Why Maria Miller’s demand we show the economic value of arts makes no sense


11:33 am - April 24th 2013

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by John Clarke

The Government’s interest in fiction seems only to apply to economics. Now we have the Culture Secretary, Maria Miller, demanding, in a speech this morning at the British Museum, that leading figures in the arts show the value of culture to the UK economy.

It sounds like a sensible idea. Unfortunately, but to a large extent it’s impossible to do.

And I don’t just mean in the sense of how cultural activities enrich our lives, I mean at the crude economic level Maria Miller is talking about.

The problem is that looking at arts through an economic lens means making predictions about future performance. In reality you can’t predict winners in the arts industry.

Research done on the US film industry tells us that the economics of this is essentially unpredictable. Arthur De Vany, Professor of Economics at the University of California, has written extensively on film economics.

In Hollywood Economics De Vany writes: ‘Anyone who claims to forecast anything about a movie before it is released is a fraud or doesn’t know what he is doing. The margin of error is infinite.’

The variables are huge. This is because capturing an audience is difficult. There are so many different things to consider. What if the artistic product is simply a bomb? What if cultural interests of the public change while the product is being developed? What if they product is good but it doesn’t get the word of mouth or the coverage in newspapers necessary for people to learn about it?

His arguments can also apply to plays, television, music or any other art form you care to mention.

On Radio 4′s Today this morning it was pointed out that huge successes like One Man, Two Guvnors and War Horse were only taken on by the National Theatre because no commercial producers saw them as financially viable.

Indeed, there are so many failures that the successful products often end up covering for the flops. The more activity there is in the arts the more likely there is to be major successes like The King’s Speech.

Just look at what happened when the UK Film Council was abolished in 2010. Film production in the UK is down 30% on 2011 levels. While there are broader economic factors at play, Paul Brett, a director of the film production and financing company Prescience, puts it down to the scrapping of the Council.

This is not to say that money should be chucked at the arts without any accountability.

The money needs to be allocated in a sensible way by experts, but doing this expecting a strict return on investment is self defeating.


John Clarke is chair of Islington Fabians. He tweets from here and blogs here.

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Reader comments


“The money needs to be allocated in a sensible way by experts”

And if my own tastes fail to coincide with those of the “experts”?

No. Let’s all allocate our own money to those arts which we ourselves enjoy.

While an alternative explanation for the decline in UK film production offered in the article is a crackdown on film related tax avoidance!

1 cjcj. Exactly

2 Yes you can predict the economic outcome of artistic venture. I give you Cameron Macintosh.

1 Cjcj. Exactly.

2 You can predict the financial results of artistic venture. I give you Cameron Macintosh.

5. Shatterface

It sounds like a sensible idea

No it doesn’t – not even in principle. If ‘culture’ is reducable to proffit and it is possible to predict that profit with any certainty there’s no need for public funding at all.

The ‘value’ of art is no more reducible to profit than education. Its an end in itself, not a means to an end.

In reality you can’t predict winners in the arts industry.

So even less reason to squander public money trying to.

The money needs to be allocated in a sensible way by experts

Yeah, the sort of experts who live in Islington and are Fabians?

The UK Film Council was mainly comprised of a cabal of entrenched luvvies who shelled out money to their mates to make appalling trash. Mike Leigh was gutted.

Of course he needn’t have worried. It was immediately replaced by the British Film Institute, another cabal of entrenched luvvies charged with shelling out money to their mates….

7. Richard Carey

@ 1 cjcj,

by “experts” I presume he means members of the Islington Fabian Society.

8. DumbToryNarrative

Meh

Indie films can easily co-opt mainstream films by making money as Hollywood has recently shown and it would probably happen on a bigger scale over here.

The crap right-wing daily mail reading morons like cjcj and pagar and richard carey love to watch could easily be ignored.

“In reality you can’t predict winners in the arts industry.”

More to the point, you can’t predict winners in any industry. Socialist planning of the economy does not work.

10. Churm Rincewind

I’m afraid this post is entirely wrong is pretty much every respect.

Maria Miller’s call for evidence of the value of culture to the UK economy is by no means an impossible request. Mr Clarke (and indeed Ms Miller) might like to start by consulting the DCMS’s own “Creative Industries Economic Estimates”, available online.

Or, as the OP concentrates particularly on film, Mr Clarke might care to take a look at “The Economic Impact of the UK Film Industry”, prepared by Oxford Economics, also readily available online.

The fact that it’s hard to predict winners in the field of arts and culture is beside the point. The fashion and music industries are equally high risk, yet no-one seriously suggests that they should be state-subsidised. They simply use a business model with a greater emphasis on risk mitigation than would otherwise be conventional. And the longevity and success – the very existence, in fact – of companies like Disney, Warner Brothers, and Twentieth Century Fox proves that the same approach can work for film, too.

