artmarket: part II

Following on from this, I have a small idea about a better way to allocate public funding for the arts.

The motivation here is that public money for the arts, whether you agree with its existence or not, is allocated according to decisions made by a small group of experts. Could an aggregation of individual choices - a distributed computation - do it better?

The idea is simply to allow potential grant recipients to post their project ideas on-line, and then allow people to vote for them in a way that, overall, will rank their desirability, prior to each funding round. The web is used to provide a catalogue of arts and cultural options, which tax-payers can then subjectively evaluate, and value by exercising their right to vote for particular projects. Public funding is then allocated on the basis of voting results. A sort of fiscal ballot, if you like.

One of the perceived problems with arts funding as it stands is that larger and more established organisations receive more attention in the funding process than do small, relatively unknown artists/enterprises. The catalogue mechanism, being web-based and therefore focused on the quality of the pitch - rather than the organisation making it - would provide a flatter landscape for getting new project ideas in front of their tax-paying sponsors (and potential audience).

But an important aspect to this idea is that it separates the decision to support a potential arts/cultural project (i.e. by voting for it) from the decision to consume it in the market (by attending the performance/exhibition etc). This mechanism therefore creates a type of 'democratic option', in the sense that citizens of a jurisdiction have the right to vote on - to subjectively value - a potential project with no attendant obligation to exercise that right by direct consumption in the market.

This 'real options' approach - which separates the right to value from the obligation to exercise that valuation - may have applications to other fiscal domains: sport, infrastructure, foreign aid, and environmental & urban amenities come to mind. What all these areas have in common, to a greater or lesser degree, is that tax payer dollars are spent on them but there is little ability for individals to express their preferences on how those tax-dollars are spent (and, crucially, whether they should be spent at all, a collective decision-outcome which would be accommodated by a well-designed voting mechanism).

In this sense the current situation in many areas of government spending is the inverse of that suggested by the logic of real options theory: now, we are obliged to pay taxes to fund these activities but have no right to value their specific allocation or implementation. The 'fiscal ballots' or 'democratic options' I am suggesting could change this.

Many issues arise in the execution of this idea: do people get voting budgets? Can people on-sell their right to vote in a secondary market? How do you properly identify and secure individual's voting rights in a web-based environment? How do you prevent gaming of the system? I think these (and other issues) can be addressed at least academically by, for example, designing good economic experiments - and perhap simulations - to test the mechanism, its assumptions and its potential outcomes. A real-world experiment with radical fiscal democracy might be another thing altogether.

There are in any case precedents, at least of a sort. The Swiss are well-practiced at facilitating (more) direct democracy via frequent referenda; using the web for particular collective allocation decisions would surely reduce the costs and increase the efficacy of such endeavours. More specifically, there is already at least one project underway in Australia that allows voting for arts/cultural projects with pecuniary consequences.

A final thought: arts experts and libertarians both will likely take issue with this idea; the former because it undermines the value of their expert status (and their associated investment in education/training); the latter because it's not quite a market solution that's being proposed.

Arts (in fact, any) experts should be willing to at least test the value of their insights against decisions that emerge from democratic processes. Libertarians should also concede that, like it or not, tax-payer money is currently spent on these activities. A mechanism that introduces the right to choose the allocation of these funds at least ameliorates the involuntary obligation to pay for them in the first place.