• Really scary stuff about political meddling in editorial content at the Alabama public television network. Seems like one of the underreported stories of the year.

MUSICAL CHAIRS

• Congratulations to Randy Engstrom on his appointment as interim director of the Seattle Office of Arts & Cultural Affairs, replacing Vincent Kitch who left abruptly in August. Engstrom won the Americans for the Arts Emerging Leader Award a few years back for his pioneering work with the Youngstown Cultural Arts Center in Seattle.

IN THE FIELD

• Victor Kuo offers a good overview of FSG Social Impact Advisors’ work in Cincinnati to develop shared outcomes across a range of funders and help build “backbone organizations” in the region.  Kuo will be presenting with ArtsWave’s Mary McCullough-Hudson and me at the Grantmakers in the Arts Conference later this month.
• Is crowdfunding a good fit for museums? The recent experience of the Hirshhorn and Contemporary Art Museum Houston suggest not. On the other hand, with the help of superstar web cartoonist The Oatmeal, a campaign to build a museum honoring the inventor Nikola Tesla has raised over $1.35 million on Indiegogo.
• What it’s like to (not) make a living as a poet.

THE MYSTIQUE OF CITIES

• Diana Lind on the revitalization of Cincinnati’s Over-the-Rhine neighborhood: “It becomes harder to complain about gentrification when investment returns to the community the benefits of street lights, restored facades, new trees and eyes on the street.”
• Burning Man is not just an inspiration for artists – according to this article by burner Jessica Reeder in Utne Reader, it also could be a model for city planners. A well-written, thought-provoking piece.

THE (NOT SO?) DISMAL SCIENCE

• Interesting list of economists who support, or are practitioners of, the arts. Be sure to read the comments too.
• Check out this super fascinating interview with young economists about the future of their field. Some quotes of note:
  

  Although we have accumulated considerable evidence showing that people do not always behave rationally, we do not have as good a sense of how they actually do behave and what this means for policy.

  [W]e are far from a unified, versatile, believable alternative to the rational-actor model.  I am hopeful, though, that this might be overcome—in part because of progress in the sister disciplines (psychology and neuroscience) and basic modeling, and also because empirical anomalies are forcing the economic profession to be more open-minded.  Contributions by computer scientists and physicists will help inject new perspectives into economics.

  In his famous 1945 article, “The Use of Knowledge in Society,” F. A. Hayek argued that despite their inequity and inefficiency, free markets were necessary in order to allow the incorporation of information held by dispersed individuals into social decisions.  No central planner could hope to collect and process all the information necessary for social decisions; only markets allowed and provided the incentives for disaggregated information processing.  Yet, increasingly, information technology is leading individuals to delegate their most “private” decisions to automated processing systems.

  Economics is in the midst of a massive and radical change.  It used to be that we had little data, and no computing power, so the role of economic theory was to “fill in” for where facts were missing.  Today, every interaction we have in our lives leaves behind a trail of data….The tools of economics will continue to evolve and become more empirical.  Economic theory will become a tool we use to structure our investigation of the data.

RESEARCH CORNER

• Cool visualization of the top-selling artworks from the past four years. I recommend checking out the “men / women” view.
• Lots of people are talking about Walk Score, but some users (including me) find its ratings a bit unreliable in practice. Urbanist Steve Mouzon thinks it’s because Walk Score misses the crucial point that some places are simply much more pleasant to look at than others, and that affects how far people are willing to walk. Two adjacent suburban strip malls might have lots of amenities clustered in one place, but no one wants to walk from one to the other, because walking through parking lots is soul-destroying. So Mouzon has developed the interesting concept of Walk Appeal as a potential next-generation index of walkability/livability.
• Amazon releases its book sales data in the context of an interesting political “heat map,” which suggests that GOP voters buy more politically tinged books, proportionally speaking, than their Democratic counterparts do.
• Michael Hickey is examining the details of nonprofit arts organization budgets in New York City in a multipart series for his new blog, Man About Town. In his first post, he finds that four institutions (which he doesn’t name, but I’m guessing are the Met Museum, the Metropolitan Opera, Lincoln Center, and Carnegie Hall) received nearly half of all the dollars granted by the city to arts organizations in 2010. His next entry discusses the mysterious “Other Earned Revenue” budget category that accounts for more than 20% of earned income across all organizations. A third includes testimony to the NY City Council on the impact of the arts on small businesses and community vitality. And finally, Hickey makes a passionate argument for data aggregation tools for New York City (hmm, that sounds familiar). The Municipal Arts Society of New York (which absorbed the research functions of the Alliance for the Arts after the latter organization dissolved last year, and for which Hickey has done some consulting) has a new report out exploring some of these topics in more depth.

