The inevitable consequences of statism in the arts

With a new government comes a new Minister of Culture, and as usual we observe turnover in the leadership of top artistic establishments. Ms Filipetti, minister of culture, is no exception to this rule: theatre directors who are disliked are replaced by people more palatable to those in power.

The case of Jean-Marie Besset, director of the Montpellier theatre, is especially interesting. In fact it could be the topic of a Vaclav Havel play.

Mr Besset is being sacked following a report by an “inspector” who criticizes his artistic choices. Mr. Besset complains that he did not get the report, which furthermore seems to have been written by a competitor, the director of the Odeon theatre in Paris.

As bureaucrats paid by the government, theatre directors are subjected to inspections. What we learn from the Besset episode is that the inspectors are not only in charge of checking that the director followed the rules of public management, but act as political commissars  who evaluate the conformity of the director with the esthetic  Party line.

In the particular case of Mr Besset, the political commissar complains that the style of the productions is outdated and the actors play too much like vaudeville.

National theatre directors in France are an interesting kind of apparatchiks. Most of them are stage directors (a much revered category) whose artistic-bureaucratic cursus honorum rests on catching the attention of the cultural establishment early in their careers by being “provocative”. These so-called provocations essentially mean either

(i) being outrageous to some putative conservative bourgeois infected by rigid traditional values (but, as no theatre goer would ever admit having even a shred of traditional values, nobody complains about being offended, and so it is unclear whether these predictable devices — a typical one being having naked men on stage — amount to any provocation).

or

(ii) organize one’s production around a well-meaning humanitarian cause (such as the fight against AIDS or racism), while keeping a “décalé” and chic radical twist (you don’t want to appear as being lecturing, especially when your are).

Now Mr. Besset is not a director, but an author, and furthermore he has the bad taste of giving  his plays to private theatres, an endangered species which only survives in Paris. As the government has massively invested in public theatres, with the price of a seat often as low as 10 euros, private theaters, that have to pay taxes and balance their budget, and typically have to charge from 30 to 80 Euros, struggle for survival. These private theaters rely more on the text of a play and on the quality of the acting, and less on the costly decors and staging devices, because they simply cannot afford lavish productions. In contrast, major public theatres often indulge in pharaonic, opera-type productions so as to make sure to spend their entire endowment for the year (a golden rule of public management is that you don’t save a cent for the taxpayer, otherwise your endowment in the subsequent year will be reduced by the savings you made. The logic of “needs” prevails, and everybody acts so as to boost their needs).

Private theaters are less hospitable to the provocations and innovations that are instrumental in determining the careers of state stage directors, because they cannot afford to lose spectators and they prefer to cater to them rather than to the cultural establishment. This hierarchy is inverted in the public sphere.

Mr Besset’s twin sin is not to be a member of the clique in control of the higher national theatrical establishment and managing his theatre as a private one, i.e. believing that the text is more important than the actual staging, which runs agains the cultural Party line.

To be sure, the French artistic caste is almost unanimous in begging for government money. But their claims that they may achieve more independence that way than under  private sponsors is ludicrous. An artist paid by the government has to cater to the tastes of the people in  power (who, that way, manage to staisfy them with other people’s money). The government is no more neutral than private sponsors but, unlike private sponsors, there is only one government and its hegemony in financing the arts is a threat to diversity.

By over-subsidising theatres the government has managed to create a loyal group of supporters for state intervention in culture. There are currently some 400 plays in the Paris area; this would have to shrink to perhaps 100 should the government withdraw its support, many people in the artistic profession would have to retrain into less exciting occupations. Statism in culture is entrenched by having artificially boosted the number of artists, thus rendering them vulnerable and dependent on state subsidies for their survival.

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Buyer’s remorse

In a recent post (in French) on the Telos web site,  Professor Elie Cohen complains that he finds President Hollande’s policies disappointing. According to him, Hollande is putting the country into jeopardy by postponing any serious structural reform or fiscal adjustment. The risk is that markets eventually corner France in a similar situation as its Southern neighbours, with harsh austerity measures having to be rapidly implemented in exchange for the IMF/German manna.

