In many countries the arts have been effectively nationalized. In the United Kingdom, for example, not one of the national opera, ballet or theatre companies turns a profit: they survive on taxpayer subsidies. Regional companies are even more dependent on handouts. On the continent of Europe, opera and ballet is even more reliant on state subsidy.
The arts have suffered from being welfare-dependent. Between 1950 and 1994 public expenditure on the arts in Britain increased twentyfold in real terms. In contrast, public expenditure as a whole merely (!) trebled. By 1996, each seat in the Royal Opera House, Covent Garden was being subsidized to the tune of £28. As Dominic Hobson points out in the National Wealth: 'All too often the quality of subsidized art is low, the cost of producing it is high, and the prices charged to consumers are excessive.'
State support tends to lead to the bureaucratization of the arts and an obsession with form-filling and performance indicators that stifles artistic vision. State subsidies allow producers to raise their costs which, perversely, means that ticket prices are driven up too.
But the arts do not have to be heavily reliant on taxpayer support, justifying themselves as a 'public good'. Instead, policy makers should encourage sponsorship of the arts by businesses, individuals and charities through tax incentives.
In the United States there is virtually no government funding of the arts. Helped by tax allowances, private sponsorship fulfils this role. Even television is supported in this way: PBS (the 'Public Broadcasting Service') works as a private, non-profit media enterprise, owned and operated by the nation's 349 public television stations. It provides children's, cultural, news, nature, education, history, science, and public-affairs programming to 100m people each week. Its billion-dollar budget comes largely from the subscriptions of private members and from business and foundation support.
In the United Kingdom since 1984, under the Business Sponsorship Incentive Scheme, the taxpayer matches donations made by corporate sponsors. The sums raised now amount to over £80 million a year. It also helps that, in the UK, gifts to artistic foundations are tax-exempt.
The UK's Glyndebourne Opera has shown that it possible to attract audiences without the need for state subsidy. Taking advantage of the economic recession of the early 1990s, it entirely rebuilt the opera house for £33.5 million. Production costs are half those of the state funded Royal Opera House.
Good art attracts visitors. London has long benefitted from its unrivalled theatre, while Edinburgh now acts host to the largest International Arts Festival in the world.
Scottish arts chief Magnus Linklater commented in the Scotsman newspaper: 'I would like to see a range of small and medium-scale arts organizations being market-orientated and unstuffy about it. They should have no hang-ups about re-labelling themselves in association with a commercial company in what can be a very rewarding partnership for both sides.'
Private support for the arts reintroduces some much needed customer sovereignty into what is exhibited or put on the stage. It also provides valuable employment opportunities for young, creative talent, some of which will not appeal to politically correct state arts bodies.