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.