As for live theatre, “One Man Two Guvnors” and “War Horse” were not “taken on by the National Theatre because no commercial producers saw them as financially viable”. Rather, they were projects originally conceived and initiated by the NT. They were certainly not commercial rejects.

The suggestion that film production in the UK is “30% down on 2011 levels” is just a misreading of the statistics. In fact there was a 16% increase in investment in UK domestic films. I assume that this 30% figure is intended to refer to the drop in inward investment – i.e. the amount spent in the UK by the Hollywood studios. According to the British Film Institute, which produced these figures, this reduction is explained by “a flattening out of global film production investment”. They also note that entire production spend on Skyfall was accounted for in 2011 although it actually filmed though to May 2012, which introduces a significant anomaly into the year-on-year statistics.

None of this has anything to do with the abolition of the Film Council, and Mr Brett is talking through his hat.

Personally, I support state subsidy of the arts for many reasons, including economic ones. I see no reason why the state should not ask for the figures, nor why the creative sector should ever be unwilling to comply.

@8 “The crap right-wing daily mail reading morons like cjcj and pagar and richard carey love to watch could easily be ignored.”

Thanks for your elegant comment.

In fact as a regular attendee of the Royal Opera, ENO, National Theatre, Barbican and RSC I am a beneficiary of the (enforced) largesse of people far poorer than myself.

Ta muchly, anyway.

In fact as a regular attendee of the Royal Opera, ENO, National Theatre, Barbican and RSC I am a beneficiary of the (enforced) largesse of people far poorer than myself.

Yes.

Presumably the subsidy of George Osborne’s regular seat at Covent Garden by someone working on minimum wage at Tesco is not considered the apotheosis of the socialist dream….

http://liberalconspiracy.org/2009/10/17/does-the-arts-council-need-trimming-too/

It was a free market libertarianish economist who gave us the joys of public funding for the arts.
http://en.wikipedia.org/wiki/Lionel_Robbins

Valuing what the public will value or even what will work before it is produced is always going to be fraught with uncertainty i.e. you can’t. Beforehand nobody knew that Harry Potter would be a global success. The only way to find out what the public value is through trial and error by effectively asking them. An argument for public subsidy may imply that subsidy is necessary because the art would not take place without subsidy and there is some sort of pressing need. Subsidising posh rednecks with fat backsides in opera seats is ludicrous, as is subsidising their husbands. The opera would still take place without the subsidy so it is a transfer to people who do not need the transfer.

The Department of Culture Media and Sport is an atrocity. It is like something a drunk French bureaucrat would come up with as a dare. Closing the appalling department down would be an improvement.

14. Richard Carey

@ 13 Richard W,

“It was a free market libertarianish economist who gave us the joys of public funding for the arts.”

He was seduced by Keynes and repudiated his early work.

The rest of your comment; agreed.

15. Churm Rincewind

@ Richard W (13): “The opera would still take place without the subsidy so it is a transfer to people who do not need the transfer.”

And your evidence for this strange assertion is what?

16. Charlieman

@15. Churm Rincewind: ‘@ Richard W (13): “The opera would still take place without the subsidy so it is a transfer to people who do not need the transfer.”

And your evidence for this strange assertion is what?’

I’m not Richard W, of course, but I’ll chip in. Rich people find the money themselves or convince companies to pay for the distractions that they enjoy.

An example of this is racing historic motor cars which has grown from a minority hobby (minor in the motor sport world) to a massive industry. Thankfully, much of that industry is in the UK, but the change has been detrimental to those who used to be able to afford to buy a vintage banger and race it. It is also damaging to modern motor sport; wealthy businessmen who used to sponsor a local driver working up the system look at the business proposal and think again; instead they treat themselves to the Chevron or Lola that was unaffordable in their youth but which can be discounted as a company promotion (commercial sponsor identification on historic racers is deprecated, although the Rossi family race a few cars in Martini colours).

Yeah, rich people will always pay for their hobbies and interests and the opportunity to exhibit wealth.

“The Department of Culture Media and Sport is an atrocity. It is like something a drunk French bureaucrat would come up with as a dare. Closing the appalling department down would be an improvement”.

I’m trying hard to contain my laughter here. This is just utter drivel. The French state spends 1% of its national budget on arts and culture. The UK spends only a fraction of that. By the way, it was the Major government that created what was once called The Department for National Heritage… which reveals a great deal about how Tories think about culture. If you were in any doubt as to the difference between culture and heritage it is this: heritage is about dead things; stately homes and statues of military figures who have been detached from their own histories.

Good for them. All the more reason for us to spend zero. DCMS is not a national department, it is a metrocentric monstrosity. Let the people who want to visit London cultural attractions pay for the London attractions if they value them that highly. Nobody would ever suggest the state should subsidise football fans attending matches but somehow it is OK to subsidise the opera. There is a class dimension to what gets subsidised, and by sheer coincidence subsidised culture also happens to be what the metrocentric establishment value.


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