ETC.

• Cool story from Michael Kaiser about getting fathers involved in their kids’ ballet dancing.
• Great, hilarious taxonomy of jazz musician career archetypes. One of the categories is simply called “The Industry,” which includes this definition of the “arts administrator”: “This well-fed, parasitic middleman—typically a jealous amateur musician formally trained in non-profit business administration—may work either directly for the government or for a government-funded non- profit presenting agency. Either way, he or she enjoys a salary and accompanying benefits unthinkable for a working jazz artist.”

Anyway, on to the issues of the day:

• Barry Hessenius wants your opinion. More specifically, he wants you to send your nominations for the next NEA Chair to Barack Obama’s transition team.

  Nominate whomever you like – hopefully someone with nonprofit arts experience, familiarity with our issues, and vision for what our field needs. Nominate yourself if you like. I would suggest sending no more than two names, and include with each a brief (perhaps three or four sentence) background on who your nominee is (title, organizational affiliation etc.), and why that person would make a good choice (visionary, experience, effective leader – etc.)

  End the letter with some statement to the effect that this is a very important appointment to you, and the people in your community.

  Address the letter as follows:

  If Obama is victorious – send the letter to:
  John Podesta
  Obama Transition Team
  c/o Senator Barack Obama
  United States Senate
  Washington, D.C. 20510

  Apparently, former NEA Chairman Bill Ivey has been named head of Barack Obama’s transition team for arts and culture, and will be participating in a webinar with Americans for the Arts on Thursday, November 20. (Note: the webinar is free for AftA members, but a whopping $125 for everyone else.)

• Robert Shiller gets it. Shiller, perhaps the most famous behavioral economist out there, published an editorial in the New York Times this week arguing that groupthink among economists was responsible in part for failing to anticipate the home loan crisis:

  I BASED my predictions largely on the recently developed field of behavioral economics, which posits that psychology matters for economic events. Behavioral economists are still regarded as a fringe group by many mainstream economists. Support from fellow behavioral economists was important in my daring to talk about speculative bubbles.

  Speculative bubbles are caused by contagious excitement about investment prospects. I find that in casual conversation, many of my mainstream economist friends tell me that they are aware of such excitement, too. But very few will talk about it professionally.

  Why do professional economists always seem to find that concerns with bubbles are overblown or unsubstantiated? I have wondered about this for years, and still do not quite have an answer. It must have something to do with the tool kit given to economists (as opposed to psychologists) and perhaps even with the self-selection of those attracted to the technical, mathematical field of economics. Economists aren’t generally trained in psychology, and so want to divert the subject of discussion to things they understand well. They pride themselves on being rational. The notion that people are making huge errors in judgment is not appealing.

  Effectively, Shiller is accusing economists themselves of irrationality in thinking that others will act as rationally as they (think they) do. Love it. Meanwhile, Shiller’s own stock, already high as it is, is likely only to rise in the coming months and years. He saw the credit crisis coming in advance and even published a book about it as far back as 2005.

• Speaking of government financial policies, I learned something today which just blew my mind (though probably won’t be a suprise to anyone in my parents’ generation). Did you know that the tax rate for the top income bracket in this country was at least 70% from 1936 to 1981?! Or that it topped 90%(!) in 1944-45 and again from 1951 to 1963, encompassing the entire administration of noted commie Dwight D. Eisenhower? So, conservatives, when Obama says he’s going to roll back the Bush tax custs for the richest Americans to Clinton-era rates, put that in some freakin’ perspective, please.

• And over in philanthropy land, Sean Stannard-Stockton is spearheading an intriguing open-source bailout in the name of transparency. FORGE, a nonprofit devoted to serving refugee populations in Africa, is facing financial difficulties that threaten to foce the organization to shutter its doors. Its founder, Kjerstin Erickson, posted an SOS note on her blog at Skoll Foundation’s Social Edge site, and Sean picked it up soon afterwards. So far, he’s helped hook Kjerstin up with pro-bono strategic consulting and communications help, tons of ad-hoc advice, and doubtless some capital as well. Sean sees this as an “experiment in radical transparency” due to the forthrightness with which Erickson has presented her organization’s predicament and the willingness she has shown to make its attempted rescue a public affair. On its own, the public disclosure of financial troubles frankly doesn’t seem so groundbreaking to me, as we see this all the time in the arts–take Tonic, for example, which went public with an emergency fund drive a couple of years before it was forced to shut down, even though it’s not even a nonprofit organization–but to Sean’s and FORGE’s credit, I’ve never seen a project like this one before in which consultants advising an organization are making all of their work public and blogging about it to boot. It will be very interesting to see where this all leads, and if successful, whether other organizations in trouble will try to follow the same model.

