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Is Money Worth the Price?

In 1966 William J.  Baumol and William G. Bowen,  two distinguished economists at Princeton University  (Bowen was  subsequently President of that Institution),  wrote a monumental book called Performing Arts: An Economic Dilemma.  The year of its publication does not reflect any out -of -date information about the performing arts.  An enduring classic in it’s field, the far-ranging topics the authors discussed include the value of the arts in America and the disparity of  income among and between performing musicians, relative to other non-arts professionals with high-level training.  The lasting impact of this book is felt to this day in arts management.

Baumol and Bowen explained why the costs of arts presentations rise but  why it is impossible to economize to save money.  When performing a symphony of Brahms or a Sonata by Beethoven, for example, the length of the performance is always approximately the same.  This unchangeable fact creates problems in the arts profession where worker productivity cannot keep up with other industries and innovations that decrease the time  it takes to make tangible products.

Baumol and Bowen emphasize economic disparities between artists and among artists and other well-trained and highly skilled professionals.   For example, a small number of artists earn a large income.  There is not as much demand for artists in the labor force as there are artists  who want to earn their living from their art.  It is not unusual for artists to accept lower income than their qualification would indicate, especially compared to a different population of highly educated and highly skilled professionals. Artists  often identify themselves with their work, thereby deepening their ego investment in their profession.

The latter point , about ego investment, is important to spotlight.  Musical performers must begin lessons  and involvement in their art in childhood. You cannot start to train as a performing artist in adulthood.   This is something that other high-level professionals do not need to do and thus, they can commence careers at later ages, often in college,  when ego maturation, physical development,  and parental involvement  are not as intense as they are in childhood.  For example, lawyers and doctors can make career decisions at ages much later than musicians who typically begin instrument lessons in childhood and progress not only to excellence on an instrument, but  who rule out other occupational opportunities.

In the December 1981 American Economic Review, Sherwin Rosen coined the term “star system” in his article “The Economics of Superstars”.  He explained why a minority of performing artists earn major salaries within the arts population. Managers and audiences are willing to pay more for name artists who have captured public attention although difference in talent of many performers may be minimal.  Interestingly artists who are not earning equivalent to their talent and ability continue to perform for less income and often take jobs in other occupations to support their chosen career of performance.

Baumol and Bowen have described this performing arts phenomena (earning less than you are worth yet continuing to perform) “psychic income” – i.e., the internal rewards artists accumulate when real dollars are not forthcoming.  Psychic income typically occurs   for many performers in lieu of appropriate actual dollars. Psychic income  does not, however, pay bills or create financial security. Psychic income also speaks to psychological issues of self-esteem  in individual performers who are happy to feel “wanted” and “invited”  (with or without appropriate compensation) as well as the cultural idiosyncrasies and hierarchies of the value of the arts in our country.

The phenomena of psychic income combined with cultural values for the arts raises many questions, particularly in light of mega salaries that are earned by others in non-arts professions. I am thinking now about the sports profession, where it is common for athletes to earn multi-million dollar contracts. Here the gap in values is readily apparent in the salaries of athletes and performing artists (particularly those not anointed with “star power”).  To get more to the point, I shiver about the the scandal in the NBA and Donald Sterling’s racist remarks that led to his dismissal as owner of the LA Clippers and the requirement that he sell his team.

I condemn racism in all its subtle and overt forms.

News reports abound about the nature and legitimacy of the punishment meted out by Commissioner Silver in the wake of Sterling’s blatant bigotry.  Donald Sterling will earn billions of dollars if and when he sells the Clippers.

To my mind this is not a question about punishment, money, or the economic currency gained or lost by Donald Sterling (how ironic that the Commissioner’s name is Silver – also connoting a type of coin – as is sterling).  No amount of money can bring psychic wealth to Donald Sterling or restitution for his remarks that, however the leak occurred, illustrate blind hatred, prejudice, and  intolerance.

Donald Sterling is one of those people whose wealth reflects a disparity in our economic hierarchy that  rewards some people with lots of cold cash.  But his net worth is gravely diminished because his psychic bank account is empty of humility, compassion, and dignity.  These are qualities that  money cannot buy.  Perhaps performing musicians and artists know something valuable about psychic income that is relevant to those who think a bulging bank account is the ticket to happiness.  In the case of Donald Sterling, his net worth is tainted with unbridled discrimination, consuming intolerance, and unapologetic bigotry.

As always, your comments are welcome.

 

Photo: Taxcredits.net

1 COMMENT
  1. Henry 5 years ago

    Dear Julie:

    As always, you are right on target. A truly superb commentary.

    All the best,

    Henry

    Reply

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