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Here's a perspective from the Austrian School of Economics that claims government hinders the arts. Government aid usually jumps on board already highly supported programs to gain political favor. Also, the money tends to flow to those who are the best at filling out forms, not necessarily the best artists. Would we have more art? Possibly. Would it be better? Doubtful.
Check out the podcast here: http://mises.org/resources/5574fca2-0ab0-4caf-8......
Also, another point of the lecture was these programs are essentially subsidies for the middle and upper class entertainment needs. People that could typically afford to pay $15 dollars to get into some event can get in for free thanks to the government, but rarely are the programs helpful to the poor.
It's certainly an interesting debate. I just get concerned because whenever I think of state-sponsored art I think of statues of politicians and government propaganda films. Scary!
Some quotes from the great economist Ludwig von Mises:
The most primitive work of art also can express the strongest experience, and it speaks to us, if only we let it.
[Epistemological Problems of Economics p. 46]
A work of art is an attempt to experience the universe as a whole. One cannot analyze or dissect it into parts and comment on it without destroying its intrinsic character.
[Epistemological Problems of Economics p. 136]
There can be no freedom in art and literature where the government determines who shall create them.
[Omnipotent Government p. 52]
It is a hopeless task to interpret a symphony, a painting, or a novel. The interpreter at best tries to tell us something about his reaction to the work…. There are no words to describe the ineffable.
[Theory and History p. 276]