (emphasis mine).

With greater philanthropic support, any resources can be deployed more extensively. Whether or not they are also deployed more effectively, and in particular more effectively than the larger organization down the street, is a different and more complicated question than “Fusing” acknowledges.

None of the issues identified above undermines the assertion that inequities exist within the arts sector. They do, however, raise questions about the extent to which those inequities are problematic, and whether they are problematic for the same reasons that the report identifies.

Implications

“Fusing” does not, in my mind, provide a comprehensive argument for how private grant dollars should be restructured to better address social ills, but where it does succeed is in raising very strong and pointed questions to compel us to think more deeply about how and when the basic notion of equity informs arts funding. What I find to be Sidford’s best and most thought-provoking question isn’t included in “Fusing,” but raised in GIA’s online equity forum: “What if we could start fresh and design a new system of support for arts and culture in this country,” she asks, “with equity as one of its fundamental tenets?”

If “Fusing” had been written as an extended meditation on possible answers to that question, I suspect the resulting essay would envision, among other things, a much greater government investment in the arts. Government institutions in a democratic society are, in theory at least, more naturally aligned toward equitably serving the public, and providing basic services to the disadvantaged, than private institutions. ”Fusing” highlights this point in noting that public arts’ agencies “broad mandate” has historically made their funds more accessible to cultural groups serving marginalized communities. If the demographic and aesthetic statistics in “Fusing” had been applied toward arguing for greater and more stable public investment in the arts, I doubt I would have found as much to quibble with.

Barring a massive reinvestment in public arts funding, which given our current economic and political environment isn’t likely to happen anytime soon, uncertainties remain about how and how much the role of private funders should change. As mentioned earlier, two unanswered questions hover over “Fusing,” both of which have implications for private grantmakers. To revisit them one at a time:

1) In which contexts are the arts are the most efficient and effective means of addressing social inequity?

This question is one that, as a field, we are only beginning to answer. As the report states, “in the past 100 years, we have made a science of developing nonprofit arts institutions but we are still relative neophytes in understanding the role of the arts in catalyzing individual and community capacity, and sustaining individual and community health.” Private funders are well poised to help us deepen that understanding in two ways: first, as “Fusing” suggests, by seeking out and learning from the higher-quality work undertaken by arts and social change organizations; and second, by supporting systems through which our field can become more systematic and thoughtful in exploring and documenting the impact of arts programming on the general public. This latter strategy could take two forms. The first involves incentivizing/requiring grantees to collect more specific information on who their programs are reaching and how exactly those audiences are being served. (The Cultural Data Project springs to mind here as a potential resource with opportunity for expansion.)

The second involves funding third-party research to study both the intended and unexpected consequences of arts programming in underserved communities. Sidford refers to existing research on the impact of art and social change, and implies that established best practices exist (“documented in a growing body of various resources including books, studies, films and websites”). The report doesn’t delve into either in detail, however, so it’s unclear how many models exist and which could (and should) be brought to larger scale. Increased funding for third-party research would be less burdensome to small organizations, which lack infrastructure to support robust research and data collection. It could also help refine best practices and research tools that could then be applied back to large and midsized organizations.

2) How can private grant resources most efficiently, effectively and sustainably address inequities within the artistic field?

The answer(s) to this question will depend in large part on how those inequities are defined. They include inequity of access to artistic and cultural capital, inequity of access to and preservation of cultural heritage, inequity of access to audience, and so forth. If we focus on inequity of benefit from artistic practice, broadly defined, then I think we could use a better understanding of how newer, more grassroots organizations evolve as they expand their scale and scope, both with and without private funding support. Sidford states that “many [such] organizations do not fit the classic model of an arts institution… their internal structures and more informal than conventional arts institutions, their modus operandi more nimble and opportunistic, and their resources almost never in line with their commitments.” As the aforementioned “science” of building nonprofit arts institutions has taught us, organizations undergo fundamental changes in both their administrative structures and their delivery systems as they build up private grant support. These organizations may not now operate under a “classic model,” but the models they do offer seem like fertile testing grounds for better understanding not just the impact of artist-activism, but the impact of private grant support on that activism.

“Fusing Arts, Culture and Social Change” raises compelling questions about inequities in arts and culture funding that demand to be taken seriously. In the end, I cannot dispute the claim that many small and culturally-specific arts organizations deserve to receive more attention and resources than they do. In order to determine how best to identify and support them, however, our field must identify and pursue learning opportunities that can help arts funders be as efficient and impactful with existing resources as possible. As Sidford notes, shifting arts grantmaking toward a greater focus on equity is a long-term process. Managing that shift well requires care, experimentation, and a lot of trial and error. It also requires our collective willingness to set ideology aside and, without apology, question, examine and clarify the benefit and impact of artistic practice on all communities.

FURTHER READING

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[Createquity Reruns] MASS MoCA and the Revitalization of North Adams

(This week, we’re celebrating the Createquity Arts Policy Library, our collection of in-depth investigations of specific research reports and other publications that have something of interest to say about the arts. Today’s entry highlights a lesser-known study published in 2006 that provides some of the best evidence we’ve amassed to date about the causal relationship between the arts and local economic development. Creative placemakers should take note! -IDM)

MOCA2This particular Arts Policy Library entry is a bit of a reprise, since I read and discussed “Culture and Revitalization: The Economic Effects of MASS MoCA on its Community” for my independent study on public policy and the arts earlier this year. However, in recent months I’ve had a few experiences (including a session on community economic development at the Grantmakers in the Arts Conference last month) that suggest this study and its implications are less well known in the field than I would have thought. To help get the word out, I’m now doing a more complete analysis as part of the Arts Policy Library series.

