Museums ineffective at economic development
April 06, 2014 12:32 AM | 2293 views | 3 3 comments | 15 15 recommendations | email to a friend | print

I hereby nominate Marietta Councilman Stuart Fleming as this month’s man on the margin. A crucial concept in economics is that all change takes place on the margin. For a camel hauling 10,000 straws, it may take only one additional straw to break the camel’s back.

Last month, Councilman Fleming grossly misjudged the marginal impact of highlighting boarded, blighted properties. However, his recent effort to evaluate how the city subsidizes entities such as the history museum is potentially revolutionary. Not only is the subsidy for the museum significant, but historical tourism is a primary focus of the city’s economic development program.

In debating Councilman Fleming’s question, the City Council really has two issues to consider. First, should the city be subsidizing tourism (or any economic activity) in general? Is it a valid function of government to take from one group of citizens (property owners and taxpayers) to give to other groups (business owners)? Conservatives tend to prefer a limited role for government and favor the emergent growth resulting from allowing taxpayers to make their own decisions on how to spend their dollars. Liberals tend to prefer a broader role for government and favor taking dollars from taxpayers to be spent more appropriately by government officials.

Historically, Marietta has taken the liberal route when it comes to economic development. Perhaps Councilman Fleming will be the marginal vote to change that approach?

Second, only if the answer to the above is yes, should the city then consider the best ways to subsidize economic activity. Which subsidies do the most good for the least amount of harm? How does the subsidy for the history museum measure on an absolute value, and relative to the city’s other options?

On this point, the issues unique to museums are considerable. Most incorrectly assume a museum’s customers are the viewers of the art or artifacts, when in reality, the true customers are the donors. Museums exist to provide legacy benefits (as well as tax, networking and social goods) to donors.

The current museum subsidy assumption is that the museum will be a marginal factor for visitors deciding to come to Marietta. In reality, visitors make those decision on other factors, and those who do visit may partake in the museums because they are here for other reasons. The serious fans of history are willing to spend significant resources to consume their hobby. However, they often do so in the private marketplace. Instead of spending time and money to travel and stare at a wall, they spend time and money to purchase artifacts for their own collections.

In short, the beneficiaries of the city’s subsidies to the history museum are local donors. This may be a valid use of public funds, but it is an ineffective way to achieve economic development.

Russ Wood


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Seeing Eye
April 07, 2014
How about using the subsidies to repair homes and keep people from losing them or going to jail for code violations.

Read the article "Mortgage Miracle" in the MDJ and you can see what a helping hand can do.

People should never go to jail for code violations. Take the money from the museum and help property owners who have lost so much, especially the elderly trying to survive on Social Security.
Ben Twomey
April 07, 2014
Russ, would you be in favor of doing away with all the subsidies, in favor of economic development?

No more subsidies for the Strand, the Marietta Museum of History, the GWTW Museum, for example.

Then we could get rid of the hotel and motel tax, from which comes the funds for these subsidies, or would you prefer to keep that tax intact and use the funds for something else? Just curious.

Oh, more question. do you not see any value in preserving the artifacts of our history for the benefit of future generations?
Russ Wood
April 08, 2014

I cannot fully answer here, but here's a short reply.

I do not think it is government's role to support any industry. Most subsidies are designed for economic development, but do them poorly. Economic development, at the government level, should be limited to ensuring a fair legal system and an efficient tax and regulatory process.

I see tremendous value in preserving historical artifacts, and I think the private marketplace does this very well. I also think for profit entities, such as television, do a good job sharing that history with folks who cannot afford a private collection. To think history needs the taxpayers of Marietta to save costumes from a movie is ridiculous.

Thanks for your questions, I hope you enjoyed my letter.
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