submitted by: Anderson Reynolds
August 29, 2014
Although the public good rationale for state funding of cultural products is prevalent in the economic literature, its use by laypersons seeking state funding doesn’t appear to be as common. Accordingly, this blog introduces the notion of cultural products as public goods and advocates the public goods rationale for state funding of cultural products.
A public good is one that is both non-rivalrous and non-excludable. Meaning its consumption or use by one person doesn’t reduce its availability or preclude simultaneous consumption by others (non-rivalrous), and it is very difficult or near impossible to effectively exclude others from consuming it (non-excludable). Typical examples of public goods include lighthouses, policing, national defense, and street lighting.
Policing is a public good because the safety of one person brought about by say neighborhood policing doesn’t reduce the safety of other persons (non-rivalrous), and once the neighborhood is safe it is near impossible to prevent anyone in the neighborhood from enjoying the safety (non-excludable).
The opposite of a public good is a private good which is a good that is both rivalrous (consumption by one person reduces its availability to others) and excludable (persons can be effectively excluded from its consumption). A food item such as a loaf of bread is a private good because its consumption by one person makes it unavailable to others (rivalrous), and its supplier can exclude non-paying persons from its consumption by simply withholding it from them (excludable).
The non-excludability of public goods means that resource owners cannot exercise control over who enjoys the services that flow from their resources; for example, they are powerless to exclude from use those who refuse to pay for the resource. This inability to effectively exclude non-paying persons from consumption makes it much more challenging for providers or potential providers of a good to recoup full cost of provision. Therefore, from societies point of view, an insufficient or suboptimal amount of the good will be produced, or, worse, none at all.
Cultural Products as Public Goods
Although most cultural products can be regarded as private goods, they are to some extent non-rivalrous and non-excludable and as such can be considered public or quasi-public goods. Music can be considered non-rivalrous since music flowing through the airwaves can be simultaneously enjoyed by all persons and, thanks to recent developments in communication and computer technology, one person streaming or downloading a song doesn’t interfere with other persons doing so concurrently. Again, thanks in part to ever advancing technology, music can be considered non-excludable in that the cost and ease of duplication, sharing of files, and streaming and downloading have made it extremely difficult or near impossible for producers or owners of music to exclude non-paying music lovers from use. 
The ease of duplication, television viewing, and internet streaming and downloading speak to the non-rivalrous and non-excludable side of the film and video industry. The tendency of readers to pass on books and other literature they have already read to others and the availability of literature in libraries (both physical and online libraries) and for download in the form of electronic files, suggest that to some extent literature is non-excludable and non-rivalrous.
Invariably art in public can generally be considered non-rivalrous and non-excludable because, except in the case of crowdedness, viewing by one person does not prevent others from simultaneous viewing, and the public nature of the location suggests non-excludability.
Theatre is known to build stronger and more vibrant communities, and the conversation it stimulates both among theatre goers and between theatre goers and non-goers allows the educational benefits of theatre to spread beyond theatre goers. Therefore, like public goods, theatre produces positive external benefits, where at market equilibrium social marginal benefit exceeds social (private) marginal cost and a suboptimal number of theatre shows are staged.
Cultural Products and State Sponsorship
As public goods cultural products face the problem that because they are non-excludable it is difficult to exclude non-paying persons from use. This discourages private production (because producers are less likely to recoup cost), while it encourages free-riders prepared to let others do the paying. The end result is that as public goods cultural products are under-produced.
The problem is more acute in small economies where the market is too small to fully support artists. Too few cultural products get sold to allow artists to earn a living. Consequently, businesses are reluctant to invest in the creation of cultural products and many artists trade their craft for gainful employment before they have reached internationally competitive standards. Among those who continue to produce, many do not have the luxury of investing the amount of time and resources required to create at international standards.
Another complication is that many cultural products face the hurdle of large initial investments of time and finance which have to be overcome before the products can come to market. For instance, consider the amount of resources that goes into the making of a feature film, the production of a music album, the preparation and staging of a play, or the writing and publishing of a book. However, once the initial production is in place, the marginal cost or the cost of generating additional units of the product (or the cost of additional usage) may be minimal.
The foregoing discussion suggests that the cost to the artist of creating cultural products are likely to exceed the financial benefits, however, given the non-rivalrous nature of cultural products, their positive external benefits, and their tendency to have low reproduction or low marginal cost, their benefit to society are likely to far outstrip their cost. Therefore the same justification for state support of public goods such as policing, national defense, education, healthcare, etc., holds for cultural products.
Dr. Anderson Reynolds, founder and managing director of Jako Productions, a cultural enterprise that seeks to encourage the artistic expression of St. Lucian culture and to promote that culture worldwide, is the author of Death by Fire (novel, 2001); The Struggle for Survival: an historical, political, and socioeconomic perspective of St. Lucia (2003); and the Stall Keeper (novel, forthcoming).
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