January 16, 2008


In his work, Discover You Inner Economist, Tyler Cowen argues for a position of intuition in economics. The first half of his work deals mostly with incentives and everyday activities. The chapter which intrigues this economist would have to be the Pocess All the Great Art Ever Made. Within this chapter Cowen examines whom museums are for. He argues that museums are not for the patrons of them but instead for the donors and governments who pay for them. This leads us down an interesting road.
Cowen doesn’t really concern himself, in this work, with any more than the incentives and intuition of markets. This is the works greatest strength and weakness. Is it important that there exists a disconnect between who funds the museums and who uses them. I believe that this issue may be more interesting then it appears on the surface. Does this disconnect lead to market failure? Yes, but of what kind? There may be market power, but that wouldn’t be from this cause. Public Good? Maybe, but unlikely because people can be excluded and it looks closer to a club good (non-rival, excludable). Is the market for museums causing an externality? Yes, as far as this economist believes. The market for museums is between donors and the museums, but a third party outside this transaction benefits.
Cowen side steps the issue of a possible externality and just leaves it at American museums (which are mostly, according to him, from private sources), but he doesn’t look for solutions just work arounds. Well some museums are simple better than others because of reason x or y; so, simple go to the better museums is the general idea of Cowen’s argument. Could there be a fix? A third party is benefiting, an externality, we would like the public to be even better off. How would we go about making even more museums and related facilities. In economics we argue that in this case, since the market is failing to allocate efficiently, it may be a role for government.
What kind of role though? Well when the market is producing a positive externality we general prescribe a tax subsidy. This would encourage more museums to be built but in this case it doesn’t seem to help with the problem of bad museums. The issue becomes more museums and better museums. A tax subsidy encourages more, but not necessarily more. Competition between museums could cause better ones; however, museums are expensive and some areas may only be able to support at most one of each type. This then gives market power to the remaining museum, but this doesn’t mean a better museum just a more profitable one. If an area is able to support at least two then the competitive nature may be enough to ensure that both are good. But what about those other museums?
We went from a situation of little to no market power issues to a situation that market power is the overall fact. How do we fix this? I wonder if a committee could fix this. If we take the power of making the museum away from the “owners” and give it directly to the people I wonder if this would work. Another words make a museums a “public” property. Give the power of what and where, the full functions of a museum, into the hands of a public committee. Say the committee is similar to a school board where all the members are elected and then vote upon the issues happening with the museum. This would give the people a voice within the museum: it may not please everyone, but may please the majority. In this case at least its geared toward the people.
So on finally view, he brings up the issue and presents a work around but I don’t believe he fixes the issue. And I don’t believe I have either, but at least I have brought the discussion to the fore front.

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