“Culture and Revitalization” is the economic anchor of a four-part multidisciplinary examination of the impact of the Massachusetts Museum of Contemporary Art (MASS MoCA) on its hometown of North Adams, MA that also included historical/ethnographic, anthropological, and sociological approaches. The study was funded by the Ford Foundation’s Shifting Sands initiative and completed in 2005 by Stephen C. Sheppard, Professor of Economics at Williams College, along with co-authors Kay Oehler, Blair Benjamin, and Ari Kessler. Sheppard and his team are or were all associated with the Center for Creative Community Development (C3D), which began as a Ford Foundation initiative and has received additional grants and contracts from the likes of LINC and the Institute for Museum and Library Services to improve our collective understanding of the role arts organizations play in their communities.

Summary

North Adams is a small industrial town that was once home to vital textile and electronics firms that played a key role in the regional economy of Western Massachusetts. Thanks to the changing nature of industry and misguided urban renewal policies, however, the city began a steep economic decline beginning in the late 1960s. By the time the Sprague Electric Company closed down its factories in the center of town in 1985, North Adams was in bad shape.

It didn’t take long for the arts to step in. Thomas Krens, the erstwhile director of the Guggenheim who was at that time head of the nearby Williams College Museum of Art (WCMA), came up with an idea to repurpose the now-abandoned factory space in North Adams for large contemporary art works. Krens was inspired by an art fair he had attended in Cologne where dealers rented abandoned factories as exhibition space. He quickly won the support of North Adams’s mayor, John Barrett III, and the Massachusetts State Legislature approved a $35 million bond to build the facility in 1988. Krens installed his young WCMA colleague Joseph Thompson as the museum’s inaugural director.

The same year, however, Krens left to take over the reins at the Guggenheim, and for various reasons the project began to stall out. It wasn’t until 1995 that construction began on the facility and 1999 before the museum finally opened to the public, more than a decade after it was first envisioned.

This is where Sheppard et al.’s study steps in. Broadly speaking, the paper is structured around a kind of “before and after” snapshot of North Adams’s economy in the wake of the museum’s appearance on the scene, as variously manifested in employment figures, payrolls, housing values, and hotel tax receipts. In doing so, it takes full advantage of the natural experiment presented by the sudden infusion of $56 million in public and private funds toward the transformation of what had become a brownfield site into the largest center for contemporary art in the country.

The study begins with a helpful review of important recent cultural economics literature, including the work of Americans for the Arts, the Social Impact of the Arts Project (SIAP), the Urban Institute, and Richard Florida. The authors explain that each of these research efforts approach the problem of measuring the economic impact of culture from a slightly different angle, implying various advantages and disadvantages. For example, the approach employed by Americans for the Arts is easily ported to cities not included in the original study, but it focuses entirely on regional impacts rather than the arguably more important effects seen at the neighborhood level—a weakness shared by the Creative Economy Council’s report on the “creative sector.” SIAP’s work, by contrast, is lauded for its careful attention to spatial analysis, but is not as easily replicable in other settings outside of Philadelphia. The authors perceptively note that most of these efforts, whether focused on cultural tourism or Florida’s creative class, examine only one side of what is really a dual process: the long-term productivity potential of creative residents and the immediate benefits of discretionary spending by creative visitors. Interestingly, the authors also assert that Florida’s theories are of “little relevance” to rural areas and small towns, though they offer little evidence for this claim.

To understand the economic impacts of MASS MoCA in the greatest possible depth, Sheppard et al. employ several distinct tools. First, using employment data from the museum, an input-output model similar to that used in Americans for the Arts’s Arts & Economic Prosperity study is constructed via the Minnesota IMPLAN Group’s software package IMPLAN. As the authors explain, the language and framework of input-output models are familiar to policymakers and their results are loosely comparable between cities, but they miss a lot of depth due to overemphasis on regional effects and undercounting of artists and independent contractors. Nevertheless, the estimates provided by IMPLAN turn out to predict with almost eerie precision the actual growth in total local employment headcounts and payrolls in the years following the opening of the museum.

The authors’ input-output model reports a total increase in output of $9.4 million resulting from the museum in 2002, with $5.6 million of that total represented by museum expenditures, $1.9 million accounted for by expenditures on the part of other local businesses related to the museum (indirect effects), and another $1.9 million coming from the additional household expenditures of local employees supported by the museum’s and local businesses’ spending reported above (induced effects).[1] Using data from Americans for the Arts’s survey of non-local audience members’ expenditure habits as well as MASS MoCA’s own records, the authors estimate an additional $4.8 million of increased output resulting from audience spending on related items such as lodging, transportation, meals, etc., for a total yearly impact of over $14 million. The same model estimates an increase of 230 jobs throughout the local county economy as a result of MASS MoCA’s existence in 2002, with the bulk of the benefits accruing to the museum, restaurant, educational services, hospitality, and transportation industries.

Sheppard et al.’s model also provides estimates for revenue paid to the government as a result of MASS MoCA (even though the museum itself does not pay income or sales tax). “The government,” of course, is perhaps a misleadingly monolithic label: of the approximately $2.7 million per year attributable to MASS MoCA that goes to government coffers, more than half ends up at federal level, with the balance staying with state and local government. The biggest sources of this revenue are from personal income and social security taxes paid by/on behalf of new employees at the federal level, indirect business sales tax at the state level, and property taxes on improved real estate asset values at the local level.