One year ago, Professor Cohen, along with a number of prominent French economists,  signed a vocal petition in French newspaper Le Monde asking people to vote for Hollande. So it must be that the policies that have been followed come as a surprise to Prof. Cohen.

Well they hardly come as a surprise to me. The course of action followed by the French government during the last year was totally predictable. Historically the French socialist party represents civil servants and various beneficiaries of the welfare state. Reducing public expenditure is simply in contradiction with its ideology. With its Keynesian twist it is also reluctant to engage in austerity and would thus be happy to indefinitely postpone a reduction in deficits. However those deficits are bordering 5 % of GDP and public debt is increasing fast, while markets and Brussels are watching. (The French should be prepared for  a quality of public service at the level of Italy or Belgium for years to come. This is what excess public debt does to your economy and it’s the poorest who will suffer the most from it.)

So something has to be done to appease Brussels and the markets, that is, one must raise taxes. Then the ideology dictates that one should tax “capital” and hit on the groups who are least likely to vote for the socialist party.

The problem is that, contrary to what the signers of the petition pretended to believe, capital was actually taxed quite a bit to begin with. Furthermore the presumption that capital should be taxed as much as labor, now popular in France, makes little economic sense. Capital is money that has already been taxed in the past, and you tax it again when it earns its return. Relative to a consumption tax this is a big intertemporal distortion. This means that savings and wealth accumulation are discouraged by capital taxation.

Recent fiscal moves amount to taxing high incomes and capital income of a rather small fraction of the population. If you want any money out of such a scheme, you have to increase the tax rate by a lot. We are not talking about people paying 4 % more of their income in taxes relative to last year. We are talking about people paying 20,30,40 % more of their income relative to last year.

For example, an individual firm owner paying dividends to himself faces a 33% corporate tax rate, plus a 15.5 % extra social security tax, and now a 40 % levy on dividends, and has to pay personal income tax on what is left. This is not taxation, it is expropriation of the Lenin kind. To avoid that, the entrepreneur has to do some convoluted contorsions to convert his profits into something different from dividends–or just pack and go elsewhere.

Given that the new taxes are especially hitting those people most likely to create jobs in the future, hopes that “growth” will bootstrap the French economy out of its self-inflicted path to gradual extinction sound ludicrous.

Again none of those developments are remotely surprising. 2+2 = 4, meaning either one reduces public expenditures or one raises taxes. The preceding government was not great at reducing expenditures, but at least it tried. It was kicked out of power by the French, a majority of whom seem content with another round of inflating the welfare state,  despite that it is one of the heaviest in the world.

How about the elusive “structural reforms”? The word was not written in the Hollande programme, nor in the petition signed by Prof. Cohen, so why is he surprised that we do not see them coming? The socialist party has traditionally implemented measures that were most harmful to the competitiveness of French companies: the 35 hour workweek, reductions in the age of retirement, repeated raises in the minimum wage, and so forth.

To implement structural reforms you have to believe that they work. That is, you have to believe in the market economy — that more competition and more contractual freedom mean more mutually profitable transactions and more prosperity down the road. If you think you can get away with taxing firm owners and executives at 80 % then it’s unlikely that you believe in the market economy. Instead you are more likely to believe that wealth just “happens” and sits there to be taxed, not that it actually belongs to somebody else who created and accumulated it.

Many of my left-wing colleagues believe that the Left is more likely to implement product market reforms than the Right. Besides the fact that such reforms won’t help much if at the same time you keep raising labor costs and kicking talent out of the country, there is no evidence that the Left has ever been interested in them. It is true that the lobbies in favor of such regulations are more right-wing than  those in favor of labor market regulation. But product market regulation generally protects a set of incumbent firms at the expense of potential entrants and this benefits both employers and employees in the incumbent firms. Both Left and Right see no electoral gains in a product market deregulation. The gains to consumers are diffused and hard to identify, the losses to incumbent workers are clear, at least if they share part of the rents thus generated.