Austerity and the social construction of economic knowledge

In a rich and wonderfully detailed 2011 article for the American Journal of Sociology, Donald Mackenzie lays out a case for “The Credit Crisis as a Problem in the Sociology of Knowledge.”

The global financial crisis, Mackenzie argues, was partly the result of particular and contingent “knowledge-generating arrangements”, which allowed the wildly mis-allocated risks of the US mortgage securities industry to accumulate and eventually implode. Research for the paper included detailed interviews with 87 financial market participants.

Responding to Steve Kates: more zombie shuffles

RMIT economics lecturer and weird Australian defender of the Romney 47%-thesis Steve Kates has a new blog up called Law of Markets, which is unsurprisingly devoted to Kates’ laissez faire economics and far-right political opinions.

You might recall that I wrote a post a few years back entitled “Don’t study economics at RMIT”, a rather tongue-in-cheek critique of Kates’ baroque views about economics, and the apparent concentration of libertarian economists at that institution.

The original post was in reaction to an op-ed by Kates in the Australian Financial Review, in which he argued that Labor government’s 2009 stimulus package was crowding out private business activity, and therefore causing inflation:

The RBA is continuing to raise rates because the government is taking up domestic savings more rapidly than we are able to generate those savings through productive activity.

In this economy at this time it is the government that is the single most important cause of rising rates. The RBA is only doing what it can to ensure the resources available for investment are properly priced.

As I argued in my original post, Kates’ ideas are highly neoclassical. Dr Kates is a well-known proponent arguing for the resurrection of Say’s Law, a largely discredited economic theory that suggests that demand and supply, by definition, are essentially always in equilibrium.

I criticised it at the time by pointing out that:

One of the implications of Say’s Law is the crowding-out theory of investment, namely, that government investment necessarily diverts the investment in productive capacity of an economy away from private firms. This is why Kates argues that “it is the government that is absorbing our national savings and raising the cost of capital.”

I further argued that there didn’t seem to be much evidence that the government was raising the cost of capital. I pointed out that the government was largely borrowing foreign money through sovereign bond issues, and that Australian firms were having no problems getting access to foreign capital via their own bond issues. So we should expect inflation and therefore interest rates to stay low.

So let’s just fast-forward and ask ourselves: has government stimulus in Australia crowded out private savings and raised the cost of capital?

No. Since Kates’ article, and since my response, Australian inflation has stayed remarkably contained, and interest rates have been lowered, not raised.

But how does Kates react to this reality? By denying it.

Here is his argument:

For me, schooled in the classics as I am, it was as obvious as a cloudless day that the stimulus could never achieve its ends. For virtually the rest of the profession it was not. Why the difference? I base my understanding on the classical theory of the cycle; they base their understanding on Keynes. That’s it. Nothing else.

Kates is so reflexively anti-Keynes that he simply can’t admit that a) stimulus can stimulate, and b) austerity can contract. This means he keeps getting things wrong. In 2010, for instance, he thought stimulus must lead to higher inflation and interest rates. Of course, it didn’t. Now, he believes that austerity is not really contractionary. Of course, it is.

It would be pretty funny, really, if it wasn’t so serious. Basic textbook IS-LM has been remarkably predictive in the current crisis. Pre-Keynesian neoclassical theory has been remarkably useless.

I tried to respond to Kates’ blog post, by the way. He binned my comment in moderation. Classy.

The “three faces of time” in arts participation

Andries van den Broek has a really cool new paper in Cultural Trends this year. It’s entitled “Arts participation and the three faces of time: A reflection on disentangling the impact of life stage, period and socialization on arts participation, exemplified by an analysis of the US arts audience“

It’s a really neat way of thinking about the temporal aspects of culture, and completely original as far as I know (though van der Broek points out that analysis of generational cohorts goes back to Comte).

Here’s a taste of his argument:

This is the history of the arts participation of a fictitious character, Pete. At the end of 2013, he’ll be 50 years of age, which implies he was born in 1963. He is not particularly keen on visual arts or theatre, though he visits the odd exhibition and performance. He is more into rock concerts, but also attends the occasional classical music concert and art house movie.

How come his cultural repertoire is like that? Is this typical of his being 50? (Do other people at the same life-stage typically display a pattern like that?) Or, is this typical of 2013? (Does it reflect what is the cultural offer that year?) Or, is it typical of someone who grew up in the 1970s? (Does it relate to a taste pattern acquired in that era?) It’s probably the case that Pete’s cultural repertoire is affected by all three (and, of course, by many other factors too). But, which aspect of Pete’s cultural repertoire can be attributed to the fact that he is 50; which aspect relates to it being 2013, and which aspect to his having grown up in the 1970s?

van der Broek goes on to do some stats on the effects of these three frames, using US data from the NEA’s Survey of Public Participation in the Arts. This allows him to tease out the differences between, say, the formative cultural experiences of generational cohorts from, say, the effects of their life-cycle in determining their participation patterns. Overall, he finds that people are not participating in as much culture as they used to, and that the composition of artforms does change.

And what is that change? One of the main ones is that fewer people are interested in classical music. Younger generations are not replacing the cohorts of classical lovers that are slowly dying.

Most importantly, though, van der Broek finds that arts participation (at least as measured by the NEA) is declining in the US. “All in all, the upshot is that the future of arts participation is not threatened by the cultural behaviour of recent (or future) as compared to earlier cohorts, but by a general decline in arts participation irrespective of cohort (and of age).”

In summary, a really interesting paper and one that I expect I will be returning to.

Back in business

I’m pleased to announce that A Cultural Policy Blog will be returning to regular posts in 2013. 