• Finally, it’s instructive to compare two facts about Obama and McCain which tell you all about where the candidates and their parties were oriented with regard to the arts. On Obama’s side, artist Shepard Fairey (famed for the iconic “Obey Giant” stickers ubiquitous in hip urban streetscapes across the country) created an equally iconic poster series with official support from the campaign, sales of which apparently helped raise $400,000 for Obama’s primary campaign alone. This was part of the “Artists for Obama” effort which resulted in a stock of limited-edition prints that the campaign sold to supporters. There was no such analogous Artists for McCain effort. In fact, McCain’s campaign regularly stomped on artists’ intellectual property rights, getting themselves in hot water with Van Halen, Jackson Browne, Heart, John Mellencamp, Bon Jovi, the Foo Fighters, and others for using their songs at campaign events without permission or payment. Most artists didn’t need any convincing, but if you needed another reason to feel positive about this week’s events, there it is.

But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

…

“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”

Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

On a day that brought more bad news about rising home foreclosures and slumping employment, Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken.

Folks, when Alan Greenspan says there’s something wrong with free-market economics, it’s time for the entire field to take a look at itself in the mirror and ask WTF. As I’ve posted before, our introductory economics textbooks teach that any attempt to mess with the natural interaction of the markets leads to what’s called “deadweight loss,” essentially economic waste resulting from transaction partners who can no longer make trades because of interference from an outside party. This analysis rests upon the assumption that any nonregulated market will naturally, on its own, find a price equilibrium that works for the maximum number of people. That analysis rests upon an assumption that both producers and consumers are monolithically rational across the board, and furthermore, are smart enough to take advantage of arbitrage opportunities that would result from people not behaving rationally in the marketplace.

What we learn in behavioral economics, however, is that producers and consumers act irrationally all the time, and yet arbitrage doesn’t happen. Unlike neoclassical economics, behavioral economics is built upon actual observation of human behavior instead of theoretical models that may or may not have any basis in fact. In fact, traditional economists’ typical MO is to justify seeming anomalies after the fact by trying to find a rational explanation for them. Behavioral economics, by contrast, declines to take rationality as a given and instead looks to psychological research to identify any number of mental hiccups that human beings display on a consistent (though not universal) basis: optimism bias, confirmation bias, the endowment effect, loss aversion, hyperbolic discounting, just to name a few. The idea that such biases wouldn’t find their way into marketplace decisions on a large scale, thus undermining the very assumptions that form the foundation of the free-market philosophy, seems ludicrous to me–wishful thinking in itself, perhaps. And indeed, we looked at a number of examples of actual, functioning, competitive marketplaces in which price shrouding induced consumers to make suboptimal decisions all the time–and yet no self-correcting white knight came in to save the day. A study we read looked at brands of dishwashing detergent that held on to a niche of the market despite performing less effectively than their competitors. Or consider the puzzle of title insurance, an industry that carries what appears to be a 96% profit margin for insurance providers, yet persists due to widespread consumer adoption.

Any artist can tell you that human beings are complicated creatures, often prisoner to emotions and frequently acting in ways that could be characterized as not particularly intelligent. Cognitive science basically says the same thing. How long will it take economists to catch up?

• Business Process Reengineering. A brand-new course taught by a visiting professor specializing in operations research, BPR focuses on mapping processes graphically and effective systems design in the context of business. The frustrated software engineer inside of me finds this all very exciting, particularly given my work this summer helping to develop logic models and ecosystems for the performing arts. While not specifically centered on the nonprofit sector, I’m optimistic the lessons from this course will transfer fluidly across such boundaries.
• Program Evaluation. Taught by professional evaluator Beth Osborne Daponte, Program Evaluation explores the principles behind rigorous assessment of impact in a nonprofit context. The class involves a substantial team consulting project with an actual organization, for which we’ll develop a full-fledged program logic model and evaluation strategy by the end of the semester.
• Elements of Choral Technique. My one School of Music class this semester is taught by Jeff Douma, the director of the Yale Glee Club (of which I used to be assistant conductor, back in the day). It’s going to be interesting woodshedding scores and practicing mixed meters again. Apparently I’m supposed to demonstrate some keyboard skills too. We’ll see how that one goes!
• Behavioral Economics and Strategy. Oh, Behavioral Econ deserves a blog post of its own. Remember how last year we learned all this stuff about how markets are supposed to work, and it all just seemed a little fishy? Well, it turns out that there is lots of evidence that markets don’t actually work that way at all, at least not in the context that I like to call “reality.” So now we are told that neo-classical economics is right, except when it, you know, isn’t. I am determined to crack this nut, folks. By mid-October my goal is to be able to tell you what the hell is going on in this crazy field once and for all.