[rollei_list] OT: Corporate Responsibility and Public Giving
- From: Marc James Small <msmall@xxxxxxxxxxxx>
- To: rollei_list@xxxxxxxxxxxxx
- Date: Tue, 01 Feb 2005 18:39:12 -0500
At 05:03 PM 1/31/05 -0800, Richard Knoppow wrote:
> This is an extremely oversimplified explanation of what=20
>has happened to traditional "cultural" institutions.=20
>Symphony orchestras, ballet companies, opera companies, and=20
>similar organizations are very expensive to sustain. In the=20
>past most have been supported either through the largess of=20
>the very wealthy or throught government grants of one sort=20
>or another. Corporations no longer have the philosophy that=20
>thay owe anything to the public plus changes in tax laws=20
>over the years have made much former charitable or cultural=20
>donation no longer deductible. Publically held businesses=20
>follow the rule that maximising return on investment for=20
>their stockholders is their _only_ responsibility and will=20
>do that regardless of any costs to the society that they=20
>exist in. Government funding of the arts has disappeared=20
>because evidently a great majority of tax payers in this=20
>country do not want such funding. One may speculate as to=20
>the reason for this but it remains a fact.
Richard
I suspect that you are conflecting three or four developments into one.
First, there is no "government" funding of anything: there are decisions
made by politicians as to how the taxpayers' dollars should be spent.
"Government" funding of the arts led to politically charged items such as
the taxpayers being paid to commission a crucifix in a vat of urine, for
instance, and we need not discuss "performance art". In the end, the
taxpayers rebelled, the politicians reacted by shutting down funding to
make the voters happy, and Bob's your uncle. Low funding and that which
exists is severely controlled to avoid embarrassments such as these in the
future.
Second, the death rate from poverty was roughly the same among the adult
population in New York City in the 1870's as it is today. But, back then,
private charity did what public welfare does today. Consider that the
middle class were a lot better off in 1875 than they are today due to the
absence of government taxation. Then, as now, the middle class represented
the heart of chartible and artistic giving but the percentages given were
vastly higher then than they are now, as that middle-class breadwinner got
to keep his monies and thus could find his pursestrings tugged by thoughts
of conscience in amounts impossible with today's confiscatory tax
structure. And the middle class was about as large a percentage of the
population in 1875 as it is today, depending on just how you define classes
(these can be defined either culturally or economically, and the results
vary as a result). =20
Third, the absolute duty of corporate officers to maximize stockholder
earnings was established by the FORD case in 1922 and has remained the law
of this land thereafter. In fact, corporate officers have a fiduciary duty
to maximize such earnings and, if they fail to do so, they are personally
liable for their failure to do so. So long as a complete write-off was
allowed, corporate sponsorship of the arts such as Texaco's long-standing
(60 years, give or take) underwriting of the Metropolitan Opera's radio
broadcasts on Saturday afternoons was acceptable but, once the government
began to cut back on the write-off allowed, nervous boards of directors cut
back on their support.
Fourth, the overhead for the arts has ramped up dramatically over the past
century. This includes both the cost of performers and artists but also
the administrative costs. The freight to hire a cello player in 1900 was
limited by the fact that there were a LOT of young folks floating about
without gainful employment who played the cello, but such is not the case
today. In 1900, many high school students and other youngsters were raised
in the playing of a musical instrument, so the pool of talent available to
a symphony orchestra was large. Today, however, very few youngsters learn
anything other than the electric keyboard, geetar, or drums, and so the
talent pool is much more directed towards obtaining rather substantial
salaries. The situation is much worse, of course, for the orchestra
located in a union-friendly state but, even so, the salaries paid to
performers have increased at something on the order of ten times the
inflationary rate, a symbol of the success of supply and demand as an
economic reality.
The administrative situation is worse and results from the reality that
arts institutions, like higher education, had absolutely no cost controls
between roughly 1930 and 1990. Thus, these institutions became sloppy and
allowed their costs to escalate without a lot of concern over this
development. Once private and public funding began to slack off, these
guys started screaming about a "crises" but the reality is that there is a
tremendous amount of fat in the administrative end of even a relatively
small art gallery or chamber-music program. (Yet, at the same time, there
are only the barest funds available for, say, the restoration of older
paintings or the production of avant garde musical compositions.)
The issue is immensely complex but the simplest solution would be to adopt
the Fair Tax Proposal (HB 25), which would completely eliminate the income
tax and thus would return to the 1875 system of allowing our consciences to
guide our contributions to cultural activities.
Marc
msmall@xxxxxxxxxxxx=20
Cha robh b=E0s fir gun ghr=E0s fir!
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