This article is a much shorter version of this. If you want the full force of my verbosity, read that one.

In Arts, Inc., Bill Ivey, former Chair of the NEA, makes the case that our artistic heritage is a set of public assets that should benefit all, but instead are often squandered by existing cultural institutions. Ivey seeks to remedy this through a Cultural Bill of Rights.

Each item in Ivey’s Cultural Bill of Rights fills a chapter in the book.

• “The right to our heritage—the right to explore music, literature, drama, painting and dance that define both our nation’s collective experience and our individual and community traditions.”
• “The right to the prominent presence of artists in public life—through their art and the incorporation of their voices and artistic visions into democratic debate.”
• “The right to an artistic life—the right to the knowledge and skills needed to play a musical instrument, draw, dance, compose, design or otherwise live a life of active creativity.”
• “The right to be represented to the rest of the world by art that fairly and honestly communicates America’s democratic values and ideals.”
• “The right to know about and explore art of the highest quality and to the lasting truths embedded in those forms of expression that have survived, in many lands, throughout the ages.”
• “The right to healthy arts enterprises that can take risks and invest in innovation while serving communities and the public interest.”

According to Ivey, we don’t enjoy these rights because of  a failure of the government to prioritize cultural life and rein in corporate greed. An East Wing/West Wing divide devalues the importance of arts and culture makes it easier to treat the arts as political footballs. Congressional hearings on indecency result in industry self-censorship such as parental advisory warnings, V-chips and MPAA ratings that have a chilling effect on creative efforts. Government takes corporate preferences more seriously than the public’s interest in culture, passing intellectual property law that favors corporate interests and keeps use of artistic assets out of public reach.

Ivey does offer practical recommendations. He suggests cultural impact should be a component of merger analysis by the FTC and DOJ antitrust division. And Ivey would require the FCC to consider local cultural impact in its decision-making. Ivey feels that the fragmentation of governmental arts policy among many small agencies and institutions leads to fragmented arts policy. He would prefer a Cabinet-level department to implement consistent, strategic, aligned policy. Ivey also suggests that we significantly reform intellectual property law, encouraging the adoption of Lawrence Lessig’s Creative Commons model for greater legal sharing of content, and the reinstatement of copyright registration. And he speaks against the digital divide, advocating subsidies for those not able to afford access to high speed internet. He is also a strong proponent of net neutrality.

Arts, Inc. is based on Bill Ivey’s experience, unique vantage point, and extensive research, and is dense with supporting evidence, but the suggested cure is inconsistent with the diagnosed disease. It appears to be a manifesto, but calls for adjustments to the system, rather than revolution. Ivey prescribes fixes to the arts industries as if they are machines that can be fixed with better engineering. But the arts are an ecosystem, not a machine. No engineer designs it; it emerges from collaborating and competing forces in equilibrium. Individual institutions continually optimize activities within the bounds of their ecosystems, making systemic reform difficult.

Ivey offers the Cultural Bill of Rights as a model for reform. However, it is divorced from historical views of rights, typically based on active struggle. By contrast, Ivey casts advocacy for cultural rights in the mold of the environmental movement—one that has focused on public awareness. While either model can be grounded in grassroots activism, ignoring the models of struggle dilutes his assertion that these cultural rights are rights in the way that we think of them.

Despite these problems, there are uniquely useful insights in Arts, Inc. Few writers have Ivey’s qualifications to discuss systemic issues of policy-making. He connects all the dots between the U.S. federal government, artists, consumers, corporate owners of artistic assets and nonprofit arts institutions. The breadth of knowledge and research is impressive, and many of his solutions in the final chapter are remarkably practical in contrast to the manifesto structure of the bulk of the book.

This is a long piece. If you’d like the very short version, you can find it here.

In Arts, Inc., Bill Ivey, former Chair of the National Endowment for the Arts from 1998-2001 and Director of the Curb Center for Art, Enterprise and Public Policy at Vanderbilt University (more expansive bio here) makes the case that our cultural and artistic heritage is a set of public assets that should benefit us all, but instead are too often captured or squandered by existing cultural institutions. Ivey seeks to remedy this through the framework of a Cultural Bill of Rights. Since the book was published in 2008, Arts, Inc. has been frequently cited by arts bloggers, and Ivey has continued to speak about the topics in the book at various seminars and conferences.

SUMMARY

Each item in Ivey’s Cultural Bill of Rights forms the basis of a chapter in the book, wherein Ivey explains why, in his opinion, we do not enjoy that particular right. He then goes into greater depth on how our government has failed to secure these rights, and closes with suggestions for how these rights could be established.

“The right to our heritage—the right to explore music, literature, drama, painting and dance that define both our nation’s collective experience and our individual and community traditions.” In Ivey’s view, we do not enjoy this right because the vast majority of the cultural and artistic record of our own nation is owned by for-profit corporations, who seek to exploit whatever can be profitable and ignore or leave to molder those items with little commercial value. When perceived commercial value of a cultural artifact is low, preservation is inconsistent and ad hoc. Corporate rights owners don’t always take their de facto role as cultural archivists seriously. And intellectual property law greatly favors the owners, so when commercial value is high, costs for use can be very high indeed. Ivey cleverly illuminates the omnipresent property status of our cultural and historical record by including the rights owner and royalty fee for each photo used in the book.

