Subsidizing the Arts involves the same kind of issues as subsidizing particular industries or services in the economy, however distasteful this may seem to those who are conditioned to think in terms of a moral hierarchy in the ordering of consumption expenditure. In this analysis, attention is confined to two arguments for subsidization which are derived from the existence of market failure i.e. the recognition that the strict Paretian assumptions of divisibility of goods and absence of externalities of production and consumption are not met with in practical life. A particular aspect of the problem of indivisibility which is relevant to the subsidization of the Arts is the taking account of the welfare of future generations, that is to say the welfare of those whose interests cannot be directly expressed at present through the exercise of their own preferences in the market.

It is assumed that we are not interested in the contribution of Arts to stabilization or growth. Full employment of resources is given and we ignore the possibility that subsidizing the Arts might be a possible way of inducing people to work harder and more efficiently than if cultural activities were left solely to the judgment of the market. Cultural paternalism which might be justified on the grounds that the community does not know what is good for it, is ruled out. Apart from any predisposition of the author to oppose paternalism, the assertion of imposed value judgments is too easy a way of deriving support for public intervention designed to give the public not what it wants but what it ought to have. (p. 70-83)

CONTENTS
Introduction.
Baumol's disease.
Has contagion set in?
The Welfare economics of subsidization.
Policy issues.