Economic Nonsense: 38. The market cannot produce art, music, literature & museums

The market actually does produce such things in some other countries.  What the market does best is to allow people to create the wealth that will fund cultural activities.  The United States has a strong tradition in which people who have done well in business support the arts.  Names such as the Guggenheim Museum or the Getty Centre remind us of the generosity of rich patrons.  Andrew Carnegie, who found fame and fortune in the United States, funded the provision of organs in many churches in his native Scotland, as well as numerous libraries.

In fact the arts have been funded by rich patrons through the ages.  It was often regarded as a sign of good character and culture that a wealthy person would support art, architecture and sculpture.  The emergence of modern economies since the Industrial Revolution has enabled wealth to be created on an unprecedented scale.  This, in turn, has allowed some people to become rich through business and become patrons, where previously it was mostly aristocrats and rich merchants who could afford to do so.

When Kingsley Amis wrote for the Adam Smith Institute opposing arts subsidies, his central case was that if government through its arts committees funded the arts, their output would be skewed towards the desires and tastes of the paymasters, rather than from the passion and inspiration of the artist.

It must remain a suspicion that the committees responsible for handing out public funds as grants to the arts will give effect to their own tastes, rather than those which the public might freely choose to support otherwise.

Some arts can be self-supporting through ticket or admission prices, but government can help through its tax laws, remitting all or part of the tax that would have been due on money donated to artistic institutions.  It does not itself need to dole out taxpayer-funded largesse,  The UK's National Lottery has multiplied financial support for the arts without needing taxpayer funds.  The view that the market cannot finance the arts and that government grants are needed to sustain them is simply not correct.

Does Rupert Murdoch vet his papers' film reviews?

Media conglomerates often own newspapers and other media, while also making films, releasing music, publishing books and so on. Unsurprisingly, they are often accused of pressuring their news media to review these entertainment media more favourably than they otherwise would, and this suspicion seems quite reasonable at first blush. But a new paper finds no evidence that this is true at all for movies. "Does Media Concentration Lead to Biased Coverage? Evidence from Movie Reviews" by economists Stefano DellaVigna and Johannes Hermle say there is not even evidence of a tiny effect and suggest this means reputational effects are very important for newspapers:

Media companies have become increasingly concentrated. But is this consolidation without cost for the quality of information? Conglomerates generate a conflict of interest: a media outlet can bias its coverage to benefit companies in the same group. We test for bias by examining movie reviews by media outlets owned by News Corp.–such as the Wall Street Journal–and by Time Warner–such as Time. We use a matching procedure to disentangle bias due to conflict of interest from correlated tastes. We find no evidence of bias in the reviews for 20th Century Fox movies in the News Corp. outlets, nor for the reviews of Warner Bros. movies in the Time Warner outlets. We can reject even small effects, such as biasing the review by one extra star (our of four) every 13 movies. We test for differential bias when the return to bias is plausibly higher, examine bias by media outlet and by journalist, as well as editorial bias. We also consider bias by omission: whether the media at conflict of interest are more likely to review highly-rated movies by affiliated studios. In none of these dimensions we find systematic evidence of bias. Lastly, we document that conflict of interest within a movie aggregator does not lead to bias either. We conclude that media reputation in this competitive industry acts as a powerful disciplining force.

The whole thing is very clear in a chart—newspapers owned by News Corp are about as positive about Fox films as those owned by Time Warner (and vice versa). So much for media bias, eh!

Goodbye, Green Belt!

Last night BBC London News aired a short film I took part in about the Green Belt. As part of a series of ‘authored’ pieces about various solutions to London’s housing crisis, I suggested that we should allow construction on the Green Belt around London to increase the supply of developable land. Land, as Paul Cheshire likes to point out, is the key. The graph above shows how closely house price rises have tracked land price rises. Land-use restrictions on the Green Belt are quite strict: under the National Planning Policy Framework, local councils face a very high burden of proof to approve new developments on Green Belt land. If they were made less strict, then the supply of land and housing would increase and the price of both would fall.

I usually think of people who want to preserve the Green Belt as being motivated by financial considerations. If you own your house, you don’t want its value to fall, so you have a strong incentive to oppose any measure that will increase supply. Perhaps a large proportion of people involved in campaigns to ‘protect the Green Belt’ own their own homes. (And if not, that would certainly falsify this view.)

But filming with the BBC made me realize that this explanation is too neat and too unfair. The preservationist I interviewed, Dr Ann Goddard, was not preoccupied with preserving the value of her home – she believed, as many do, that relatively unspoiled natural areas are valuable and important to protect from development. The meadow she took us to was very pretty and I would regret losing places like it as well. Throughout our conversation Ann made it clear that her idea of England was entwined with its image as a ‘green and pleasant land’, not just somewhere for endless suburban sprawl.

Much of that greenery is worth keeping, but I suggest that the question is not ‘what’ but ‘where’. Since Green Belt land rings cities, it is much more difficult for city slickers to access than, say, gardens or parks. And lots of London already is covered in gardens or parks – more than half, according to one estimate. Allowing London to expand outwards would eat away at the Green Belt, but also allow more people to have gardens and for more (and bigger) parks to be built.

I also realized how important symbols can be: to Ann the meadow we went to WAS the Green Belt. If we’d taken her to a piece of intensive farmland (34% of the Green Belt around London) maybe she would have cared less about the prospect of that being turned into a village. And I wonder if focusing on intensive farmland is the key to changing people’s minds. In the end, if the battle over the Green Belt is about ideas and symbols rather than pocketbooks, a change of language might help us.