“The right to the prominent presence of artists in public life—through their art and the incorporation of their voices and artistic visions into democratic debate.” Ivey asserts that the sacrifices often required of artists, and the difficulty generating an income, discourage many artists from fully utilizing their skills. Even artists who appear to have “made it” by, for example, signing a recording contract, still struggle to gain the attention of their employers. And artists whose potential contribution is not immediately recognized are less likely to be supported by industries focused on immediate profit. Ivey discusses Bob Dylan’s career, and doubts that Bob Dylan would become a well-known musical artist today.

Furthermore, according to Ivey, the public little understands and values artistic professions, which hinders the engagement of artists with their communities. Or, as Ivey quotes an art student friend from college, “Every family wants a Picasso hanging on the wall, but no family wants one standing in the living room.”

“The right to an artistic life—the right to the knowledge and skills needed to play a musical instrument, draw, dance, compose, design or otherwise live a life of active creativity.” Ivey presents a long list of reasons he has perceived why each one of us does not have equal access to artistic tools that provide us with a means of expression:

• Access to high quality training for the underprivileged is irregular and often dependent upon the limited resources of charitable organizations. Even free guitar tutorials on YouTube are not available across the digital divide.
• Universal arts education usually exists through primary school at some level, but then generally becomes elective.
• There aren’t enough art educators, and it is difficult for professional artists to teach in-residence without educational certifications.
• We conflate happiness with wealth creation, and so pursue skills suited to wealth creation rather than happiness.
• Participation has been reframed as attendance, rather than personal artistic expression.

“The right to be represented to the rest of the world by art that fairly and honestly communicates America’s democratic values and ideals.” Ivey opens the chapter noting that post-September 11th, many Americans were shocked to learn how lowly our nation is esteemed in some parts of the world. He draws a connection between this perception of the United States and the poor representation of our culture that is offered abroad. He notes that one of the most popular depictions of the U.S. in Morocco at the beginning of the 21st century was the television show Baywatch, because it was broadcast for free across the Middle East, due to a unique and pioneering distribution model.

Ivey says that this sort of misrepresentation happens because our official diplomatic apparatus, the State Department, places little to no priority on cultural diplomacy, viewing it as a soft power approach that ended with the Cold War. As a former NEA Chair, Ivey speaks candidly about an East Wing/West Wing divide in federal government. Arts and culture are represented in the East Wing, alongside social functions, typically presented by the First Lady and her staff. But the serious work of government happens in the West Wing. Ivey shares interesting anecdotes of his own lack of authority and resources, as a “small agency head,” compared to Ministers of Culture in other countries. As a result of de-emphasized cultural diplomacy, commercial interests, often assisted by the Office of the U.S. Trade Representative, have a near monopoly on sharing U.S. culture abroad.

“The right to know about and explore art of the highest quality and to the lasting truths embedded in those forms of expression that have survived, in many lands, throughout the ages.” In this chapter, Ivey speaks of what is typically characterized as fine art or “high culture”: French cinema, classical music, gallery art, Shakespeare, ballet, etc. Per Ivey, we don’t enjoy this right for several reasons: commercial arts industries, like cable television and movie theaters, have little interest in offering something different, foreign, or strange (these are considered niche market products); moreover, fine arts are perceived to have an aloof and sneering attitude, and do not engage younger audiences on their own terms¹.

“The right to healthy arts enterprises that can take risks and invest in innovation while serving communities and the public interest.” Here Ivey takes aim at both commercial and nonprofit arts organizations for playing it safe. Commercial interests play it safe to maintain large audiences. For example, Ivey says Clear Channel scientifically picks songs least likely to offend or irritate so as to reduce channel changing, with bland pop music the inevitable result. This science is applied to hundreds of stations, all programmed together. To take another example, publishers need take care to distribute products that won’t be banned for indecency by the world’s biggest retailer, Walmart.

If some artist or new artistic product proves successful, then risk aversion leads commercial cultural interests to copy the success as rapidly and profitably as possible until the original idea is completely played out. In the same vein, “bankable” talent becomes more important to risk-averse institutions than matching the right talent and artistry to the content or audience.

Nonprofit institutions are also guilty of risk aversion, according to Ivey. They want to limit the risk of losing philanthropic revenue streams and audience members, and so may make similar, safe choices in programming. Some nonprofit organizations may operate more to preserve an art form with a declining audience than to create risky content for a new audience, anyway. This is more likely if a nonprofit exists to maintain elite forms of entertainment.

The Failure of Government

Ivey pins our failure as a society to enjoy these cultural rights largely on the government. The East Wing/West Wing divide mentioned above that devalues the importance of arts and culture makes it easier to treat federal arts funding and obscenity or explicit content in the arts as political footballs. Even though the First Amendment makes direct regulation of artistic expression difficult and rare (with the exception of FCC fines for broadcasters), Congressional hearings on perceived indecency or obscenity tend to result in industry self-censorship such as parental advisory warnings, V-chips and MPAA ratings that have a chilling effect on creative efforts. Government also takes corporate culture industries’ preferences more seriously than the public’s interest in culture, leading to frequently extended copyright terms and intellectual property law that increasingly favors corporate interests and keeps use of artistic assets out of public reach.

Bridging the Cultural Divide

Ivey ends the book by acknowledging, for the first time, what he sees as good news and positive trends. Citing Daniel Pink’s A Whole New Mind and Thomas Friedman’s The World is Flat, Ivey notes that creativity is again seen as a positive economic driver. Economists are increasingly interested in happiness beyond Gross Domestic Product. Corporations are taking greater notice of stakeholder benefit, not merely shareholder benefit. And influential work like Gifts of the Muse has informed conversations among arts leaders and foundations on whether we’d benefit from a greater focus on the so-called “intrinsic” benefits from the arts, such as increased creativity.

