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Minister of Culture. The Arts Council experts are motivated by career concerns and fully internalise
benefits of higher expected ability. The Minister of Culture wishes to secure re-election. It follows that
bureaucrats and art experts are better suited for tasks requiring special abilities or technical competence
that not everyone (and a Minister of Culture definitely not) is likely to have. They are not more gifted
than the Minister of Culture, but that they have stronger incentives to be gifted.
Assume now perfect monitoring and that cultural policy is concerned with two tasks: facilitating a
diverse spectrum of cultural activities of high artistic quality (Q) and promoting participation of large and
diverse audiences (P). The success of achieving these tasks is determined by effort Xi, i=Q,P and ability
A of the person who makes cultural policy, so Q=A+XQ and P=A+XP. The costs of the efforts of the
policy maker are additive and convex, C(Xq+Xp), C'>0, C">0. Ex ante the electorate is uncertain about
whether it prefers more artistic quality or more participation. It has utility U[δQ+(1-δ)P], where δ=1 with
probability p and δ=0 with probability 1-p. The Minister of Culture formulates in a White Paper the
mission or task of the Arts Council, say Y≡λQ+(1-λ)P with 0<λ<1, and defends this in parliament before
asking the Arts Council to use it. The mission of the Arts Council is not contingent on the realisation of
the preferences of the electorate δ (i.e., it is an incomplete contract) and thus does not follow the whims
of the voters. The experts on the Arts Council are concerned with the perception of their ability, hence
their reward is E[(E(A/Y)] = E[A+λXQ+(1-λ) XP -λE(XQ)-(1-λ) E(XP)]. If p>1/2, it is optimal to ask the
Arts Council to focus completely at artistic quality Q (i.e., λ=1). The optimal strategy, as far as the Arts
Council is concerned, is to set XP=0 and Xq=C'-1(1). By giving the Arts Council a fixed mission, society
is stuck with the risk that they cannot respond if ex post cultural participation is important as well. The
Minister of Culture can respond to changing preferences (i.e., the realisation of δ) and devotes effort only
to the task ex post preferred by the electorate. This advantage is not so strong if voters are not too risk
averse and relative certain about their ex-post preferences. In that case it is best to let the Minister of
Culture set the mission of the Arts Council.
7. Subsidiarity, local cultural clubs and federalism
To determine the best level (local, regional, national of international) for the making of cultural policy,
the well-known subsidiarity principle employed by the European Union is useful. This implies that it is
best to conduct cultural policy at as low a level of government as possible. Politicians at the local level
are better informed about preferences of their electorate and can be more readily rewarded and punished
if they do not take account of them than politicians at a national or international level. However, culture
thrives best in a competitive climate so it is better to allocate part of the subsidies at a national or
international level. This ensures that the quality of, say, a local symphony orchestra is judged against
symphony orchestra in other regions and requires cultural policy at a higher level of government.