Traditionally, the state has been in charge of subsidizing and organizing the artistic activities. Towards the late 1980’s, a declining period, that had been noticeable some decades before, made its appearance. It was necessary to rationalize the public spending and the speeches implied that the only people to benefit from the cultural production would have to do it by themselves, that is to say, with their own resources. This was not clearly said, otherwise, it would have caused very serious reviews too difficult to counteract. The discourse was not solid, nobody knew what they were talking about.
They compared the cultural activity with any other market asset as if cost and revenue would behave in the same way.

It is not surprising to prove that there was no critical objection to the virtual desertion of the cultural institutions. Those who had to resist were not able to adjust their strategies and so, tried to manage matters with the available resources, knowing beforehand, that they would not be able to fulfill their duty effectively. Many of them resisted with dignity setting more austere goals, though, debasing their work to the lowest. Some cultural officials turned to the private sector the same way their top managers did to credit institutions. They did so under the creditor’s conditions, i.e. the private sponsorship.
The Palais the Glass is the most striking case. A private merchant had the program planning for almost a decade. It was a de-facto privatization. No clear public-benefit objectives were set, better said, they were misled for more profitable purposes.

Those institutions, that by nature, could not hold attractive exhibitions gave way to abandonment, or worse still, pretended that everything went all right and gave concerts, tango lessons, yoga, set up amateur shows, conferences and so on. I am not referring to isolated cases of archives or small provincial libraries, I am talking about the National Library, the National General Archive, the National Museum of History and so many other institutions that suffered the disastrous effects of the lack of leadership and cultural mission. Some officials of that time were indicted but some others, due to the subsequent changes in the government, were rewarded with honors, therefore risking the heritage.

Once the 1990’s were over, a little light of hope was remaining to recover the activity. Unfortunately, the Allianza’s government was even worse than the previous administration and it all ended up in the crisis we are currently enduring.
In this scenario, we ponder: What is the role of culture in our society and what is the nature and distribution of the benefits that it allegedly grants?

1. Cost, demand and financial viability through the market

The notion that arts should finance themselves to be responsive to the consumers’ demand is not absurd.
Massive performing arts, to cite an example, can finance themselves. Not only am I talking about Enrique Pinti’s show but also, about some classical or contemporary plays. However, the transfer is not that simple. Costs have grown steadily at an accumulated and sustained rate.
William Baumol gives us an example of the increased number of shows necessary to cover the costs of a performing arts production. It took Isabelian performers (teatro Isabelino) less than two weeks to cover all expenses, and those two weeks yielded a very clear profit. During the First World War, a balance was achieved in the first four weeks, in the 1920’s it rose to about 5.5 to 8 weeks (only with 60% of the seats sold). Today, it takes a play in Broadway upto a year to cover the expenses and many years for a music-hall show to do so. That is why music-hall shows decreased by 50% in the last 25 years.
The casts numbers fell from 16.8 to 9.3, in the last 30 years, a 50% drop.
As we can very well see, the theatre of high demand is in trouble.

It could be said that in Argentina the economic phenomenon really shaped the artistic and the aesthetics format of certain theatrical shows. The dramatic art chamber of “ El periferico de los objetos”, the group that receives most of the invitations to European festivals, requests small theatrical rooms to be built inside the large theatres where the festival is held. This is the only way a stage intimacy is achieved in charge of a small group of actors who are dramatist as well as directors.
A report required by the Rockefeller Foundation in 1966 on the show-arts perspectives and problems, pinpointed that they suffer from the so-called “ cost illness” which symptoms are a long story of sustained and accumulated cost increase which surpasses the country’s inflationary rate. The meaning of “arts cost illness” is that if the available funds for an artistic organization do not grow at a higher rate than the average inflationary index, this would inevitably cause a withdrawal in the amount of activity and quality.

Every thing comes down to the fact that live shows are , to a certain extent, technologically resistant to the constant innovation of work saving. An example, could be the steady rise in labor productivity. A quartet written by Haydn in 1796 to be played for half an hour, at that time, needed two musicians and an investment of four instruments. Today, two centuries later, the same amount of work is needed to play it. At the same time, the country’s economic productivity grew at an average rate of 1 or 2 percent a year. This means that (not taking into account other costs so as to avoid confusion) the average wage of musicians, no matter how low they are, increase at a rate similar to the average-worker-pay growth. Therefore, the cost of the concert should grow by 2% annually over the inflation economic index. As regards as the rest of the market, the cost of every manufactured item would increase in agreement with the salary rise, except the 2% of expected savings for the eventual work saving reduction in every product. That is to say, regarding those economic shares, salaries grow by 2% a year, but every year the average worker makes 2% more in industrial products than the previous year. Thus, comparing the production growth with its cost, both grew at the same rate, the product cost per unit (total amount spent in the production process divided by the total amount produced) remained invariable. In contrast, the quartet performance with no increase in labor productivity (i.e., without a rise in the per hour played yield) will not be parallel with the salary rise. The concert cost would go up gradually at a higher rate than inflation because of the 2% lacking in productivity that, on its average, benefits the rest of the market. The same happens to the other live shows like performing arts, orchestral music, dance, and other activities that are not related to teaching, legal services and health among others.
All of them have something in common ; they are manual activities, in the sense that they are not greatly affected by the technical progress of work saving, the first source of labor productivity growth.