In addition to the digital divide, Ivey posits a cultural divide that cuts across class and other group identifications and separates people from artistic expression. Professionals with 80-hour work weeks, for example, don’t have enough time for arts in their lives. To help resolve this, Ivey suggests a new Arts and Crafts movement that would encourage craftspersonship and could serve as a correction or counterpoint to industrial production of cultural goods. Ivey notes that the Arts and Crafts movement linked an “aesthetic with humanitarian sensibilities,” and suggests this is an antidote for our increasingly shallow cultural participation and divided society.

Ivey also offers a list of practical recommendations that are more specific and concrete than the Cultural Bill of Rights. He suggests that cultural impact should be a component of merger analysis by the FTC and the Department of Justice antitrust division. And Ivey would require the FCC to consider local cultural impact in its regulatory decision-making. This sensible idea could be implemented at the agency level². Ivey feels that the fragmentation of governmental arts policy among many small agencies and institutions, such as the NEA, NEH, Smithsonian, Corporation for Public Broadcasting, Institute of Museum and Library Sciences, programs within the Department of the Interior, the Kennedy Center, cultural attachés in the State Department, the U.S. Trade Representative, the Commission on Fine Arts, the Department of Education, etc, lead to fragmented arts policy arenas with narrow foci that cannot help establish the Cultural Bill of Rights. He would instead prefer a Cabinet-level department, parallel to Ministries of Culture in other nations, to implement consistent, strategic, aligned policy. Ivey notes the potential for abuse by a Cabinet level department, but believes that this could not make the situation worse than it currently is.

Ivey also joins the chorus of those suggesting that we significantly reform intellectual property law. He encourages the adoption of Lawrence Lessig’s Creative Commons model for greater legal sharing of content, and notes growing discomfort with digital rights management (DRM) in the digital publishing industries. Additionally, Ivey would like to introduce “statutory rates” common in music publishing to other forms of cultural property, so that rights to utilize other work can be legally and consistently and reliably obtained³. And he recommends that copyright registration be reinstated, so that an additional step is required to enforce one’s copyrights.

Finally, Ivey speaks strongly against the digital divide, and advocates subsidies for those not able to afford access to the information superhighway, so that our next generation of artists is not determined by the affordability of high-speed internet. He is also a strong proponent of net neutrality, and makes it clear that concerned citizens must be careful observers of both Congress and the judiciary, because intellectual property law is developed as much in court as in legislative session.

ANALYSIS

Arts, Inc. is a long book, based on Bill Ivey’s considerable experience, unique vantage point, and extensive research. It is also a slow read. It is dense with supporting evidence, which is welcome, but Ivey is not afraid to repeat a point, in detail, if it can be applied to the topic at hand. For example, he repeats his concern several times, at length, that copyright law is harmful to future artists who wish to build upon past work of others. And with every chapter except the last focused on the terrible state of affairs for arts and culture in the United States, it becomes polemical and pedantic pretty quickly, despite several interesting stories from his time as NEA Chair.

Ivey has written what appears to be a manifesto, but ends with a call for adjustments to the system, rather than revolution. I can’t help but come to the conclusion that Ivey has too many axes to grind, including his apparent belief, based on some experience with lobbyists, that high school band teachers are an entrenched special interest who will ruthlessly cut off at the knees any other form of music education in high schools, therefore limiting a child’s ability to create other forms of music.

Machine vs. Ecosystem

Most of Ivey’s recommended solutions are practical things that a somewhat unified and motivated government could accomplish, but it is not self-evident that such changes would guarantee the whole Cultural Bill of Rights. In Chapter 2, Ivey states, “If America’s arts system can be viewed as a giant machine connecting artists, heritage, and our expressive lives, fair use is the lubricant that smoothes the give-and-take of creativity.” Ivey prescribes fixes to the arts industries as if they can be applied by fiat; as if they are machines that were designed by an engineer, and can be fixed with better engineering. But I believe he is wrong. Arts are an ecosystem, not a machine. No engineer designs an ecosystem; one emerges when collaborating and competing forces and the actors therein find a sustainable equilibrium. No one designed the current set of inter-related systems of arts and culture generation and propagation. They emerged as a result of various incentives, initiatives, and interplay of different collaborators and competitors.

Individual institutions might themselves be machine-like, and subject to tweaking. But each individual institution, typically lacking the ability to change the environment alone, continually optimizes its activities within the bounds of its ecosystem, making collective acts of systemic reform difficult. Further, each participant in a system at equilibrium is primarily concerned with survival, not intentional restructure of the system. Ivey laments that both for-profit and nonprofit arts institutions are risk averse, but this is the natural consequence when institutions fear for their survival in a highly competitive environment. Equilibrium, after all, does not imply plentiful resources for all members. Equilibrium can be highly competitive (and in nature, often is).

The arts and culture landscape that Ivey wants requires systemic change, and systems simply cannot be adjusted and redesigned like a machine. Systemic change requires either immense cooperation and coordination among the most powerful members of the system (which might be arts consumers in this case), or revolution, or breakdown of the system into a disequilibrium that may be seized upon and exploited.

Regulating Preference

Just as Ivey writes as though the arts ecosystem were actually a machine that could be fixed, he writes about individual institutions and arts users as if their behavior and preferences could and should be changed to match his.

