Earlier in the week, a thinktank called “Onward UK” got some press for a report condemning the proliferation of “Mickey Mouse Degrees” in British universities. You might think (and indeed say, as I did) that a bucket shop policy institute consisting of a recently resigned special advisor and a “Senior Research Fellow” with a lobbyist day job has a bit of brass neck calling anyone else “Mickey Mouse”, and that’s why I’m not linking to the report (although I did finally crack and read it; it’s not terrible quality stuff, but as an example of the genre of policy entrepreneurship it’s an American trend that I don’t want to see embedding in British public life). Instead of getting into an empirical debate, I want to address what I see as a more interesting question; the whole way we think about our creative industries is fundamentally misconceived, because of a sort of methodological individualism that stops us seeing the system as a system.
In skeleton form, the argument is:
1. Lots of students choose to do degrees in creative arts subjects
2a. Most of them don’t get high-paying jobs in the creating industries
2b. Many of them don’t get graduate-premium jobs at all
3. Because of the way the UK’s student debt write-off system works, this means that the provision of creative arts degrees gets a taxpayer subsidy
4. This is bad and should stop, either by regulating the provision of degrees or by futzing around with the loan/subsidy system to similar picking-winners effect.
It’s got a certain logic to it, but it suffers from what I’m going to call the “Park Problem”. I set it out (subject to a very compressed word limit) in City AM this week.
Basically, if any policy aimed at solving the alleged problem above would work, it would hit courses in media, film and creative arts at former polytechnics pretty hard. Specifically, you’d bet against the survival of “Communication Arts” at Sheffield Hallam University.
But … congratulations, Minister, you just zapped the course that brought us Nick Park, Aardman Animation, Wallis and Grommit and the media-industry cluster in Bristol.
The thing about the arts industries is that they’re very hits-driven; talking about what happens to the median person going into them is always going to massively underestimate the value of the system as a whole. They share this characteristic with pharmaceuticals and, famously, the oil industry (as the wildcatter proverb has it, “part of the cost of a gusher is the dry holes you drilled”). You can’t tell ex ante which spotty undergraduate is going to turn into a claymation genius and retrospectively justify the last decade of investment. Importantly, nor can they. As far as I can see, if you were to set it up without subsidy, you would most likely get too few people going into the creative arts, as they would rationally decide that they were more likely to be one of the ones that didn’t make it than one of the Nick Parks.
This is really not all that unorthodox; it’s just the application of venture capital thinking to what people are (wrongly in my opinion) analysing as a debt problem. The undergraduate education subsidy system ought to be thought of as one where the government makes loads and loads of smallish VC investments, effectively buying a roughly 30% shareholding for a five figure investment, with diversification across an entire undergraduate cohort every year. If you’re given that sort of an opportunity, then obviously you go for some moonshots, particularly when you’re the government of a country that famously does very well in creative industries compared to its peers.
But it’s actually possible to push this line of thinking somewhat further into a general point about arts funding, making use of the fact noted two paragraphs ago that not only is it impossible for an outsider to pick winners, it’s usually very difficult for the artists themselves. Where I think that leads to is the conclusion that when you’re looking at the rate of return on arts subsidies, there is no coherent way to measure ROI at any level more disaggregated than the entire system.
What I mean by this is that it’s not possible to isolate particular parts of the creative industry as “commercial” and look at their funding separately from the “artistic” bits. Some organisations might try to do this as a book-keeping exercise (and obviously, this isn’t a literal impossibility when it comes to things like an annual pantomime). But in fact, the avant-garde is a provider of raw and semi-finished material to the “commercial”. One of the outputs of “productions of Samuel Beckett” is “directors of Bond films”. More importantly than that, one of the important outputs of a thriving fringe theatre scene is an educated and critical audience, which is the hidden crucial competitive advantage that the British media industry enjoys over most of its competitors. There’s a reason why it was in the UK market that Simon Cowell managed, twice, to turn an incredibly generic talent-show concept into a format that conquered the world.
So not only is arts funding a hits-based business (in which part of the cost of the successes is the cost of the flops), it’s also a hits-based business in which it’s not really possible to measure the output, because a lot of the output is the production of intangible assets which only get converted into cash at a later date and with a connection that’s very hard to observe. I think that what this means is a) the overall ROI of creative arts funding is likely to be systematically underestimated by accounting systems which don’t take into account the production of intangible assets and which try to make a commercial/art split. And b) that the only reasonable way to allocate arts funding is by the judgement of informed creative peers.
 In general, one might see this as creating a rebuttable presumption that creative arts are succeeding in a marketplace which is competitive and internationally traded, and that this is good. The market for undergraduate education isn’t perfect of course; I have had numerous interesting arguments about whether the information asymmetries are really so great as to undermine this presumption but let’s set them to one side here.
 It basically replicates a really crude and badly designed graduate tax, but one which has the massive advantage over a proper graduate tax that it can be levied on foreign students from EEA countries.
 I have noted in the past that, whether or not China produces a hundred thousand graduate engineers every year, it remains the case that China has never produced a single decent television game show. Anyone remotely familiar with the concept of comparative advantage can draw the obvious conclusion with respect to whether the UK ought to be directing its talented young people into software engineering or into media studies.