E.L. Kirchner, Acrobatic Dance. NGA, open access

Over the past three weeks, WNYC has been running a series called Making It in NYC. It’s about how artists manage to cobble together a living while creating art in New York City, and how the rest of us who live here manage to pay what it costs to experience the art they create. Or don’t manage to, in either case. It’s an age-old problem, not unique to New York, but particularly acute here and now. “New York has closed itself off to the young and the struggling, …. the poor and creative” says Patti Smith at a 2010 event exerpted in in the series. Her advice: “find a new city.”

Does anyone think it’s good for New York, or even reasonably tolerable, that artists can’t afford to live and work here, and residents can’t afford tickets to a concert or a play? The first piece in the WNYC series is an interview with Ford Foundation President, Darren Walker, whose role in the piece, in large part, is to explain why having art and artists around really matters. It’s a fine question to open the series, and Walker answers it capably. In particular, I appreciated his point (beginning around 12:00) that the social value of art can’t be reduced to its measurable economic impact. My feeling, though, is that, in some basic way, most of us already understand that we would be lost without our artists. It’s not as if we planned to run them all out of town.

All we did was get richer and richer as a society, without deciding what all our riches are for. Instead of deciding, we’ve inadvertently used our wealth to maim our culture. In this case we’ve done it through competition that has driven prices—for housing and studio space, for tickets and entrance fees—impossibly high. It’s not too late, though, to decide what’s important and act accordingly.

Specific, feasible remedies abound. We could give artists a tax break on real estate rentals up to a certain level. (I happen to be on the board of an arts organization housed at Artspace’s PS109, which is discussed in another piece in the WNYC series. Artspace provides subsidized housing for artists. When it was preparing to open PS109, it received 53,000 applications for 89 apartments.) We could give tax breaks on income earned as an artist up to a certain income level. We could make the price of tickets to performances or exhibitions tax deductible. Just to name a few. Off the top of my head. None of these tax breaks would require us to increase taxes in general or borrow money, because we could compensate by raising taxes on things that are harmful. Peruse the blog for ideas on that, or think up some of your own.

What we don’t know yet is which remedies we should apply, and how aggressively. Darren Walker is right that econometrics can’t tell us the value of the arts. But in that case, what can? How do we know what the arts are worth compared to everything else? In a democracy, the only answer is that they’re worth what we decide they’re worth, when we decide together. We’re working to make that decision possible at Democratism.

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source, rights: bit.ly/1PUUdDm (modified)

What makes a public project public? Government often funds private projects with taxpayer money. What about the opposite–when private donations fund a government project? I just learned about Citizinvestor,  (ht govtech), “a crowdfunding and civic engagement platform for local government projects.” Think Kickstarter for municipal projects. Contributions are tax-deductible but subject to an 8% fee. Recently posted projects include restoring trees to the city parks of Middletown OH, which lost 200 trees to the emerald ash borer ($5400 sought) and pavement markers and street signs for a proposed pedestrian and bicycle pathway in Angels Camp, CA (also $5400).

In principle this is a lot like my kid’s public school, which relies on money the PTA raises from parents. Kinda makes you wonder: If the public money isn’t enough to fund the cost of a good school, shouldn’t we increase the public funding so that kids whose parents can’t make up the difference get a good school, too? A “crowdfunding” site for government projects just generalizes the issue. What’s wrong with taxation—government’s own ancient and compulsory crowdfunding system?

One answer is that we don’t have a good, democratic system for deciding what’s socially valuable, except at very high levels of generality, mainly as to the few issues that matter in elections. Solving that problem is the goal of Democratism, but in the meantime, by voting with our pocketbooks we can steer social resources to specific projects that we know and care about as individuals.

The danger is that the people with money to give may not have the same priorities as everyone else. Of course, this same risk applies to all kinds of philanthropy, and indeed to essentially all money-spending by the very rich. Where it’s a government project, at least a public entity has implicitly judged that the project would be a net social benefit. You can’t say that about private projects, even though they may be tax-deductible.