A model means little, however, if it’s not grounded in reality. Fortunately, the authors took the time to compare the model’s outputs with actual trends in regional economic growth during the period following the museum’s opening. MASS MoCA’s own budget is well-forecasted by the input-output model, which makes its estimates based on the number of the museum’s employees. In 2002, MASS MoCA’s actual expenditures, according to tax records, were $5.56 million; the model’s prediction of $5.62 million (which forms the bedrock of its $14.2 million total impact estimate for that year) was therefore off by only 1%. Meanwhile, annual payrolls for the area increased a total of $24 million (in 2004 dollars) between 1998 and 2001 according to Census data. So in other words, the model implies that the birth of MASS MoCA was responsible for nearly 60% of the region’s net economic growth in the three years following its opening. Similarly, the model predicts an addition of 230 jobs to the county economy attributable to the museum; records show that actual job growth between 1998 and 2001 was 510. And if the average of the three years following MASS MoCA’s debut is used, the prediction of 230 new jobs comes even closer to the actual growth figure of 255.

In addition to total payroll and employee counts, Census employment data shows substantial increases in the average employee salary since MASS MoCA appeared on the scene. It appears that the museum helped bring more professional/white-collar workers to the city, with the average from the four years prior to the museum’s opening jumping from $24,991 to $27,114 in the three years afterwards (all numbers in constant 2004 dollars), an 8.5% real wage increase. Furthermore, there was a 12-15% increase in the number of small and medium businesses with fewer than 100 employees, particularly between 1998 and 1999 (the first year of the museum’s existence). The authors also examined the growth in hotel tax receipts to double-check the model’s assumptions about the impact of new cultural visitors to North Adams, and this time, they compared the numbers to those for surrounding communities. As it turns out, tax revenue for all of northern Berkshire County rose some 75% between 1994 and 2003—but the corresponding figure for North Adams was over 300%, far above that of any neighboring city or town. Both construction of new hotels and greater occupancy rates in existing facilities made the increase possible.

The true star of this study, however, is its innovative use of multivariate regression analysis to pick out the impact of MASS MoCA on local residential real estate prices. Sheppard developed aspects of this technique himself, based on the hedonic analysis pioneered by Ridker and Henning in 1967. Essentially, the team looked at actual home sale prices within a 2-km radius of the MASS MoCA campus (and the brownfield site that was there previously) during the period between the mid-1980s and 2003 and inferred the values of surrounding properties from what people were willing to pay for the ones that sold. The prices were normalized to the shelter component of the regional Consumer Price Index to cancel out any broader fluctuations in housing values during that period, and the regression analysis controlled for other variables that might influence prices on a house-by-house basis, including lot size, internal space, the age of the building, whether it was Tudor style, and so forth (full diagram below).

MOCA4Sheppard et al. found that MASS MoCA did indeed appear to have an impact on real estate housing prices. Before the museum opened, properties closer to the MASS MoCA campus were actually less valuable than those farther out, because at that time it was a brownfield site with only the hulking remains of an electronics factory occupying it. For every meter further away a house was from the factory, its value went up by about $9. This result was statistically significant when controlling for the factors mentioned above. After MASS MoCA’s debut in 1999, property values still increased slightly with distance from the campus, but the value was much lower (just over $2 per meter) and the statistical significance disappeared (meaning that we can’t even say for sure whether distance from MoCA made any difference at all in a house’s price after 1999). Effectively, controlling for a whole host of other factors that might affect housing values, this means that the houses closer to MASS MoCA became a whole lot more valuable after that brownfield site was turned into a world-class contemporary art museum—to the tune of around $11,000[2] in the case of the properties closest to the action. The effect was noticeable out to a radius of about 1.7 kilometers (or just over a mile) from the museum. The authors estimate that the total rise in residential property values attributable to MASS MoCA was just shy of $14 million – and that number doesn’t include any increases in value that accrued to North Adams as a whole relative to surrounding communities because of MASS MoCA, or two extraordinary commercial investments (i.e., hotels) totaling $11 million that almost certainly would not have taken place if not for the museum.

MOCA3This is one of my favorite visuals ever, showing the increase in property values in North Adams attributable to MASS MoCA, as modeled by Sheppard et al. Each dot represents a single residential property and its predicted property value increase as of 2004 as a result of the museum. Note that the perfect concentric circles are a result of the linear nature of the model; the actual impact of the museum on each property would probably not be quite as neat, but should follow the same general pattern.

Analysis

This is really impressive work on a number of levels: from the earnest attempts to ground modeling in actual data, to the multipronged and multidisciplinary approach, to the savvy exploitation of the natural experiment afforded by the museum’s opening. The advanced regression analysis of real estate prices is particularly notable and begs for replication in other communities. An exceptional package of materials is provided alongside the study, even including a rudimentary cultural asset map of North Adams showing visitor origins against a backdrop of demographic data. At almost every turn, it is clear that the authors have thought through the full implications of what they are claiming, and done their best to explore alternative explanations and identify competing or obscuring factors. They take their social science seriously.

MOCA1The fact that “Culture and Revitalization” covers the birth of an institution adds a significant degree of credibility to its conclusions. My objection to much of the analysis contained within Americans for the Arts’s Arts & Economic Prosperity studies, for example, is that it assumes that if an art organization disappeared tomorrow, all of its money and employees would disappear with it. To be sure, losing an organization is always a traumatic experience for the community, but the strong likelihood is that many of the employees would eventually find work with other employers; some might form new businesses or organizations, and so on. Indeed, in some cases it’s possible that an arts organization might even be standing in the way of a more economically efficient business environment taking shape. In the case of MASS MoCA, though, the city was under such duress and the investment was so centrally placed that it’s hard to imagine the impacts on payroll, jobs, and salaries observed in the study if the town had just stood pat. The people who moved to the area to work for the museum almost certainly would not have done so otherwise; the Porches Inn almost certainly would not have been built if there were no museum to draw tourists; etc. For these reasons, the input-output analysis carries far more weight here than it does in most other circumstances.

