Tuesday, 8 January 2013

Perverse Incentives

Photo: National Gallery
The Art Newspaper reports that the government provided free insurance for loans of works of art worth £8.6bn last year.  It is a shameful and stupid subsidy that incentivises perverse behaviour. 
This insurance isn't free.  There are costly claims for damage, and there is always the risk of a catastrophically high claim if something goes horribly wrong.  Governments shouldn't be in the business of providing services that they don't understand and can be more efficiently supplied by the private sector.  Insurance is a complex business, and a worst-case outcome (fire at the Leonardo show) could put a meaningful dent in state finances at a time when it's especially unaffordable.  I'm all in favour of government subsidising the arts, but this is an arbitrary subsidy that encourages institutions to borrow the costliest works because they never bear the full cost.
The dreadful story of the damaged Miro at the Tate is a salutary warning of the real harm that can be caused, which no amount of cash can put right.  It's not just spectacular instances of damage that are of concern, but the ongoing stresses caused by packing and unpacking delicate works of art and moving them between different environments.  The state shouldn't be encouraging this by picking up a big part of the tab. 
The Art Newspaper estimates that commercial insurance would have cost about £15 per visitor to the Van Gogh exhibition at the Royal Academy (which I heard was too crowded for any of the 411,000 visitors to have seen much anyway).  The implication is that it's a Good Thing because it allowed the exhibition to go ahead with ticket prices at a reasonable level (less than half the cost if insurance were purchased commercially).  But why - especially in times of austerity - is the government providing a £15 a head subsidy to the well-heeled visitors to the RA?  And is this really the best way for the government to subsidise the arts at a time when the National Gallery cannot even afford to pay enough guards to cover all of its rooms?
Excellent journalism from The Art Newspaper.  Stupid behaviour by the state. 

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