A common argument or implied belief in many of the comments that have been made in this thread is that subsidies are needed to make the Arts accessible to more people, by reducing their cost and increasing their availability. It has also been suggested that governments, the Church, or very rich people, have financed a large part of the Arts (in all its shapes and forms) that the world now possesses. In order to replace these former main sources of funding, it is argued that Government should step in and take over those roles in the form of subsidies.
I do not believe that this argument is justified by the historical evidence for the United Kingdom, at least not over the past 500+ years since the Reformation. In the UK religious institutions, the aristocracy, Church and governments have played a different role from that of their Continental equivalents. The theatre flourished in Britain from the end of the 16th century because it attracted a large paying audience, especially in London. The public concert was largely a British invention in the mid-17th century, presumably because the audience was available in large enough numbers due to the growing affluence of the lower/middle classes as people started to drift away from the land towards more urban areas. In the visual arts, the various institutions have had also little influence in Britain ever since the Reformation. For example, The Church of England has never been a patron of the arts in anything but a minor way. There was patronage from the aristocracy before about the middle of the 18th century, but from that time forward the demand for paintings was largely met by artists meeting private commissions, or selling uncommisioned works through dealers.
It therefore seems to be an implausible argument that the market-based artistic systems, which flourished for centuries in Britain until well into the 20th C, in periods when incomes were far smaller than they are today, cannot now survive without government subsidies. In truth, the main likely effect of most subsidies to the Arts is to change the nature of the arts that are produced. The subsidised works will probably displace some of the unsubsidised works in theatres and concert halls etc. This is because the subsidised producers need not be concerned about the audience to the same extent, and can charge less for admission, thereby diverting customer traffic that might otherwise have gone elsewhere. Not only that but, perversely, this reduced dependence on the audience by the subsidised sector may have made some of the Arts more elitist, so that they are freer to produce whatever takes their fancy rather than what the customers would ideally want and be prepared to pay for.
The only arguments in support of subsidy to the Arts that may be viable are those which I set out in previous posts, based on so-called "externality benefits". These are essentially of an economic nature in that they relate to possible increases in National Income that may result from subsidising certain sectors of the economy out of general taxation. Normally, a subsidy has only a re-distributional effect (which may be desirable in its own right on grounds of equity) but with no major impact on National Income. Only if "externality benefits" can be identified will there be any expected gain in National Income, and this is what is required in order to justify a subsidy out of general taxation towards an elite sector such as the Arts.
Here, I can only repeat what I said earlier, that some of the so-called "externality benefits" that have been put forward are bogus, and most others are difficult to quantity. Among the most bogus of suggestions that I have spotted in this thread is the notion that by shoving more Art towards the "working classes" will somehow be a benefit to Society as a whole. This assumes that they don't know how to spend their incomes in a way that maximises their own well-being, but that Government does and so this sector is going to be given more Art for free for their own good in the hope that they like it. Of course, the "middle/upper" classes are the main source of finance for such a programme, and the fact their incomes will be reduced on account of the extra taxation required, doesn't even get a mention. That's because "money grows on trees", according to some of these tax and pay advocates .