A crowdfunding site might also lower administrative costs and so open the system up to more lower-level contributors. (The numbers I see on the site don’t give me the impression that there’s a tidal wave of interest in privately funding government projects like this, but you never know. Maybe it’s the fee.) Anyway, you can’t easily oppose more trees in parks and pavement markers on bike paths.

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Over the last five years, eight new drugs have been approved to treat lung cancer, the leading cause of US cancer deaths. All eight drugs targeted patients with the most advanced form of lung cancer, and were approved on the basis of evidence that the drugs generated incremental improvements in survival. A well-known example is Genentech’s drug Avastin, which was estimated to extend the life of late-stage lung cancer patients from 10.3 months to 12.3 months. In contrast, no drug has ever been approved to prevent lung cancer, and only six drugs have ever been approved to prevent any type of cancer.

That disturbing oddity opens Eric Budish, Benjamin N. Roin, and Heidi Williams’s American Economic Review piece, Do Firms Underinvest in Long-Term Research? Evidence from Cancer Clinical Trials, which Austin Frakt wrote about in the NY Times yesterday.

The authors’ explanation for it is a particular species of corporate short-termism, in interaction with the drug-approval process and patent law. The Food and Drug Administration typically will not approve a new cancer drug without clinical trials showing that the drug improves survival. It’s much quicker and cheaper to show that a late-stage cancer drug can extend a patient’s life by a few months than to show that a cancer-prevention drug can save the lives of people who don’t have cancer in the first place. Corporate managers tend to overvalue short-term profit over long-term profit, so they tend to underinvest in prevention. Making matters worse, the patent that the drug company may win has a fixed term that usually begins well before the drug is commercialized. The longer the trials take, the less time remains on the patent. “Corporate short-termism and fixed patent terms reinforce each other in distorting private research dollars away from long-term investment.”

Before getting to solutions, I want to point out the enormity of this issue. Cancer prevention is big enough on its own, of course, but this isn’t just about cancer, or even just about drugs. There’s every reason to believe that essentially the same problem affects virtually every area of product development. Not every product is subject to a government approval process, and not every product is patentable. Every new product takes time to develop, though, and for every product there’s some period during which the original maker has a likely advantage over competitors. Regardless of the FDA and the PTO, firms prefer to develop products with a short time to market and a long period of market advantage. Neither of those factors correlates with social value.

The authors offer three possible solutions, of which the Times piece mentions only two. The first is to approve drugs that haven’t been shown to improve survival, so long as they produce some other outcome that has been tied to survival. Such “surrogate endpoints” are already considered sufficient in some circumstances—blood cell counts as surrogates for leukemias, for example. Relying on them is controversial, though, because it increases the risk of approving drugs that don’t end up doing anything that really matters.

The second is changing the patent law to guarantee protection for a minimum fixed term that begins when a drug is commercialized. A provision of Obamacare has already done this for biological drugs. This solution, though, addresses only the patent issue, not managers’ tendency to overvalue short-term profits, and the study doesn’t reveal the relative importance of the two factors. There’s also “remarkably little evidence that stronger patent protection induces more R&D investments.” As a result, the authors say their “analysis of patent reforms as a policy lever should be considered suggestive rather than conclusive.”

The third solution, not mentioned by the Times, is the most direct and the most relevant to Democratism: subsidize R&D for cancer prevention drugs. While either of the other two solutions might help, subsidies is the only one that goes directly to the immediate cause of the problem—underinvestment—without skipping the proof that the drugs actually improve survival.

“Subsidize” probably sounds like a choice between a tax hike and more government debt, but it doesn’t have to be. It only has to be a shift in resources, from the overvalued short-term to the undervalued long-term—or the overvalued anything to the undervalued anything else. We can decide together what’s over- and undervalued and by how much. If we decide to subsidize research in cancer prevention, for example, we can take the investment from research in late-stage cancer treatment. On the other hand, we don’t have to. Personally, I’d prefer to take it from, say, activities that emit greenhouse gases, or maybe from high-speed financial transactions. In any case, while my exact preferences might not win the day, I’m sure we can find something or another worth giving up for the sake of curing cancer.

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