With that said, there are two parts of the study that I find less compelling than the others, which is why they are not mentioned in the summary above. First, Sheppard et al. attempt a return-on-investment analysis of the Commonwealth of Massachusetts’s initial $35 million bond issue that helped MASS MoCA get off (or, I guess, into) the ground. The analysis is based on a total annual return to government revenue of approximately $2.7 million based on figures from 2002 (this includes the estimates for residential and commercial property tax revenues driven by the museum). Without knowing the full details associated with the bond issue, I have to take the authors’ word that the public’s investment will pay off when taking inflation and growth projections into account. However, the bigger problem is that more than half of the $2.7 million in anticipated annual revenue is going to the federal government, not to the Commonwealth of Massachusetts or the city of North Adams. Even with some of that money eventually finding its way back to the state, it seems likely that the $35 million bond issue is actually resulting in a net outflow of public funds from Massachusetts to the rest of the country. For this reason, I find the authors’ case that “in fifteen years taxpayers will have recovered the initial investment” in MASS MoCA a weak one, at least from the perspective of Massachusetts taxpayers.

Second, the authors claim that North Adams has not suffered the negative effects of gentrification due to MASS MoCA’s arrival because the percentage of residents who have moved in the past five years actually went down nearest the museum between 1990 and 2000. There are all kinds of problems with this analysis (increased occupancy rates or new buildings could account for more people who have recently moved without implying any displacement; if displacement moved people into another neighborhood, they would show up in the new neighborhood rather than the old), but the biggest issue is that the data from 2000, barely a year after MASS MoCA came into existence, is not fresh enough to capture any serious displacement trends in the community. After all, the authors’ own models have the impact on real estate prices taking place from 1999 through 2003, or three times longer than the time window used for the gentrification analysis. We’ll need to wait for information from the next Census, in 2010, before this approach can shed any real light on displacement trends in North Adams as a result of MASS MoCA. (To their credit, the authors do note this deficiency in their approach, but that doesn’t stop them from declaring confidently that “MASS MoCA as made North Adams a better place to live without causing gentrification.”)

Implications

So, what’s the bottom line here? Did MASS MoCA cause the revitalization of North Adams or not?

Certainly, North Adams experienced a pretty impressive revival in close temporal proximity to the opening of the museum. The hardest part of any rigorous study in the social sciences, though, is establishing what’s known as the counterfactual: that is, what would have happened if MASS MoCA had not, in fact, been built? It’s not enough to look at action A and outcome B and conclude that A caused B. You can only know that if you know that B wouldn’t have happened anyway. Short of renting a time machine and assassinating Thomas Krens before he came up with the idea, there aren’t too many tools at our disposal to figure that out. One thing we can do, though, is compare MASS MoCA to communities that are similar in important ways: either by virtue of geographic proximity, demographic and historical parallels, or (preferably) both. “Culture and Revitalization” admirably takes steps in this direction for parts of the study, specifically for the comparison of hotel tax receipts which pitted North Adams against other towns in the Northern Berkshires, and for the real estate regression analysis by adjusting sale prices according to the shelter component of the regional consumer price index. One way in which the authors could have built an even stronger case would have been to compare trends in job creation, salaries, small business growth, and downtown real estate to a “sister city” or two that did not have a world-class cultural institution dropped into its center one year. It might not have been enough to establish conclusive proof (I’m not sure that will ever be a realistic goal with this type of work), but it would give us some pretty strong evidence to work with when considering policy decisions.

Even without this extra layer of evidence, though, the case for MASS MoCA’s role in the revitalization of North Adams is quite convincing, due largely to the absence of other obvious factors that could have explained the remarkable growth seen by the city following the museum’s opening. While it’s important not to overhype these impacts—North Adams is still a city with a lot of problems, after all, and residential properties are still more valuable if they are farther away from the museum as of 2003—to think that a single cultural institution could become this kind of an immediate force in a community is remarkable. A follow-up study, taking place perhaps early in the coming decade, would likely provide us with a richer understanding of the true extent of the museum’s transformative power, or lack thereof. In the meantime, the multidisciplinary companion documents prepared by the C3D team present the qualitative aspects of MASS MoCA’s regenerative properties in sharper relief, particularly the history of the museum’s inception (from which some of the material in the first section of this essay is drawn) and the paper describing the city’s neighborhoods and organizational infrastructure. An innovative fourth document uses social network analysis to describe MASS MoCA’s connectedness in the communities of North Adams and Williamstown relative to other prominent organizations. The museum ranks 7th-10th on various measures overall, and first among arts organizations.

This study demonstrates pretty clearly that arts organizations can provide strong economic benefits to their community. Before we get too excited, though, there still remain some unanswered questions. MASS MoCA’s situation—a huge, world-class facility coming into existence in an economically depressed city of fewer than 15,000 people—is highly unusual as arts organizations go. It’s unlikely, though certainly not impossible, that the birth of a single institution could meet with similarly dramatic results in other socioeconomic contexts. Furthermore, the study does not do anything to compare the arts with other types of investments. Remember, MASS MoCA would not have been possible without a $35 million bond issue from the state and over $20 million in other funds to pay for its construction. How much of North Adams’s revitalization was attributable to MASS MoCA itself and how much simply to the money that funded it? In other words, if $50 million had been spent on, say, converting the Sprague Electric Company site into a biotechnology office park instead, would we have seen the same results? “Culture and Revitalization” provides us with few clues.