Ivey believes that the division of the market for arts products into smaller and better-defined niches, or the “long tail,” is bad for our cultural consumption. He believes this promotes a focused insularity of cultural preference, and does not expose consumers to new artistic forms or ideas. He contrasts this model with the radio stations and DJ’s of his youth, who would take on a curatorial role and introduce listeners to a diverse variety of content. However, he does not address the trade-off between breadth and depth. Niche focus allows for a greater depth of exploration and expression and risk-taking within that niche than would have been possible on Wolfman Jack’s border-blasting broadcasts, or the Ed Sullivan Show, which Ivey uses as an example of curated culture for a mass audience. Ivey desires that cultural institutions take more risks, so we should acknowledge that catering to a particular niche may facilitate managed risk-taking. A modern classical music ensemble can take more artistic risks with daring compositions than a larger symphony orchestra can, because the modern music ensemble has sought out a niche audience that supports the risks inherent in new classical composition.

As noted above, in Ivey’s desire for a new Arts and Crafts movement that might reconnect aesthetic and humanitarian values, he points out over-worked professionals as people who are on the wrong side of the cultural divide. But these over-worked professionals cannot be compared to exploited workers of the industrial revolution. A career working 80-hour weeks as a lawyer, doctor, investment banker or management consultant is one that is chosen and striven for, not one that is imposed upon a person. It requires a fair amount of cultural chauvinism to assert that these professionals, who have made choices that we hope are consistent with their values and preferences, are on the “wrong” side because their preferences do not match an artist’s preferences.

Rights

Ivey offers the Cultural Bill of Rights as a model for reform. However, it is divorced from historical views of rights, which are typically based on active struggle. Ivey does not even discuss whether his Cultural Bill of Rights is more likely to be granted or rather demanded and asserted. This is a strange omission in a discussion of “Rights.”

Ivey believes that fair use greases the creative gears and supports the rights of artists to create while borrowing from other artists, while intense copyright restrictions inhibit such creativity. The principle of fair use is described as too vague and inconsistently applied, and in any case, fair use is only used as a defense once legal proceedings are threatened or under way, making it an expensive principle to apply in practice.

Ivey wants an expansion of this; he clearly advocates for a wider freedom within the scope of law to encourage and empower artists. Yet he spends no time on the artistic vitality of illegal reappropriation of cultural products for creative endeavors, e.g.: unauthorized samples in hip hop; exposure of friends to new music through mix tapes, burned CD’s or shared mp3 files; or unauthorized video mashups and parodies so prevalent on YouTube. He seems uninterested in, or possibly unaware of, the emergence of creative internet memes (transmittable and mutable ideas or cultural artifacts) from open, authority-flaunting internet playgrounds like 4chan. The artistic reappropriation that Ivey champions (e.g., collage, pastiche, remix) is happening in spite of legal limitations.

The best review of Arts, Inc. that I’ve read was published in voiceXchange, a peer-reviewed online journal published by graduate students in the University of Chicago’s Department of Music. Eric Martin Usner points out, “As so many studies of popular culture have shown, law and control/ownership actually do much to inspire creative circumvention of ‘official,’ mainstream, or hegemonic arts through creative ‘piracy’—cultural disobedience.” Usner further notes that the heritage of civil disobedience, from Thoreau to Martin Luther King, Jr., to Gandhi and Vaclav Havel is relevant in any discussion of rights. Ivey doesn’t spend much time with the history of other struggles for rights, e.g., the Civil Rights Movement, gay marriage, and the Declaration of Independence. In these struggles, rights were demanded from and asserted against powerful institutions long before they were ever granted by powerful institutions, and typically focus on the prevention of harm to one part of society by members of the dominant culture. By contrast, Ivey casts advocacy for cultural rights in the mold of the environmental movement—one that has focused on public awareness and changing hearts and minds, with a fair amount of success. While either model can be grounded in grassroots activism, ignoring the models of struggle dilutes his assertion that these cultural rights are actually rights, in the way we think of them.

Ivey recognizes that a centralized Department of Culture to administer our cultural rights could potentially have too much power to encourage a homogenized or sanitized U.S. arts scene. He makes the argument that it wouldn’t be worse than the current situation, where art gets homogenized and sanitized by corporate interests. He writes, “The introduction of a central cultural authority in the United Sates could backfire, opening new opportunities for control that might make it more difficult, not easier, for Americans to achieve rich expressive lives. But, as we’ve seen, there’s plenty of poorly directed cultural interference going on right now⁴.” Ivey sensibly anticipates concerns about a more powerful governmental authority involved in arts and culture, but simply asserts that the government won’t be worse, more parental, or more homogenizing than for-profit arts industries. He doesn’t support this assertion. Much of the book is an exploration of how we are not able to trust corporate or public institutions to protect and perpetuate our artistic heritage, yet he believes part of the solution is a new government institution to consolidate others.

Useful Scope

Despite these problems, there are uniquely useful insights in Arts, Inc. The wider public debate (i.e., outside of the arts blogosphere) over copyright law in the United States rarely takes utility for future artistic endeavor into account, despite some current relevant cases in classical music and theater. And among arts and culture writers, few have Ivey’s qualifications (and interest) to discuss structural, systemic issues of policy-making. Ivey has written a book that connects the dots all the way from the U.S. federal government to artists to consumers of art to children first exposed to the joys of artistic creation to corporate owners of artistic assets and nonprofit arts institutions. The breadth of Ivey’s knowledge and research is truly impressive, and many of his proffered solutions in the final chapter of the book, labeled “Conclusion” in the table of contents, are remarkably practical in contrast to the manifesto structure of the bulk of the book. I highly recommend this chapter, even if you choose to skip the rest.

