Saturday, July 28, 2007

Readings: Creative Economy

One of the ideas that’s swept the art world in recent years is the notion of the “Creative Economy.” It arose in response to the so-called culture wars of the 1980s and ‘90s, when Republicans in Congress cut government funding for the arts. The Creative Economy argument is that the arts aren’t just about aesthetics and entertainment and blasphemy, but that studies show that the arts are a significant economic engine (and tax revenue generator), pumping dollars into communities and creating jobs. In other words, it seeks to win funding from legislators and business donors by arguing that the arts are practical.

And the Creative Economy argument has traction – the Massachusetts Advocates for the Arts, Sciences and Humanities has successfully used it to help win state funding for the arts.

Americans for the Arts, a nonprofit arts advocacy group based in New York and DC, recently released its “Arts & Economic Prosperity III” study. They looked at 156 locales across the country – including Pittsfield, Massachusetts; Providence, Rhode Island; Portland, Maine; Windham County and Greater Burlington, Vermont; and the Portsmouth Seacoast Area of New Hampshire and Maine – and found that ...
The $166.2 billion in total economic activity [from the American ‘nonprofit arts and culture industry’] has a significant national impact, generating … 5.7 million full-time equivalent jobs, $104.2 billion in household income, $7.9 billion in local government tax revenues, $9.1 billion in state government tax revenues [and] $12.6 billion in federal income tax revenues.
Sounds good. But in the July 13 Chicago Reader, Deanna Isaacs looked at the report and asked whether such Creative Economy numbers exaggerate the arts’ net economic benefits.
“My favorite guide through this kind of thicket is a guy who’s done more than a few of these studies himself: Mark Rosentraub, dean of the college of urban affairs at Cleveland State University. He says the flaw in a lot of economic-impact studies is something called the substitution effect: making the assumption that if people weren’t going to the events being studied, they’d be doing nothing. Either you’re at, say, Chicago Shakespeare Theater or you and your money have been sucked into a black hole where you won’t be dressing, eating, driving, or spending a penny on anything.

In the real world, however, if you don’t go to a nonprofit arts event, you’re likely to do something else: have a leisurely restaurant dinner or take in a baseball game or visit the neighborhood pub. Money will be spent. Unless we’re talking about audiences from outside the region—generally tourists—these are dollars that are probably circulating anyway, and one kind of event is merely being substituted for another.”
And Isaacs argues that the concept of …
“full-time equivalent jobs” … allows them to gloss over the fact that many of those employees are poorly paid part-timers without health care coverage or other benefits.


Blogger George Fifield said...

Mark Rosentraub’s point about the substitution effect in Deanna Isaacs article may be well taken on a large scale, which, after all, is what the “Arts & Economic Prosperity III” study is. But on an individual organizational level, the creative economy impact still has a profound effect. If a family’s choices are go to the Boston Symphony, go to a Red Sox game or just go eat out, the economic impact of those choices means a great deal. If they go to the Symphony, they will park at a nearby lot and probably eat at one of the restaurants on Huntington Ave, likely sitting at a table next to people who just came from the Huntington Theater.

If they go to a Red Sox game, they will park at one of those $30 gouge lots, and eat and drink somewhere near Kenmore Sq. If they decide to just go out, they will perhaps eat at a neighborhood bistro or on a special occasion at somewhere like Rialto’s. The economic impact of all three choices means a great deal to the micro economy of each local organization. Imagine the effect that removing the Symphony and the Huntington Theater would have to the businesses around them, just as removing Fenway Park would be devastating to the Kenmore Sq hospitality business.

So while the overall restaurant and parking dollars might be the same to the City of Boston or the State of Massachusetts, it has a profound impact on the micro local economy surrounding those organizations. Because of this it seems entirely fair to me to ascribe an economic impact to each choice.

Now in some cases the impact is even more profound. The Study includes Pittsfield, Massachusetts. Pittfield claims audience spending on arts related activities of $8,300,532. The fact of the matter is that a few years ago Pittsfield was a downtown wasteland few people visited. It was full of empty storefronts and a depressed economy. Few of the seasonal visitors in Western Massachusetts attending Tanglewood or visiting Stockbridge ever thought about Pittsfield as anything more than some place to quickly drive through. The growth of arts related businesses has revitalized the downtown area. Gallery openings and arts events, like their 3rd Thursdays have had an incredible impact on the energy and economic prosperity of the city. Sure, these dollars might have (and did) go elsewhere, but the people of Pittsfield are sure happy that they aren’t now. North Adams since the opening of Mass MoCA is another example of the impact of the Creative Economy, as is downtown Lowell and downtown New Bedford.

July 29, 2007 at 5:16 PM  

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