Nevertheless, this study and its companion pieces represent an important, and under-recognized, contribution to the cultural economics literature. It is one of the only research reports I have seen that makes a convincing case not just that an arts organization was associated with economic revitalization, but that it caused the revitalization. That is no small thing, and policymakers and researchers alike would do well to pay heed to the methods and circumstances that made such a striking finding possible.

Further reading:


[1] Note that this construction and terminology diverges slightly from the Americans for the Arts model, which treats all local household spending (not just employees’) as just another industry in the matrix of local businesses. AftA also has a different meaning for “induced” spending, using the term to refer to audience expenditures.

[2] Several variations of this figure ranging from $9500 to $11,728 are seen in the report. It is unclear which of these represents the most accurate value.

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[Createquity Reruns] Economicsitis: A Response

(If left on their own, are markets in the real world more likely to work or to fail? That’s the fundamental issue at hand in this week’s reruns, including this one which features a lengthy back and forth both in the post itself and in the comments. Though it’s a little on the abstract side as Createquity posts go, the answer to the fundamental question above has huge implications for policy and strategy to support the arts and everything else. Plus, anybody who enjoys a good debate should dig this exchange between me and my own boss. -IDM)

Last week’s post, provocatively titled Economists Don’t Care About Poor People, attracted two lengthy, substantive critiques. One was from Michael Rushton, with whom I’ve tangled previously on the subject, and the other from Adam Huttler. (Note to self: when your own boss writes an eleventy-thousand-word comment refuting your twelvety-thousand-word blog post, maybe it’s time to, uh, throw in the towel. Just kidding, it’s on!)

I decided to address Adam’s and Michael’s critiques together since there is some degree of overlap. Below, I’ll distill each man’s arguments into bullet-point form and number them so they can be addressed more clearly.

Adam thinks that I am overstating my case and “foster[ing] false hope in a bogus alternative.” He claims:

  • My example of the Costner memorabilia auction is undermined because the dotty old rich guy does not realize what he’s buying, and thus does not have perfect information. (1)
  • The goods cited in the examples given are “luxury goods” (goods in limited supply that have high demand), and thus do not typify markets in general (though Adam allows that the normal rules of supply and demand do not apply to luxury goods). (2)
  • I’m missing the point of Baumol and Bowen’s argument; the real point is that producers should have the option of claiming the full value generated by their product, and they do not have the option to do so if prices are regulated. (3)
  • Anyway, instituting a lottery system for ticket distribution just randomizes wealth, it doesn’t equalize it. (4)

Michael says that I’m too mean to economists and that most of them do have a heart. He writes:

  • Libertarians’ arguments don’t deserve to be taken seriously, so why am I even bothering? (5)
  • He doesn’t know “serious” non-libertarian economists who disagree with a vision of good policy that includes (among other things) a progressive income tax, publicly-provided health care and dental services, and public pre-school, along with most other things that the U.S. government currently provides. (6)
  • Most goods in a marketplace are run-of-the-mill products that are regulated by supply and demand, and that’s okay; the things I’ve mentioned are exceptions. (2)
  • “Efficiency” is a separate concept from “justice” in economics. (7)
  • Instituting a lottery system for ticket distribution just randomizes wealth, it doesn’t equalize it. (4)

OK, let’s see, taking these in order from least salient to most:

First, the appropriateness of using lotteries to distribute expensive tickets to arts events (arguments #3 and 4). Adam & M-Rush’s point that lottery systems randomize wealth rather than equalize it is fair enough – I didn’t necessarily mean to hold lotteries up as the be-all and end-all, but only mentioned them since Baumol & Bowen specifically seemed to think their solution (let the free market decide) was fairer than the lottery. To Adam’s point about commercial operators having the opportunity to claim their own value, I am more sympathetic, though even in the case of some commercial entities the question may not be as easy as all that (e.g., the Red Sox employ a lottery system for distributing hot-ticket items like Yankees games; one might argue that this would be justified as an enforced policy because baseball enjoys an antitrust exemption from the government which allows the Red Sox to have the grip on Bostonians’ identity that they do). And in an environment where nonprofit arts administrators across the country are tearing their hair out trying to understand how to reach new, younger, and more diverse audiences, a lottery system is perhaps a fairer way to distribute scarce resources than relying on market forces to distribute them according to society’s existing unfairnesses.

But I don’t want to let the lottery issue distract from what I see as the bigger fish. The real question here is how well what Adam calls the price =value equation (aka neoclassical pricing theory) describes the real world and how much it influences mainstream economic thought. So let’s begin.

Regarding argument #1, I thought about the issue of perfect information, but I could just as easily have made it a situation where he was buying the memorabilia as a gift for his wife, who divorced him a year later and threw out everything he had ever given to her; or if that’s not good enough, just that it pleased him in the moment to own this item and that he bought it for no real reason other than that he could. Either way, the point still stands, if not quite as dramatically. But this is supposed to be an extreme case for purposes of illustration. The price = value equation is challenged in much subtler ways all the time.

