Daniel Davis on Creative arts and investing in systems at Crooked Timber:
The thing about the arts industries is that they’re very hits-driven; talking about what happens to the median person going into them is always going to massively underestimate the value of the system as a whole. They share this characteristic with pharmaceuticals and, famously, the oil industry (as the wildcatter proverb has it, “part of the cost of a gusher is the dry holes you drilled”). You can’t tell ex ante which spotty undergraduate is going to turn into a claymation genius and retrospectively justify the last decade of investment. Importantly, nor can they. As far as I can see, if you were to set it up without subsidy, you would most likely get too few people going into the creative arts, as they would rationally decide that they were more likely to be one of the ones that didn’t make it than one of the Nick Parks.
This is really not all that unorthodox; it’s just the application of venture capital thinking to what people are (wrongly in my opinion) analysing as a debt problem. The undergraduate education subsidy system ought to be thought of as one where the government makes loads and loads of smallish VC investments, effectively buying a roughly 30% shareholding for a five figure investment, with diversification across an entire undergraduate cohort every year. If you’re given that sort of an opportunity, then obviously you go for some moonshots, particularly when you’re the government of a country that famously does very well in creative industries compared to its peers.
But it’s actually possible to push this line of thinking somewhat further into a general point about arts funding, making use of the fact noted two paragraphs ago that not only is it impossible for an outsider to pick winners, it’s usually very difficult for the artists themselves. Where I think that leads to is the conclusion that when you’re looking at the rate of return on arts subsidies, there is no coherent way to measure ROI at any level more disaggregated than the entire system.