IMPLICATIONS

The Cultural Bill of Rights is difficult to compare to human rights or civil rights, as these are often very much about not being harmed by members of the dominant culture. The Cultural Bill of Rights, for example, will not prevent anybody in this country from being lynched, so it is worthwhile to examine whether they are potent as “rights,” or whether they are redundant with free speech rights. If Ivey’s Cultural Bill of Rights seeks to protect us from active repression of (or chilling effect on) our artistic expression, then it is redundant with free speech rights, and Ivey ought to add his influence to ongoing free speech advocacy. But if the Cultural Bill of Rights means that we have a right to be encouraged and subsidized to be more artistic and expressive, and I think this is Ivey’s intention, how should such rights be balanced against other priorities? For example, how can Ivey’s cultural rights be granted precedence over the arts industries’ rights to profit by artistic expression as best they can?

Instead of answering these larger questions, Ivey has assumed the supremacy of artistic expression, and offered solutions for his cultural rights in the style of environmentalism. This sets up the arts as something we really should appreciate more, and should protect, even if we don’t really want to, or we’ll be sorry later. In other words, the heritage and capacity for artistry that Ivey says we’re entitled to is the broccoli that we’re supposed to be eating instead of the potato chips that the cultural industries are feeding us. The recommendation to use the organizing tools of environmentalism is consistent with the tone of Ivey’s recommendations for governmental and bureaucratic reform. But this is at odds with the tone of aggrieved complaint throughout the bulk of the book. Despite Ivey’s best efforts to write a manifesto of articulated grievance and demand for change, I’m left with the conclusion that you can take the bureaucrat out of Washington DC, but you can’t take Washington DC out of the bureaucrat. Ivey is calling for new policy, not revolution. This is perhaps consistent with his view of the arts as a machine (which can be tweaked) rather than a system (which is more likely to be changeable in a period of disruption or disequilibrium). An arts advocate should decide whether she or he accepts some central premises of Ivey’s:

1. We are entitled to and have a right to a life of artistic participation and expression.
2. The current arts system is not delivering our cultural rights.
3. These rights can be reclaimed, though, through adjustments to the culture machine.
4. The best way to reclaim them is through grassroots organizing to change hearts and minds, as with the environmental movement, so that politicians are forced to take notice, so that policies can be improved.
5. Once government policy is improved, our access to our cultural rights will be improved.

If you can agree with all of the above, then you can agree with Ivey’s prescriptions. If however, you believe that the arts are an ecosystem rather than a machine, or if you believe that a more powerful governmental presence in arts and culture will not be a positive change, then you must seek other solutions.

FURTHER READING

Eric Martin Usner’s review in voiceXchange, cited above, focuses on Ivey’s call for a more expressive life for all people, as well as some analysis of the concept of cultural rights.

Jason Baird Jackson at Indiana University responded to Arts, Inc. just this March, from a folklorist’s perspective, with more in depth analysis of Ivey’s perspective on intellectual property.

Video of a panel discussion of Arts, Inc., hosted by the Center for American Progress. Ivey was on the panel with Robert Lynch, President and CEO of Americans for the Arts, Rep. Jim Cooper (D-TN), and moderator Sally Steenland, Sr. Policy Advisor for Faith and Progressive Policy at the Center for American Progress. The discussion focused on the theme of cultural assets as public goods.

Bill Ivey introduced many of the themes of Arts, Inc. back in a 2005 column in the Chronicle of Higher Education, entitled “America Needs a New System for Supporting the Arts”.

USA Today published exactly the reductive, brief review you’d expect from USA Today.

The Curb Center for Art, Enterprise & Public Policy at Vanderbilt University (Ivey is the Director) has a page about the book with well-chosen pull quotes.

Governor Sanford was tainted by scandal when his veto was overriden, so some observers wondered if the SCAC was as likely to gain the 2/3rds supermajority votes required in both houses to survive Governor Haley’s veto. It wasn’t even close. It is perhaps interesting to note that FY2012 grantees were already announced, pending the outcome of the budget bill and veto process. Advocates could call their State Representatives and State Senators knowing precisely who and what they were fighting for, including approximately $250,000 in arts-in-education funding. Still, funding levels are 16% lower in this budget (which begins July 1st) than the previous one, when the SCAC received $250,000 in one-time stimulus funds, and 55% lower than in 2008. New in FY2012, the SCAC is required to spend 70% of its funding on grants.

Also worthy of note, the news was distributed widely across Facebook and Twitter before the SCAC’s website and others could be updated.

U.S. Capitol. Photo by Andy Withers

As has been previously reported, public funding for the arts is one of the many foci of our national debate over fiscal policy. While funding cuts for the National Endowment for the Arts and the National Endowment for the Humanities (and potential but unrealized cuts at the Smithsonian) all made national headlines, the Corporation for Public Broadcasting, which unwillingly and inaccurately functions as a proxy for NPR in the public imagination, was the hottest of the hot potatoes. The House of Representatives voted to defund the CPB entirely, but in the end, appropriations were essentially unchanged from the year before. This may seem like a dead issue for the moment, but there is an extremely good chance these battles will resurface in the fiscal 2012 budget process.

Federal arts funding is a small share of the budget
So, how much money are we talking about? The CPB is getting $455 million (of which about $90m goes to radio stations). The Smithsonian gets the biggest federal arts allocation, at $761m. If you add all arts-related federal programs together, funding for the current fiscal year totals just over $2.5 billion. Honestly, that number looks pretty large to me. I can’t imagine what a billion of anything really looks like. But the total federal budget for this fiscal year (which runs through September) is $3.82 trillion. So the federal arts funding we’ve identified is 0.066% of the total federal budget. And when we’re only shouting about CPB, we’re talking about 0.012%. That is twelve one-thousandths of one percent.