Which brings us to #2: I’m not convinced that these “luxury goods,” and the attendant supply-and-demand weirdnesses that go along with them, are such edge cases after all. Adam goes so far as to say, “while Price = Value in the aggregate, the formula doesn’t necessarily hold for any individual purchaser.” Huh? If the formula doesn’t hold for any individual purchaser, why would we assume that it holds in the aggregate? I’m open to the possibility that it could, if confronted with irrefutable empirical evidence, but I have a hard time believing a priori that the disconnect between utility and willingness-to-pay for individual market players doesn’t bias and shape the market in specific, systematic ways. And if anything, this seems like it would be especially true in the arts. After all, the original discussion that led to all this was about whether unpaid internships were a threat to diversity in the arts because low-income individuals could not afford to take them (and thus were at risk to remove themselves from contention at the front end for an important career stepping-stone towards more potential income later on). One might think of this “willingness-to-accept” problem as a kind of corollary to the “willingness-to-pay” issue that I pointed out with my post. We also looked recently at the possibility of pernicious effects on the socioeconomic diversity of artists that compete for recognition through competitions if entry fees were raised to nontrivial prices. And it doesn’t end there, certainly. Think about what kinds of investments are needed or helpful to jumpstart an artistic career: training, documentation (e.g., recording), production values, marketing, travel, living expenses in expensive cities, time not spent earning income. If anything, in many of these situations willingness-to-pay may be inversely correlated with utility/personal value, not one and the same–not even close.

Do economists understand this? Here’s where Michael Rushton and I just don’t see eye-to-eye (arguments #5, 6, and 7). I applaud his list of policy recommendations–clearly, he is living proof that not all economists are heartless bastards. And surely there are others – Paul Krugman, for one, and the fact that the latter won the Nobel Prize speaks volumes. Perhaps the kinds of economists I want to see are more in evidence in the international community. But here in the US, I wish I could believe they were as mainstream as he says. I mean, really? No serious economists would dispute that we need government-provided universal health care and a no-fucking-around progressive income tax? Has Michael Rushton not heard of the Chicago School? Are these people not mainstream? Have they not had a tremendous formative impact on public policy in this country over the past 30 years? The foundation of their philosophy is the very libertarian principles that Michael is so quick to reject as not being worthy of debate. Yet the shadow they cast over the national discussion of economics is tremendous.

Interestingly, my two contenders reserve their strongest criticism for things I didn’t even say.

Adam, for example, concludes:

Ultimately my concern with your line of reasoning here is that I can’t see how it leads to anything but trouble. Markets are deeply imperfect, but they’re the best tool we have. To the extent that they result in undesirable outcomes, then we should seek to tweak their functioning, not abolish them in favor of some kind of centralized arbiter of happiness.

OK, so I never suggested that we abolish markets. That would be pretty nonsensical of me–after all, markets are there whether we like it or not; they happen. I think of marketplaces like biological ecosystems. Sometimes, depending on what’s going on inside of them, they work extraordinarily well, with everything going according to Nature’s plan in a sustainable, virtuous cycle. Other times, though, again depending on what’s going on a the micro level, they get out of balance; portions flourish while others flounder, leading to displacement or the loss of biodiversity or even wholesale collapse. To fix the imbalance, one must help the system to function again. Whether we call it a market or not doesn’t really matter; it is what it is.

Meanwhile, Michael thinks that I want to achieve utopia through micro-manipulation of the prices of everyday goods.

My problem with IDM is that he wants to achieve income equality through a lottery of opera tickets, where poor winners could keep them or sell them, and the rich could still obtain them. But that’s…well, goofy. This just randomizes wealth, handing out valuable tickets to a lucky few and letting them trade them. I have a better idea…

Of course a lottery of tickets isn’t going to achieve income equality. At best these measures are a small band-aid on a much larger problem, and I’m planning to address that problem in a future post. In the meantime, though, a band-aid is better than salt, is it not?

If anything, in the last two years, my orientation towards markets has become more positive, not less; I now believe that markets are one of the most efficient and effective ways of advancing the social good, when they work. So I think Adam, Michael, and I are actually in quite similar places here after all, broadly speaking. It’s just that I think of markets as systems that occasionally bear a resemblance to the idealized marketplace seen in economics textbooks, but much more often don’t.

*

Here’s the point in all of this.

I have all the respect for Adam in the world (love ya too, boss!), but I remain convinced (or at any rate, I strongly suspect) that it’s the neoclassical model that’s the edge case, not luxury goods. How common is it, really, for people to have full and relevant information on what they’re getting? How common is it that their preferences are really rational? Just because your mind works that way doesn’t mean most people’s do. Likewise, I think Michael Rushton is a smart, smart cookie, but his campaign to limit the discussion to (what seems to me) a relatively narrow group of middle-of-the-road, professional academic economists does a disservice by ignoring the vastly disproportionate impact that the free-market purists have on the national conversation. Dude, if you want to call yourself an economist and be proud of it, you need to take some responsibility for the damage your crazy-ass colleagues are doing to the credibility of your profession.

Rushton thinks it’s unfair that I implied that William Baumol and William Bowen don’t care about poor people, when clearly they do. I agree that it’s an unfair characterization. But I need to explain something about that quote in my last post. For those who have not had the opportunity to read Performing Arts: The Economic Dilemma, the book is through most of its pages a model of “telling it like it is” understatement: the authors clearly identify the limits of their knowledge and analysis, every assertion is thoroughly documented, a host of alternative explanations are examined at every turn, and issues of class, race, and gender are given fairly enlightened treatment by 1966 standards. In short, they approach the issues at hand exactly in the way I would ask.

The outburst I quoted on page 286 is not an offhand remark taken out of context; it is part of an impassioned five-page rant that is completely at odds with the tone seen in the rest of the book. The authors offer no empirical evidence for their claims in this section, only a few quotes from historians and their own very obvious frustration (some of it perhaps justified) at overzealous regulation of ticket prices. Clearly, one if not both of the authors felt very strongly about this issue, strongly enough to break with decorum and tone to take a stand. That they did it while disparaging the notion of “public virtue” and ignoring the very obvious benefits to access for lower-income people (remember, it’s not like these were considered and dismissed, they weren’t even discussed) from one of the suggested solutions, a lottery system, is telling to me. It’s like even Baumol and Bowen suffered from a temporary bout with Econ 101 disease.

