Elephantstrunk

In the introductory chapter of “Good & Plenty”, Typer Cowen quotes another author as reckoning that the $5m invested in the arts through the WPA had produced work worth $450m in 1999. He then goes on to claim (p12) that since the stock market would have returned $730m that was not such a great investment. He admits that the works have been enjoyed in the interim but does not give that an economic value but I think that can be done quite easily.

Since the work is valuable presumably because of its capacity to be enjoyed in the future and its value beyond 65 years time is worth little, it is reasonable to apply that value also to the previous period which would give a value of $900m. Given that tax cuts have boosted equity returns, pace McGrattan & Prescott, by as much as a factor of two and 1999 was a major peak for the stock market, things look better for the WPA. Compare it to funding costs, treasury returns and it looks spectacular.

There are of course other arts programmes but I think Cowen is slightly short-changing the WPA.