So, why? Why was this a central topic in budget debates this spring? Was it really all about this James O’Keefe scandal? Are we going to rehash the entire set of arguments again this summer and fall as we debate the fiscal 2012 budget?

Maybe the real reason we keep putting Elmo’s head on the chopping block is because we don’t really understand the numbers, after all. According to a CNN poll, most Americans do not think the CPB gets twelve one-thousandths of one percent of the budget. Actually, only 27% of those surveyed believe the CPB gets less than 1%¹ of the total budget. 40% believe the CPB gets 1-5%. Everyone else believed the appropriation to be greater than 5%, and an astonishing 7% of those surveyed believe the Corporation for Public Broadcasting gets more than 50% of the budget (which would have to be close to $2 trillion). If that were true, it would put the pledge premium tote bag and mug industry completely out of business, and This American Life would be hosted by Robin Leach. The survey also asked whether funding for different funding categories should be increased, decreased, kept the same, or eliminated. 16% of respondents wanted CPB funding to be totally eliminated.

We care about other spending, too, right?
It’s interesting to examine the other spending categories in the poll. The survey asked about Medicare, Medicaid, Social Security and defense. Those are pretty big portions of the budget, so it makes perfect sense they’d be in the list. The rest of the categories are decidedly different: foreign aid (also highly overestimated by respondents), benefits for retired government workers, food and nutrition assistance for poor people, housing for the poor, and federal education funding. And that’s it.

But, what’s missing here? Quite a lot, actually. What about subsidies to the oil & gas industry, which the Obama administration claims add up to $4 billion (about 9 times CPB funding)? What about direct subsidies for farmers, which were about $5 billion last year? Tax exemptions for ethanol production aren’t mentioned, either. Nor are the $8.5 billion in subsidies given to the airlines since 9/11 simply to help them survive. These subsidies went to for-profit industries, which are theoretically subject to the rigor of the free market and exist for the profit of their shareholders. And yet, more discussion is generated by $2.5 billion in subsidies to arts organizations, both governmental and non-profit, that explicitly exist for the public benefit and do not have shareholders.

Why didn’t CNN ask about mortgage interest tax deductions of $88.5 billion in 2008, 200 times this year’s CPB funding? What about first time home buyer and hybrid vehicle tax credits? In 2008, contributions to employee retirement and pension funds, and tax deferrals on the earnings in those funds, lost the federal government $117.7 billion in tax revenue. There are many, many more examples. Decisions to fund and subsidize these sectors of the U.S. economy are just as important as decisions about arts funding. And the amounts are significantly higher than the $2.5 billion of federal arts funding in question.

How is it so easy for Congress to ignore all of this during budget battles, and instead focus on whether Juan Williams should have been fired or not? One reason is that subsidies can easily be swept under the rug, when the rug is the tax code.

Tax breaks: spending with less scrutiny
Tax deductions and credits, also called tax expenditures, are a form of government spending, as we can see clearly from the now-ended hybrid vehicle tax credits. The federal government wanted to provide incentives for the purchase of fuel-efficient vehicles. It would have cost the federal government about the same to send a check directly to hybrid buyers, perhaps processed at the dealerships, as it cost to reduce tax bills by the same amount. (Transaction and processing costs might be different, but the bulk of the cost would have been the same.)

The difference between tax expenditures and direct spending is that the former are not part of large budget bills, the kind that can shut down the government if not passed. Tax expenditures can certainly be treated as political footballs. But they are far less likely to be at the center of a showdown. Not only that, if Congress adds a tax expenditure in some legislation, it is a spending increase that can be framed to look like a tax cut, because it reduces tax revenues. That makes it more politically palatable for both parties, even if it has nothing to do with taxed income, and even if it distorts markets.

Consider a very large tax expenditure: $88.5 billion (2008 figure) worth of mortgage interest tax deductions (almost 200 years of Corporation for Public Broadcasting funding). Interest you pay on your mortgage gets deducted from your taxable income. Thus, if you’re comfortably into the 25% tax bracket, this tax expenditure is worth a quarter of what you paid in mortgage interest during the year. This creates an explicit incentive for people to buy their own homes by borrowing. If creating a home ownership and borrowing incentive sounds a little off to you, you might be recalling the financial collapse that precipitated the Great Recession. Like the repackaging of loans into mortgage-backed securities that contributed to the housing price bubble of the previous decade, this deduction effectively makes borrowing cheaper. If borrowing is cheaper for everybody, then everybody has more to spend, and if everybody would like to buy a somewhat nicer or bigger home if they could, then all the home prices are simply going to increase. This deduction, therefore, distorts the market and leads to increased prices. Who benefits if all prices in the market are inflated to take advantage of this deduction? It helps the realtors, who get paid a percentage of the sale price. And it helps the home building industry.

What is the point? Do I want a repeal of this tax deduction? Personally, no, I’ve already got a mortgage, and of course I want to keep my deduction. It is simply important to understand that this is spending, too. The mortgage interest deduction is really a government spending program that encourages people to buy instead of rent, and has the unintended effect of inflating home prices. And it’s a pretty large one! Why don’t we publicly debate this spending program, which is 200 times greater than the CPB budget, and is of debatable long-term utility? We don’t have to talk about it, because it’s not in the budget. It’s in the tax code, so it looks like a way to reduce taxes, rather than a way to subsidize the home sale industry.