*

I’ve used the words “sickness” and “disease” before to describe what I feel is wrong with the economics profession. I do not use these terms lightly. I use them because, though I am ready to believe that the field has no shortage of thoughtful, level-headed, and compassionate people working diligently within it, I truly believe that as a field itself its foundations are rotten at the core. The neoclassical pricing model is not just some important but outdated anachronism in the history of intellectual thought, like Freud’s Oedipal complex or Marx’s proletariat. It is the active basis of the majority of economists’ working lives. It is the foundation of all economists’, and a lot of non-economists’, first instruction in the field. This conversation, again, was prompted by a debate about the minimum wage. If Wikipedia is to be believed, the empirical evidence that a minimum wage is even marginally detrimental to employment totals is inconclusive at best. Yet according to the same source, nearly all economics textbooks have a nice, neat graph that explains exactly why a minimum wage is detrimental to employment totals. It generally looks something like this:

That graph is in my textbook, too, Pindyck and Rubinfeld 5th Edition, right on page 299. I believe that practices like this foster an anti-scientific a priori mindset in the economics profession that hamstrings progress. It empowers those with libertarian leanings to pollute and distract the conversation with theorems proving the supposed moral righteousness of their views, and forces even economists who stray from the neoclassical model to define themselves in opposition to it, to acknowledge its primacy in the face of competing evidence. Assuming for the moment that textbooks are a reflection of what a field thinks about itself, if the textbooks started from the premise of, “this is how markets might work in a laboratory, but we recognize that real life is much more complicated than that,” I would be satisfied. If the textbooks started out by asking questions rather than providing answers, I would be satisfied. If textbooks treated micro and macro as the same thing on different scales rather than two totally separate disciplines, I would be satisfied. If textbooks addressed the issue of externalities and public goods sooner than page 621 (which is where they first pop up in mine), I would be satisfied. If every graph in an economics textbook was taken from an empirical study with true causal implications rather than from a calculus problem set, I would be satisfied. But so long as these things remain the way they are, no, I will not be satisfied with the economics profession.

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[Createquity Reruns] Economists Don’t Care About Poor People

(Economics week at Createquity continues with this provocatively-titled post (don’t worry, it’s a reference) published in March 2010. In addition to the post itself, the original comment thread is well worth checking out (and generated a follow-up post, which is coming next). -IDM)

My around the horn post from this week included an item on the ethics of offering unpaid internships and a proposal under consideration across the pond to force arts organizations (and other employers, presumably) to pay interns the minimum wage if the engagement is longer than a month. This sparked a lively discussion, first on Michael Rushton’s Arts Admin blog, and subsequently on a site that’s new to me called Art and Avarice, written by young voice teacher and entrepreneur Milena Thomas.

The discussion quickly evolved into a back-and-forth on basic economic principles, and I don’t know why, but such topics always get me riled up. I found myself debating with a pseudonymous libertarian purist, the worst kind of people to argue with because the moral nihilism underlying their ideology amounts to a cop-out from considering society’s best interests at all.

In the course of doing some research a few weeks ago I came across a devastating takedown of libertarian ideology in, of all places, The American Conservative. Called “Marxism of the Right” (there’s an attention-getter for you), Robert Locke’s article argues that libertarianism is seductive on the surface but riddled with internal contradictions. Here are some of my favorite quotes:

If Marxism is the delusion that one can run society purely on altruism and collectivism, then libertarianism is the mirror-image delusion that one can run it purely on selfishness and individualism. Society in fact requires both individualism and collectivism, both selfishness and altruism, to function. Like Marxism, libertarianism offers the fraudulent intellectual security of a complete a priori account of the political good without the effort of empirical investigation.

Empirically, most people don’t actually want absolute freedom, which is why democracies don’t elect libertarian governments. Irony of ironies, people don’t choose absolute freedom. But this refutes libertarianism by its own premise, as libertarianism defines the good as the freely chosen, yet people do not choose it. Paradoxically, people exercise their freedom not to be libertarians.

A major reason for this is that libertarianism has a naïve view of economics that seems to have stopped paying attention to the actual history of capitalism around 1880. There is not the space here to refute simplistic laissez faire, but note for now that the second-richest nation in the world, Japan, has one of the most regulated economies, while nations in which government has essentially lost control over economic life, like Russia, are hardly economic paradises. Legitimate criticism of over-regulation does not entail going to the opposite extreme.

This contempt for self-restraint is emblematic of a deeper problem: libertarianism has a lot to say about freedom but little about learning to handle it. Freedom without judgment is dangerous at best, useless at worst. Yet libertarianism is philosophically incapable of evolving a theory of how to use freedom well because of its root dogma that all free choices are equal, which it cannot abandon except at the cost of admitting that there are other goods than freedom.

Anyway, I thought this would be a good time to break out a post I’ve been meaning to write for a while. I’ve gone on at great length about my various problems with the neoclassical economic model (someday I’ll collect them all into one place), but one I haven’t touched upon much yet is the way that economists deal with income.

Consider two people who are participating in an auction for a rare piece of Kevin Costner memorabilia. One is a billionaire who happens to be staying at the hotel where the event is held. The other is a teenager who has spent her (life) savings on the plane ticket that allows her to be at this event in person. She has a shrine to Kevin Costner in her room at home, and this is the one item that will complete her collection. If she misses out on it, she’ll never have another chance. Not only has she scrounged up all of her own savings, but she’s spent a month fundraising pledges from her friends and family to help her buy this item. After exhausting every avenue she can possibly think of, she comes to the auction with $3,000 to spend.