It’s been a long hiatus while I prepared and submitted my PhD, but now that’s done, I plan to resume regular posts this year. As well as my weekly column on the Australian cultural industries for Crikey, I’ll be focussing on keeping abreast of recent papers in the field, particularly in relevant academic journals like the IJCP, Cultural Trends and the rest. 

All posts here will also be cross-posted to my personal website over at beneltham.be

Time for a break

I’m taking a couple of months or so off this blog in order to complete my PhD thesis. I’ll be popping up from time to time with a short post or link here or there, but until I finish my thesis I won’t be blogging in earnest. I promise I’ll be back in early July some time with a bunch of new posts!

Until then, you can continue to read my arts column in Crikey every Friday and my regular twice-weekly column about Australian politics in New Matilda.

Australian federal budget 2011: wrap-up of arts and cultural funding

The following article appeared in Crikey on Friday May 13th 2011. 

The 2011 federal budget contained some modest announcements for the arts and culture.

In the Arts portfolio, the government delivered on its 2010 election promise for $10 million over five years in new grants for artists to create work. The funding will support “up to 150 additional artistic works, presentations and fellowships over the next five years through the New Support for the Arts program.”

As well, $400,000 has been found for the federal government’s Contemporary Music Touring Program, a successful program which supports popular mid-level contemporary music acts to tour regional areas.

In broadcasting, $12.5 million has been provided for the proverbially penurious community radio sector, an increase of 25% for a critical area of broadcasting that generally receives very little government support

There was also a package for the screen industry, with a headline figure of $66 million (as we will see, it is actually less than this). Much of the extra money goes to production subsidies through the tax system in the form of lower qualifying thresholds for the Screen Production Incentive. According to Screen Australia, the changes include:

• Lowering the threshold for Producer Offset eligibility from $1 million to $500,000, for features, TV and online programs

• Replacing the Producer Offset for low-budget docos with a Producer Equity payment

• Converting the 65 episode cap to 65 commercial hours for TV

• Exempting documentaries from the 20% above-the-line cap

• A reduction in qualifying Australian production expenditure thresholds, and allowances for a broader range of expenses to be eligible for QAPE.

Some really good news is the restoration of the Australian Bureau of Statistics’ screen industry survey, which provided gold-standard data on the state of the industry and which hasn’t been performed since 2007-08 (shortly before the Rudd government slashed funding to the ABS in its first budget).

But how much new money for screen is really here? Go to Budget Paper 2 and you will find that the total extra funding is only $8 million. This is because, quoting from the budget papers, “these changes will be partly offset by $48 million in savings over four years from 2011-12 by removing the Goods and Services Tax (GST) amounts from [qualifying production expenditure] for the film tax offsets and increasing the minimum expenditure thresholds for documentaries to $500,000 in production (from the current threshold of $250,000).”

Money is also being clawed back from cultural agencies through the increased efficiency dividend. Rising to 1.5% in future years, the efficiency dividend hits smaller agencies much harder than big ones. And everything in the arts is small.

The efficiency dividend measures mean the Australia Council is being asked to save $3.3 million over the forward estimates, the Australian Film Television and Radio School will have to find $1 million, the National Film and Sound Archive $1.1 million, the National Gallery $1.4 million, the National Library $2.1 million, the National Museum $1.7, and Screen Australia $759,000. That’s more than $12 million in funding cuts for cultural agencies over the forward estimates.

If we look a little closer at the portfolio budget statements, for instance from the Australia Council, we can see the effects of the efficiency dividend in falling support for artists and cultural organisations. This year there will be “a decrease of approximately $2.5 million in forecast grants expenses compared with 2010-11.” Australia Council grants funding will be only 2% above 2010 levels in 2014-15. But CPI is forecast to run at 3% annually, meaning Australia Council support for artists and organisations will fall in real terms — by perhaps as much as 10%.

In other words, the “New Funding for the Arts” money announced in this budget will be almost completely clawed back by the effects of static funding and the increased efficiency dividend on the Australia Council.

The one really big-ticket spending item in culture was of dubious policy value: the $376 million spend on helping pensioners and senior Australians to make the switch to digital TV. Opposition leader Tony Abbott has already pilloried the program as “Building the Entertainment Revolution”, while our own Bernard Keane and Glenn Dyer have pointed out “the political imperative of ensuring pensioners aren’t left without television as analog signals switch off”.

Personally, I’m sympathetic to the argument that television represents an important human service that allows older Australians to stay connected with the broader community. But the spending program should also be seen in the context of the broader budget, in which $211 million in spending is being “saved” from aged care itself. The government appears to be prioritising access to daytime television over places in aged-care facilities.

Money for art and culture is often spuriously disparaged by critics as diverting resources away from the critical services that governments provide. In reality, of course, the numbers are tiny compared to the investments annually in roads, schools and hospitals. But in this case it really does seem as though the owners of television networks are getting a subsidy at the expense of much-needed investment in aged care infrastructure.

Moebius on his art, fading eyesight and legend: ‘I am like a unicorn’

A fine article in the Los Angeles Times surveys the life and work of this ground-breaking artist:

"La Chasse au Major" by Moebius. Image: Los Angeles Times.

The name on his passport is Jean Giraud and he was born in May 1938 (just one month beforeSuperman arrived in a small rocket from another planet in the pages of “Action Comics” No. 1)  and he has long been regarded as the most important cartoonist of his country. That phrase, however, falls wildly short of capturing the essence of his career and breadth of his influence through comics, book covers, paintings and movie work.  As filmmaker Ridley Scott said last year of the Moebius influence on contemporary sci-fi film: “You see it everywhere, it runs through so much you can’t get away from it.” Perhaps, but the artist is still caught off guard by the breathless reception he gets these days.  In late November, Giraud made a relatively rare visit to the U.S. to speak at the Creative Talent Network Animation Expo and again and again he was approached by fans and younger professionals who gushed.

Read the rest.