boxlife - spicing up the economy

I was reading a really interesting book about the economics of arts and culture. The authors (Baumol and Bowen, 1966) have noted that live shows are fairly insensitive to the technological progress and to the resulting increase in productivity. Performing a play nowadays requires approximately the same inputs that were necessary at Shakespeare’s times: a theater, scenography, technical staff and actors.

If the wage of the artists was calculated on the basis of the average wage that other workers earn in other sectors, the price of the theater tickets would increase much more than the price of other goods or services that benefit from increasing productivity, with the associated risk that the demand would decline dramatically. If instead the artists were paid on the basis of their productivity, today they would earn the same wage that they would have earned at Shakespeare’s times, becoming one of the poorest social classes. This dilemma is avoided because usually governments could pay part of the costs. 

However, the public intervention could create distortions in the natural evolution of the supply of cultural and art goods. In fact it might happen that, to obtain funding, the artists would tend to produce something than the politicians, rather than the public, would like.