The auction begins, and she and the rich guy are the only two bidders. The price quickly gets up to her maximum of three grand, and she keeps going. It’s up to $4,000, $5,000—at this point she has no idea what she’s even bidding with, all she knows is that she has to have this item. After a while, though, it becomes obvious that she’s not going to win this contest, and she runs from the room in tears and defeat. She commits suicide the next day out of grief.

The rich guy, meanwhile, a big NBA fan, is a little dotty and thought it was an article of Kevin Johnson memorabilia. He takes it home and means to resell it, but he forgets about it (again, he’s a dotty billionaire) and it sits in his closet until he dies, whereupon it’s found by his son who doesn’t realize what it is and tosses it in the trash.

According to the neoclassical economic model, the above is a just and efficient outcome of a fair transaction. The rich guy prevailed in the auction because his willingness-to-pay, as judged by the price he actually paid, was higher than the teenager’s willingness-to-pay (as judged by the price she didn’t pay). Thus, economists would say, the dotty old rich guy “valued” the item more.

This absurd result is made possible because the neoclassical method of modeling demand has no real way of distinguishing between “don’t want” and “can’t afford.” All it sees is that a transaction didn’t happen, and the default assumption on the part of economists is that it must be because the girl didn’t want it as much as the rich guy. The economist’s response to “but I couldn’t afford it!” is, essentially, to say that if she’d really wanted it, she would have proven it by finding some way, somehow, to afford it, even if that meant selling her body or stalking the dude for another 15 years until she could buy it back from him. That the rich guy faces no such great sacrifice to obtain the item is irrelevant to them.

“But Ian,” I hear you thinking, “no one could possibly be that stupid. Real economists know what income effects are and of course they wouldn’t make policy recommendations based on what, on its own, seems like a blunt instrument for estimating demand.”

Ah, if only it were that simple! Alas, economists (with the exception of behavioral economists) all too often have a nasty anti-scientific habit of prescribing policy based solely on their flawed and incomplete theories rather than empirical observation and testing. It’s ingrained into them from their earliest training. And despite Michael Rushton’s protests that “only a fringe” of economists fail to understand the criticisms that I hurl against the neoclassical model, we’re not talking about wackos—these are mainstream, well-regarded figures in the field. I give you William J. Baumol and William G. Bowen, authors of the seminal study on the economics of the performing arts:

Not that [ticket scalping] is necessarily undesirable – indeed, as we have maintained, it is part of the normal allocation process. Suppose only one seat is left for a particular performance and two persons wish to buy it – a visitor to New York who will have no other opportunity to see the show and a native New Yorker who can attend almost any performance. If the two contenders have roughly equal incomes, the visitor will offer to pay more because the seat at this particular performance is of greater value to him; and we see nothing “immoral” in this act. Things go wrong only when someone tries to maintain a “just price” artificially, either through legislation or through self-denial on the part of the supplier in response to a questionable notion of public virtue. If those who supply the product are unwilling or unable to collect what would normally be its market price, invariably someone else will volunteer to take their place. The speculator who had nothing to do with the production will then reap the rewards which would otherwise have gone to those who contributed their labor and resources to the performance.

Nice trick there, guys, to cherry-pick the one extremely rare situation in which your logic actually works. In practice, of course, the two individuals’ incomes or asset levels will almost never be equal, and they could just as well be as divergent as our Kevin Costner-obsessed teenager and dotty old rich guy above. If the authors had stopped there, of course, that would have been fine—but they go on to disparage the “questionable notion of public virtue” that benefits “speculators” rather than “those who contributed their labor and resources to the performance,” completely ignoring the fact that some of those “speculators” might be people who actually really want to see the show who otherwise would not be able to. And sure, there would be some reselling on the secondary market, but if, say, legislation put in place a lottery system, that would arguably result in a more just sorting of tickets – because the lower-income people who wanted the tickets would keep them, while higher-income people who wanted tickets would still be able to obtain them. If the tickets are all uniformly at a high price, you would have some higher-income people with tickets who don’t actually want them as much as some lower-income people who don’t have a chance to access them.

Or take Tyler Cowen, a tenured professor and author of a fantastically popular economics blog:

One way of measuring the value of health insurance is by its market price and by that standard many of the current uninsured just don’t value health insurance very much.  That’s why they don’t buy it.

Riiiight, because the cost of health insurance strains people’s family finances beyond what is feasible, that means they don’t value health insurance at all. Having been uninsured for extended periods twice in my life (most recently just this past fall), I can serve as my own counterexample on this one – I certainly would have bought myself insurance had I the money.

Cowen goes on to qualify his statements in a way that makes it clear he is open to other interpretations. But that’s not good enough. To me, the notion that “the value of a poor man’s life is not measured by his money” is even a question up for debate is the ultimate sign of economics’ sickness. That Cowen has to lead off with the neoclassical interpretation almost apologetically before presenting alternative views shows how much weight that framework, with all its flaws, still carries with his readers.

We’ve learned this week that our aversion to economic inequality is not just a philosophical abstraction; it may in fact be hardwired into our brains. Human beings have a need for moral fairness and just desserts as part of our biological makeup, it seems, just like sex and food. But it’s no surprise that our economic models don’t take this into account; after all, it seems the people we put in charge of telling us how the world works are the rare people who don’t share this characteristic. In short, it’s true: economists really don’t care about poor people. It’s time we had a framework for understanding our actions that speaks for the rest of us.

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