Reframing the conversation
If subsidized arts workers are labeled as something like freeloaders in public discourse, then farmers, homeowners, hybrid vehicle buyers, the airlines, and the oil & gas industry are freeloaders too. Ayn Rand is very popular again among conservatives, so where is the conservative outcry against oil & gas subsidies? Instead, we are offered a redefinition of the “free market capitalist system” as something that requires government subsidy. Oxymorons rule the day when the free market must be subsidized, and arts created explicitly in the public interest, without a profit to distribute, must stand alone.

The issue of arts funding is quite likely to be revived when the fiscal 2012 budget is to be presented this fall. Conservative legislators have been able to score political points with this issue for years. But we have also seen President Obama bring greater scrutiny to bear on oil industry tax breaks, and he was making political progress in April. If uncertainty regarding oil supplies in the Middle East fades by this fall, we can perhaps expect that some part of the government spending conversation will deal with oil and gas tax expenditures.

Arts advocates, however, should not sit on our hands and wait for the President to shift the focus to federal subsidies of other industries in the budget and tax code. We are supposed to be very good at telling stories, so we ought to thoughtfully study our budget and tax code and engage with our citizenry on those issues that are most relevant and significant. It’s not just a matter of self-interest, though that is obviously part of the equation. America’s budget deficit and public debt is ours. And when we only discuss federal budgets when we launch a campaign to save our NEA grants and Sesame Street, we are lending legitimacy to those who would focus on the nickels and dimes while ignoring the big budgetary issues. We have the capacity for wider scope.

Notes
1. If you look at the wording of the poll question, you can see it is potentially a bit misleading. It asks, “Just give me your best guess — you can pick any number from one percent to a hundred percent, or if you think it was less than one percent, you can say that too.” The question first asks people to choose between 1-100%, so it anchors the idea of whole number percentages in the listener’s mind, then offers a less than 1% option as an alternative, after they’ve already framed the question in terms of whole number percentages.

The gauntlet thrown down

Landesman cites the NEA’s 2008 Survey of Public Participation in the Arts in saying that performing arts event attendance has dropped 5 percentage points. More specifically, in 2002, 39.4% of U.S. adults (or 81 million) attended either a jazz event, classical music event, opera, musical play, non-musical play, ballet, or art museum or art gallery. In 2008 that number dropped to 34.6% (or 78 million).¹

This 5% of decrease in attendance share, interpreted as demand, is juxtaposed against a 23% increase in the absolute number of nonprofit performing arts organizations during the same time period, interpreted as supply. The 5% is a decrease in percentage of attendees among the adult population, and the 23% is an increase in number of organizations, without reference to size or whether the additional 23% produce events at the same rate as previously existing organizations.²

It’s not a perfect comparison to put the 5% drop in percent of attendance against a 23% increase in number of organizations, but the opposite direction and the size of both changes is still disconcerting. If fewer people are attending arts events, but more organizations are creating them, then this could be a problem, right? Landesman said that we can’t realistically increase demand, so we ought considerer reducing supply. I.e., we need fewer performing arts organizations, or those organizations need to produce fewer events. This idea, that there is an oversupply of performing arts, has been met with negative reactions among many arts workers, to say the least. That the NEA also wants to fund fewer organizations has ratcheted up the anxiety level.

My problem is not that Landesman wants to further ration the already-rationed cookie jar. And I do not believe he thinks he can or should use the NEA to prune the gnarly tree of performing arts in the USA. My issue is that Rocco (can I call him Rocco?) presented a simplistic view of the economics of performing arts, one that hasn’t been much expanded in the discussion since, by focusing only on event attendance and NEA subsidies. Landesman, along with a passel of concerned bloggers, is ignoring what makes nonprofit economics sustainable, strong performance in multiple markets.

The demand function in nonprofit performing arts

Performing arts nonprofit organizations operate in at least three markets: markets for what people will pay to see them perform, the financial markets for debt, investments and endowments (do not apply to all organizations, and are not further discussed here), and the markets for private philanthropy and status. Markets for philanthropy and status are almost entirely missing from the demand side of Rocco’s equation (and the demand side of this traditional economic analysis by Devon Smith).

Rocco speaks of contributed revenue as if it is just a policy-driven subsidy, like a subsidy to the agribusiness industry. Or, as Trisha Mead later put it on 2amtheatre.com, a subsidy for scientific research and development, which is not a bad analogy when describing NEA funding. Frequently, a subsidy is the result of political influence, but when it is a well-intentioned policy instrument, a subsidy makes it possible to get things that we or the government think we need, but just aren’t willing or are unable to pay for on our own. It’s inherently paternalistic–making us eat our spinach (or at least pay for the spinach with a wee miniscule share of our taxes).

For now, I will use the word subsidy for policy-driven funding that somebody, like the government or a foundation, thinks is good for us. A subsidy pays for the spinach. But the vast majority of contributed revenue to arts organization comes from individuals (as the NEA knows; see page 1 of this report), out of sheer appreciation for the work that is generated. When a small business owner contributes $1000 every year to the symphony in her town, she is clearly stating that they music she enjoyed that year was worth at least $1000 more to her, and her community, than what she paid in tickets.³ That is a reflection of demand. Not only that, but she’s signaling to this organization that she likes what they’re doing. If they’re paying attention, and subsequently doing more of what they think she will like, then they are responding to market forces, just in a subtler fashion, and in a market with fewer participants.