The incompatibility with the continuous innovating saving of work has nothing to do with residue, inefficiency or the inflationary process itself. Consequently, there is not a reliable shortcut for fine arts to be aloof the cost accumulated rises that have been their historical destiny. The new technology can help but it has its severe limitations. The mass media invention reduced costs in relation to the turnout, in a dramatic way. It was a sudden change. It offered little accumulative work saving year after year. The figures show that the cost of the “prime time” hour on television grows more significantly and in a more solid way than, let’s say, a concert. Cinema tickets have increased faster than theatre tickets for over half a century. Savings, that for the first time, suffer the change to the mass media have not yet cured the cost illness.

An increasing annual 2% differential in costs does not seem much but the accumulation is significant and surpasses inflation greatly. This is easy to figure out in the artistic activities. Ticket prices should be raised as well as the search for additional resources over the yearly inflationary rate. Inconveniences should be overcome increasing turnout and the activity. Many orchestras play all the year round but once they get to the 52nd week they cannot go that extra mile. The price can be raised upto a certain degree, it can be a
“full house” night but nothing else.
All this means that the market has become rather unfavorable as a resource supplier to the arts that contribute to the culture of the country. The nation has to decide whether culture is a priority or not, and whether it is willing to accept that an accumulated deterioration in quality has happened, as well as, a drop in quantity, reducing the artistic activity to an amateur work done by badly-paid non-professionals. This is the choice that the underlying economy presents to our society. It has been said that no magical solutions would help us avoid this dilemma. If the society does not conclude that a nation without arts is a nation without cultural stimuli, pleasure and to a lesser or higher degree, without honor, it will have to tolerate the consequences because there is no other alternative. Without people’s participation, it would be very difficult to see how those consequences will be repaired.

2- Why should the public sector be financed?

There are still other issues to take into account before drawing a conclusion and there are enough proofs to counteract the criticism of those who want to cut any state support.
1)It all comes down to the fact that, we would be subsidizing the share of the population that does not need this to the least.
2)Whether the society is forced to support an activity that is of bad taste or subversive to the average liking.
3)Price. Whether the funding that they request is oversized in relation to the benefit they offer.
The answers are not obvious and they should be given.

3- Are the poor financing the rich?

• High and middle class people are interested in arts. They are better positioned to subsidize the costs that are not covered by the market. There are some reasons to bring about that art subsidies are not granted on a fair basis.
• Those who give more to the arts are those who belong to the better positioned classes.
• Several art-philes are below the average-income level. They are artists, actors and students.

One of the main objectives of cultural management is to ensure not only that the doors of the cultural institutions are open to the have-nots but also, that it is necessary to make an effort to disseminate the arts and draw in people who have never been exposed to an artistic experience. Not only for the cultural value, the loss of aesthetics or for whoever is deprived of it, but also as a contribution to the equality of economic opportunities. To be very little acquainted with the world’s culture is a real economic disadvantage for the individual that wants to get a job and go up the economic ladder.

4- Is there public support for anti-social activity?

Innovation that derives from the old practices and the traditional minds contribute greatly.

5- Is the price too high?

The spending on culture is fairly low compared to other state spending. It is not necessary a large amount of public spending money to make a significant contribution to the artistic activity. Expenditure cuts can cause a serious damage without solving economic problems. As in the FNA case.

6- Can we afford it?

The price could be increasing and unaffordable in the future. The country does not grow and the “cost illness” surpasses the hypothesis we have already made. Who is in charge of erasing the artistic activity of the national interests? Indeed, it is erased. Those who are responsible for spreading the artistic activities are motivated by passing fads, frivolity and extra artistic interests. As in the cultural supplements of the newspapers.
Other cases of cost illness are in health, the mail, libraries, education, etc. How to convince that culture has a priority?
We do have to remember that culture costs are minimum in comparison with other costs.

7-Why should arts be supported?

Everybody requests subsidies to the government: tobacco producers, merchant marine operators, and so on. It is difficult to think that they are responsive to the public interest. The question is: Why are arts considered differently?
The answer seems to be evident because culture, education, and public health are values that speak for themselves. I ascribe to the idea, it is not enough. Public funding promotes public interest. Some economic activities benefit the people different from those ones who would pay for them if they were offered under normal market conditions. These are external benefits. Education favors those who receive it. They get better jobs, are more creative, less crime oriented and better electors. They are also beneficial to the society. It happens the same to research.
Economy shows that these social and external benefits are partially given by the private sector. The reason is simple. Any activity the company sponsors would not pay back in relation to its contribution and it would not either end up as an incentive to it. It is equivalent to diverting a share of the profits to taxes or confiscation. Economists come to the conclusion that the social and external beneficial activities should be sponsored to achieve the whole company’s objective thoroughly.

7- Conclusion

We tried hard to give the reasons why arts should not be left at the mercy of the market changes. The reasons are , basically, economic. The art-cost problems show that the plausible financial cultural activity could require prices to rise at a faster and steadier rate than the inflationary rate of the economy, i.e. prices that the market forces can balance in confidence. Even if the steady ever-increasing prices were tolerable, they would, somehow, refrain from achieving of the objective to make arts available to all those who cannot have access to them. If it were so, it would be an activity for only an elite. The sums of money at stake are, in fact, insignificant to the budgets managed by the governments to whom they are requested. Under ordinary circumstances, the growing productivity enables the economy to afford such resources.
To sum it up, the state is not a plausible solution to finance culture. A public sector failure in this matter is not an excuse for the society to avoid paying for arts . These remarks try to stop the arguments of those who want to impede the public sector funding to preserve the quantity and quality of our cultural heritage