The State and the Arts: An Analysis of Key Economic Policy Issues in Europe and the United States.

• Author: Netzer, Dick
• Position: Review

By John W. O'Hagan. Cheltenham, UK: Edward Elgar, 1998; Pp. xiii, 232. $80.00.

The field of cultural economics may be the smallest of the specializations that have a Journal of Economic Literature (JEL) number all to their own. There are probably fewer than 300 economists worldwide who devote a significant share of their professional efforts to the field. But many economists, as citizens and consumers of the arts, are interested at least casually in public policy and the arts, as are many people in and around the arts. This book is aimed mainly at economists, although most of its chapters are reasonably accessible to anyone who has had a single microeconomics course.

It is organized in three parts. Part I deals with the rationale for government involvement in this sphere, which, at least in this country, is overwhelmingly commercial, as two new books by well-known economists celebrate (Cowen 1998; Caves in press). The economic rationale is plausible but not especially robust, at least to American economists. Part II deals with the instruments of state intervention, regulation, tax preferences, and direct cash subsidies. Part III looks at the effects of state intervention on the two major sectors of the not-for-profit high arts, art museums and performing arts organizations.

It is successful in applying explicitly to the policy issues what economists in the field have done and in comparing Europe, where public policy largely means cash subsidy (and some constraints on international trade in intellectual property), and the U.S., where there is little state involvement, except indirectly via tax preferences (a big "except"). Indeed, it is the best and most systematic book on the economics of cultural policy yet. It is short and readable and eminently sensible in its organization, among and especially within chapters. A small example of this is in the following of each chapter with its endnotes and references, rather than immuring both at the end of the book, making the act of reading the book as physically awkward as the publisher can manage. The chapter on art museums is especially well organized and is a model for the organization of books written for ordinary people, rather than for committed professional economists.

Now for the downside. I find it surprisingly lacking in the skepticism with which most of us approach public policy, skepticism about the professed aims of actual and proposed policy measures and about how sensible the policy...