Consider how demand differs from person to person. Conceptually it’s not complex. For any given thing that people buy, some people like it more, and are willing to pay more, than others. That’s why the iPhone cost so much when first introduced. Apple knew that some people would want one so badly that they’d happily pay a premium price, and when all their fanboys had one, it would be time to cut prices to reach the next group. If you can get everybody to pay the maximum they’d be willing to pay, then you’ll bring in the most money. Economists and marketers call it price discrimination. When you’re selling tickets you can do this, to a limited extent, with differences in price for seats in the front verses seats in the back (not exactly price discrimination), or through dynamic pricing (Trisha Mead is a big advocate of dynamic pricing). But to really get the most money, you’d like a way for somebody who adores your product to pay you even more than the highest price you’re charging. That’s exactly what you can do as a nonprofit organization when you accept contributions. If you have a good development & fundraising staff, you will get as much revenue as possible given the demand that exists. It will not be reflected, however, in the event attendance figures extrapolated from NEA surveys.

Some contributors aren’t so purely motivated. Corporations may donate for the PR or advertising. Sometimes donors want to sit on committees with other donors to make business contacts or find golf partners. Sometimes, they just want to be associated with a highly respected arts organization, because it impresses their neighbors or clients. This is the market for association and status. Don’t tell the donors that you know this, because such status may be more valuable when not explicitly acknowledged. But truly, there is demand for this. Naturally, this status is more likely to be supplied by larger, longer-lived institutions than by smaller upstarts.

Further, if you want nonprofit arts organizations to conduct R&D for the art world, donors (including foundations) often want to fund exactly that. They demand artistic R&D by funding it.

The demand to supply, and the benefits of competition to suppliers

The market for association and status is not limited to donors, sponsors and underwriters. It extends to the labor market, as well. Rocco is admirably concerned that if performing arts organizations oversupply, against lower demand, then they will have to share what he sees as a shrinking revenue pie with more organizations, which will eventually force organizations to pay their artists less, or at least will make it harder to pay artists a living wage. I think he’s generally right, if the industry structure remains fixed. When, on Twitter, a theater artist suggests that the “model is broken” if he or she doesn’t receive a living wage, I often reply that if they want to be paid more, then less theater should be produced.

Of course, each individual can’t alter the fact that artists supply their own talents for less than what the market will monetarily compensate. And, they really shouldn’t try. First, artists do get some intangible compensation. Anybody working for free, or almost free, creating art gets the intangible benefit of doing something that he or she loves or is driven to do. The artist may also receive respect and admiration from friends. Moreover, many artists are working to build recognition and reputation (or status), so that they have better opportunities to secure paid work in the future. There is a value to intangible compensation. And while we can’t perfectly measure that value, we know it’s there. If it weren’t there, people would stop creating art for free.

Further, the assumption that oversupply will lead to lower revenue per artist is one of those ceteris paribus arguments common in economic theory. If all else is held constant, then more theater and fewer theater-goers leads to less and less money for each theater. In real life, however, ceteris never stays paribus. If you want your city to gain a critical mass of creative, talented theater artists, it helps to have more production. Higher competition within a market will naturally give more options to your theater-goers, making it more likely that they’ll be able to find something they like. This might even increase demand, though there’s no guarantee this will happen, or happen quickly.

However, this is not a recommendation to form more theater companies or chamber orchestra groups. According to the National Arts Index, the vitality of the arts tracks fairly closely with the economy. Recessions impact all areas of demand discussed here. Since 2008, we’ve seen several orchestras fold or come close. Worse, the NAI research indicates that even during prosperous years this last decade, approximately 1/3 of nonprofit arts organizations ran at a deficit. This is a more serious concern, worthy of further analysis, but we still can’t leap to the judgment that this is driven by oversupply.

Conclusion

Demand is a function of more than just ticket sales and attendance. You have to include demand to provide funding, demand to contribute, demand for status, association, and even demand for truth and beauty. Further, the root of oversupply, if it exists, is in artists insisting on supplying more of their generative work to their communities. Rocco can’t stop this even if he wants to, and I doubt he really wants to. If it were to stop, our arts ecosystem would be less vibrant, would hold less potential, and would be less motivating.

Notes:

1. If you analyze the attendance decrease in absolute number terms rather than change in percent, the decrease is 3.7%. But the decrease in percentage of U.S. adults attending is 4.8%, which Landesman has rounded to 5%. The attendance number includes attendance at for-profit events (it’s based on a survey of attendees, many of whom will not know or care if they are at a for-profit or nonprofit event), and the organizations number includes fairs, festivals, and media.
2. The 23% increase in number of nonprofit organizations is taken from the Americans for the Arts National Arts Index. It is the increase from 2002 to 2008 in number of 501(c)(3) arts organizations in the above categories, plus nonprofit media organizations and fairs & festivals. It does not include for-profit arts organizations such as for-profit art galleries. If you convert this to the number of organizations per one million people, for more apt comparison to the change in attendees as percent of the population, then the number of organizations increased from 294 per million to 341 per million, a 16% increase. This isn’t a breakdown by organization size. We can’t assume that the total output of events increased 23% just because the number of organizations did. The additional organizations could be tiny, with low production capacity. If we look at both changes in terms of absolute numbers, you can see that attendance dropped 3.7% and number of organizations (not necessarily number of events) increased 23%. If we look at both changes in terms of percentage of the population, then attendance dropped 4.8 percentage points, and number of organizations per million increased 16.3%.
3. On the value of the $1000 from the small business owner: sure, there is a tax deduction, too. But even if she’s a rich business owner, in which case she might give a lot more than $1000, the tax deduction will only be worth $350 at most (less if a large share of her income is from dividends or capital gains), which means she still wants to give away at least $650 to the symphony.