Does Art Help the Economy?

By Kyle Thetford
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Culture Secretary Maria Miller leaves Downing Street in London on September 4, 2012. (Reuters)

An unexpected upshot in the wake of Britain's latest spending review was the fate of the culture budget -- it avoided a pummeling. What might be considered an easy target in a time of austerity emerged relatively unscathed, with only a 5 percent decrease in funding from £472 million to £451 million.

The arts world had already been hit by a 30 percent cut meted out in the 2010 budget and had been waiting to find out whether they might be granted a reprieve at this latest round of belt-tightening.

This time, advocates for arts funding breathed a collective sigh of relief, with the budget reduction described as a "best-case scenario" -- they had been bracing for much larger cuts.

What explains this unexpected generosity -- if you can call it that -- on behalf of the cash-strapped British government?

It seems that the supporters of the arts were able to stave off the axe by presenting their case to Britain's chancellor, George Osborne, in economic terms.

The current Culture Secretary, Maria Miller, led the charge in this marketing of the arts, presenting the economic argument in a keynote speech delivered two months before the budget review. She suggested that state funding of the arts be viewed as a form of "venture capital," encouraging investment in the British brand: The value of the artistic sector could be "leveraged" to deliver economic growth.

According to Miller, "culture should be seen as the standard bearer for [Britain's] efforts to engage in cultural diplomacy, to develop soft power, and to compete, as a nation, in both trade and investment."

Her reasoning mentions the "dividends" from the artistic industry, and the hope to achieve "financial security" for the sector -- making it clear that Miller knew how to wield the economic jargon favored by the top political brass in the Treasury.

But Miller's rationale for funding was stridently challenged by the outgoing head of Arts Council England -- the body that oversees cultural spending -- Dame Liz Forgan.

Forgan, whose term as the ACE head ended in January 2013, had previously spoken out for the intrinsic value of the arts in her departing address: "the arts, the expression of our culture, are as deep a need in us as food, shelter, sex, and security. We must have them. We must use them to express our human nature and our social existence."

In reaction to Miller's monetary argument, Forgan warned against the dangers of "directing our investment in culture for its commercial potential," lambasting this approach as a self-defeating exercise, which will result in "worse art" and a "worse commercial outcome."

The Scottish Secretary of Culture, Fiona Hyslop, also criticized the instrumental case for the arts, and responded to Miller's keynote speech by reiterating why Scots may wish to vote for independence in a 2014 referendum.

She said Miller presented art as a commodity. By contrast, Hyslop suggested the Scottish National Party "doesn't measure the worth of culture and heritage solely in pounds and pence," but values the arts "because they are our heart, our soul, our essence."

But by no means was the furor about the current state of the culture budget coming only from politicians.

Commentators at The Telegraph railed against arts funding altogether, spurred on by the cost of the event at which Forgan presented her final speech as Chair of the Arts Council.

Derided as a "lavish farewell party" by critics, it ran up a bill of nearly $12,000, paid for by public funds. In light of the event, one writer took to labeling arts funding an "outrage" and a "racket," with "the rich taking money from everyone else so that they can have their enjoyment paid for."

Culture funding, it seems, can be just as contentious as more socially controversial political issues.

Though Miller's emphasis on the economics of art was met with condemnation from some quarters, her argument received a boost from an independent report published just weeks before the spending review.

This study, carried out by the Center for Economics and Business Research, found that arts and culture make up 0.4 percent of Britain's GDP, a strong return on less than 0.1 percent of government spending. The cultural sector was also seen to have increased its contribution to the U.K.'s GDP since 2008, even as the wider economy contracted over this period.

The report's findings also highlighted the important role of the arts sector in supporting the commercial creative industries, which make up 10 percent of Britain's GDP. Drawing on academic research, the report concluded that "proximity to arts and culture can translate to higher wages and productivity" through innovation and diffusion of ideas.

There are of course risks to an economic approach to the arts. If patronage is doled out on a monetary basis, we may miss out on important artists and artworks that may not appear likely to be a big success.

This is the potential problem with Britain's approach to the arts -- culture is neither kept out of the government sphere, nor is it totally embraced within it. The arts get awkwardly wedged into governmental policy as another way of boosting economic growth.

However, the strategy has led to programs that have spurred regeneration and growth in struggling regions and cities, led by the vigor of government-funded cultural quarters. These localities would have found it difficult to attract private patronage otherwise, since the majority of philanthropic arts funding is funneled to London.

In the United States, the Brookings Institute held a symposium in 2012 investigating these same themes: the economic benefits of innovation and ideas, and the part that the arts have to play in this.

The findings cited the impact of creatives boosting growth in cities, and the stimulating effect of arts and crafts participation on entrepreneurship in science and engineering.

However, cultural bodies in the United States have not focused on these economic returns in making their case for funding. Arts spending in the U.S. continues to be hotly debated and is not unified under one department, though there have been tentative calls for a Secretary of Culture (an argument revisited recently by The Atlantic.)

One of three organizations responsible for cultural grants, the National Endowment for the Arts, currently receives federal funding of $146 million, though it is being hit by $7.3 million in cuts as a result of the sequester. By comparison, the level of French culture spending is a staggering $4.53 billion.

Even so, the GOP has occasionally suggested shutting down the department altogether -- an election promise featured in Mitt Romney's unsuccessful campaign. Taking a cue from the U.K., in the future the NEA could try making its case for funding in terms that the GOP might respect: The economic dividends returned by investment in culture.

This article available online at:

http://www.theatlantic.com/international/archive/2013/07/does-art-help-the-economy/277842/