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The Price of Everything

Luca Belgiorno-Nettis should just buy a yacht


Luca Belgiorno-Nettis’s family contributed A$600,000 toward the A$10 million budget of this year’s Sydney Biennale (Australia’s largest outdoor arts festival), continuing a long family tradition of generous support that began with his father Franco, who was the founding governor of the Biennale in 1973.

Good on you, Luca, that’s a great thing to do.

The problem, according to nine artists who have withdrawn in protest, following from an open letter signed by 41, is that Belgiorno-Nettis’s contribution was made through the family’s company Transfield Holdings, which is a small shareholder in Transfield Services, which supplies facilities to the Manus Island detention centre, through a contract awarded and paid for by the Australian government.

These artists have succeeded in being so outraged at Belgiorno-Nettis for being once associated with a company that is doing what the Australian Government requires them contractually to do, that the board of the Biennale has sought and gained his resignation as Chair of the board. The protesters, as such, were “successful”.

Now this is all very political. But that’s not what I want to talk about here. The purpose of today’s column is to look at the economics of this type of protest action from the perspective of the various parties.

On the surface, this looks like a win for the protesters, who were artists, and a loss for private companies, and Mr Belgiorno-Nettis in particular, who were sponsors. So in the “artists vs capitalism” narrative, this looks like a clear victory for bleeding hearts.

But the thing about economics is that it trains you to focus on the “things unseen”, in the language of 19th-century economist Frederic Bastiat. The unseen in this case are consumers (or festival-goers), and taxpayers. The question is whether they were also winners.

The cost of the boycott

For the artists, the boycott didn’t really cost them anything.

Certainly it didn’t cost the 41 petition-signers anything: there is no opportunity cost to adding their signature, and they probably gained some self-satisfaction themselves. (If the 41 had made a private donation of A$14,634 each to make up for the expected loss from their actions, then it would have been a meaningful costly action.) So technically, that was an act of consumption, not of protest.

Of those who withdrew, several were international artists. The loss of potential sales in Australia will presumably be more than made up for by international publicity garnered in other markets. Maybe that’s what the locals are hoping for too.

Artists trade on reputation and identity, and withdrawal in protest (for whatever reason, really) brings a kind of cultural cachet that is of capital value to the individual artist: they can trade on that reputation. My point is simply that this act was not much of a sacrifice for the artists themselves, and possibly a shrewd career move.

But for the protesters to claim success, they have to have had an impact: so where did that impact fall?

First, it has raised the risk premium on private philanthropy in arts festivals in general, and the Biennale in particular. The expected cost/ benefit calculation will now shift, and we can reasonably expect a reallocation of philanthropic funding away from arts festivals and onto other substitute goods. Maybe yacht sales might benefit, or alma mater, or the heirs of wealthy Sydney families.

The second-round effect is that local residents who themselves benefited from the (subsidised) festival, will now face either less festival, or a more costly festival for them, if say entry costs have to rise to make up the shortfall, which in turn will deter some potential festival goers.

In third-round effect that same group of organisers and consumers will now be motivated to seek to pass those costs wider – to the set of other Australians, who are likely not attending the Biennale, namely taxpayers. And if taxpayers do pick up that bill, then the cost is passed on to whatever other government program had to be cut or reduced at the margin to fund that.

The point of my ornery little rant here is that while these actions produced benefits to the protesters, they were not costless.

Specifically, what happened is that the costs were passed on, first to those who face a reduced Biennale experience or were priced out at the margin, then to other government programs, which will be reduced in proportion.

Sydney festival-goers and Australian citizens should be disappointed by the actions of the nine protesters. Wealthy families have many choices in spending their money and if public benefaction becomes more expensive then that makes yachts and other private consumption goods relatively less expensive.

Further reading:
The art of being awkward: Brandis is wrong about the Biennale
We should value the Biennale protest, not threaten arts funding
Is there any clean money left to fund the arts?
Artists’ victory over Transfield misses the bigger pictureThe Biennale, Transfield, and the value of boycott
Should artists boycott the Sydney Biennale over Transfield links?

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