THIS WEEK the Arts Council launched an updated report on the economic impact of the arts. While it is important to set out the nature and extent of such an impact, the case for public funding of the arts in Ireland can never be related to this alone. The key argument for State funding of the arts must always be found in other wealth (broadly defined) contributions.

The wider wealth benefits can be grouped into four categories: the development of national identity and contribution to social cohesion; the development of socially critical and other innovative/experimental work; the creation of an option demand for future generations; and, finally, the creation of economic spillover effects. It is one thing to assert that these wealth benefits exists, quite another matter to put a value on it, at least in terms of required State funding.

One of the arguments economists hear used most frequently in relation to subsidies to the arts relates to national identity, which is seen as a consistent set of attitudes, or shared values and convictions that define a nation. Even if it is accepted that national or regional identity is desired by the body politic, there still remains the question of the link between the arts and national identity, and more important perhaps how the intervention of the State strengthens this link.

It could be argued that the benefit of national identity is synonymous with social cohesion and harmony (which benefits everyone). If the arts help us to understand who we are and the ways of living and the problems of our fellow citizens, then the benefits are public in nature and should be supported, at least in part, by the State. It is the case, though, that many other communication media, such as newspapers and magazines, can make the same contribution.

There is also a strong social criticism role of the arts that is almost the polar opposite of the national identity and social cohesion role.

In this role, the arts act as an agent of social disruption and change and the creative individual as “the rebel, outsider, or artiste provocateur who employs his or her art to wage guerrilla warfare against established forms, authorities, values, institutions, and truths”.

The social-criticism arguments are really a part of the more general argument for public support for work that is experimental and innovative. An analogy can be drawn between subsidies for experimental work in the arts and subsidies for academic research and development. The argument is that in the arts, as in industry, there are major development costs, but that unlike industry, it is virtually impossible in the arts to ensure that these costs are met by consumers or other producers who use the creative output of the subsidised arts sector.

There is also the argument of an option demand for future generations. We have all met people who admit they have never learned to enjoy a particular art form, but feel it important that such an opportunity be available to other members of their families in the future. The same phenomenon has a significant extension to the posterity of the community as a whole.

A key assumption underlying this debate is that future generations will derive a benefit from having collections and national monuments preserved, and that present generations derive a benefit from knowing this and are prepared to pay for this through taxation. The primary potential benefit in this case relates to national/regional identity and hence the above is in many ways just a subset of the earlier national identity argument. In other words, if there is not a strong national/regional identity argument, then the argument relating to the impact of the preservation for future generations is significantly diminished.

As discussed in the Arts Council report, there are three main ways in which the arts can contribute to increasing employment. First, they provide direct employment for artists, administrators and other staff.

Second, they may be a factor in influencing tourists to visit an area, city or country, thereby enhancing employment prospects in hotels and restaurants. They could also be an important factor in shaping decisions on whether or not to locate a commercial operation in a certain city, region or country.

It must be recognised, of course, that many other enterprises – such as good golf or football clubs, good restaurants – may have similar employment effects. It could be argued though that the arts are a special case in this regard.

First, it is interesting to note, especially in today’s context, that in the 1930s the US introduced its celebrated Arts Project as part of the New Deal’s Work Progress Administration, the purpose of which was to reduce unemployment caused by the Depression. In the current economic slowdown, similar schemes are again being considered.

Second, there is some evidence to suggest that the existence of adequate cultural institutions has been an important factor in attracting business and tourists to a region. Much of the cultural attraction of an area or city to tourists may arise in the commercial arts sector (eg the West End in London, rock concerts in Ireland). Where the real benefit might arise relates to the heritage sector (eg museums or buildings of architectural interest).

There are also potential benefits in terms of the training of artists in the non-commercial sector, but the extent of this cross-benefit is unknown.

Many in the commercial sector appear to support State funding of the arts, presumably on the basis that the subsidised arts sector provides a relatively free pool of labour and ideas from which the commercial sector can maintain its vitality (at least in terms of training costs).

The major part of the arts is in the commercial sector of the economy, certainly in terms of employment. The individual arguments here can apply to any commercial activity, but it is the combination of the arguments that gives the case such special force.

The quid pro quo for generous State funding must in these fiscally constrained times be an enhanced emphasis on value for money and attention to the user and wider public interest.

John O’Hagan is a professor at Trinity College and his research work specialises on the economics of the arts in Europe