The Arts Need a Bailout, Too


The U.K. recently announced a $2 billion bailout of its arts sector. Motivated by a desire to preserve its cultural heritage, support small businesses and help the tourism industry, the money will go to theaters, museums and concert venues.

The plan raises the question of what kind of aid the U.S. should consider, beyond that already available to small businesses more generally. After all, even if there is a vaccine soon, it is not obvious when consumers will feel comfortable going to jazz concerts again. Furthermore, tourism may be slow to resume, which damages many of the arts all the more.

The best fix here consists of two parts.

First, the federal government should proceed with plans to offer significant aid to state and local governments. That package should be modified, however, to devote more money to regions where the arts are crucial. That would include New York City most of all, which remains America’s arts capital and No. 1 cultural tourist draw. Also on the list might be Chicago, Los Angeles, Nashville, Austin and Santa Fe, among other significant cultural centers.

The recipients of these funds would be decided by state and local governments, typically through their arts agencies. There is already precedent for this approach, as 40% of the Cares Act money funneled through the National Endowment for the Arts went to state and regional arts agencies. In essence, each locale would have to do a kind of triage, deciding which institutions to support and which to neglect.

Ideally, federalism would produce some innovative approaches. Some theater and concert venues may want to re-create themselves in outdoor form, perhaps under tents with appropriate spacing. Museums and movie theaters might decide to invest in better ventilation systems, while arts schools might choose to use the money to regularly test their students for Covid-19. The only requirement should be that these funds go to arts institutions.

The second element of the arts rescue plan would take a different tack. Rather than giving money to arts institutions, the federal government could set aside some amount for a concept known as arts vouchers, originally developed by the British economist Alan Peacock.

Arts vouchers are similar to education vouchers except that they cover the arts. The government would hand them out to each American and allow state and local governments to specify which institutions and individuals would be eligible to receive such vouchers as payment. Unlike direct grants to arts institutions, arts vouchers give consumers a big say in where aid goes. They could be more popular with voters, because they give each one a direct benefit — namely, cash in pocket (yes, they would have to spend it on the arts, but it’s still cash).

Most of all, vouchers would recognize that planning authorities, even at state and local levels, don’t always know which artistic forms will be popular. If some reallocations are inevitable — for instance out of nightclubs and into outdoor bluegrass festivals — vouchers will allow those preferences to be registered quickly.

Obviously, if state and local governments specify a narrow set of eligible recipients, arts vouchers aren’t much different than direct grants. In that case, little is lost. Still, one hopes that vouchers can be used more imaginatively. Imagine the city of Detroit allowing vouchers to be spent not just at the Detroit Institute of the Arts but also on hip-hop, street art and outdoor theatre.

In short, vouchers can allow American artistic innovation to proceed, even flourish, rather than merely preserving everything as it was before the pandemic. Vouchers also serve an important macroeconomic function by maintaining consumer spending and demand, thus addressing one problem area of the broader economy. With direct grants to arts institutions, there is always the danger the funds simply will sit in the coffers of still-closed non-profits while the broader economy remains weak.

Vouchers shouldn’t be the entire plan of arts assistance for at least two reasons: They may not be a sufficient lifeline for small arts institutions that cannot yet reopen, and they may not help the arts sectors that draw in foreign tourists, most of all in New York City.

Still, they’re well worth consideration. America’s cultural and economic dominance depends in no small part on a healthy and thriving arts sector.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include "Big Business: A Love Letter to an American Anti-Hero."

©2020 Bloomberg L.P.

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