The Unexpected Logic of Art Economics: Arts and Inequality in 1980s New York

By Sarah Miller-Davenport

When Richard Serra’s Tilted Arc was installed in Federal Plaza in Lower Manhattan’s Foley Square in 1981, it was meant to be a pioneering work of public art that would expose New York’s masses to post-minimalist sculpture. Tilted Arc would indeed become one of the most legendary sculptures in 20th century history —but not for its artistic merit.

Tilted Arc, Richard Serra, 1981

Tilted Arc was a 120-foot long, 12-foot high curved wall of rusting steel that, according to its creator, was intended to “dislocate” the plaza’s “decorative function.” But the office workers of Lower Manhattan were unmoved by Serra’s abstract claims. Within just a few months of Tilted Arc’s unveiling, some 1300 employees who worked in the Federal Building that faced the plaza had signed a petition asking for the sculpture’s removal, which had been commissioned by the federal government’s General Services Administration. In a GSA hearing in 1985, the petitioners complained that Tilted Arc “brutally destroys the plaza’s vistas and amenities,” and called it “the Berlin Wall of Foley Square.”[1] Defenders of the sculpture worried that removing it would signal a decline in support for public art and set a dangerous precedent on the rights of artists to display challenging or unpopular work. They argued for its gravitas by pointing to the fact that curators at the city’s major modern art museums “hailed [it] as a bold and masterful work” and by securing testimonials on Serra’s brilliance from the arts cognoscenti of Europe.[2]

But beyond the more philosophical discussions of artistic free speech and what constituted “important” art, the debate over Tilted Arc also spoke to the material changes taking place in the surrounding city. New York in the early 1980s was several years into an austerity regime that emerged in the wake of its fiscal crisis, when the city nearly defaulted on its loans. Due to a confluence of factors — including a shrinking manufacturing base, white flight, and state laws mandating that the city pay an exceptionally high share of the cost of Medicaid and welfare services — the city had been in a period of economic decline for years and had been borrowing heavily from private lenders. In 1975, with fears rising that the city might go bankrupt, banks stopped lending to the city and refused to sell its municipal bonds, cutting off the city from the funds it needed to continue running. Under pressure from lenders and the state and federal governments, New York agreed to drastic budget cuts, resulting in a significant loss of municipal jobs and services.[3]

The fiscal crisis seemed to underscore the idea that New York was a dysfunctional and demoralizing place to live — overridden by poverty, dirt, and crime — and Tilted Arc appeared to its critics to play on this sense of pessimism. Rather than offer uplift, it was a depressing corroding barricade that had become a target for graffiti artists, urinating “transients,” and perhaps even potential terrorists — the embodiment of a dystopian city.[4]

During the hearing the two sides debated who public art was for, and who should be allowed to determine its value. But the problem of Tilted Arc also raised another question, one that is usually glossed over in discussions of the famous art controversy: who was the city for? Opponents argued that Tilted Arc was a waste of public funds that impeded the open plaza in a city where people were starved for “space, vistas, and horizons” and destroyed the square’s civic uses as a venue for large public events. Dismissing local concerns, supporters suggested that Tilted Arc amplified New York’s stature as a global arts capital, as the sculpture had become a destination “for informed and sophisticated visitors” from around the world.[5] Sculptor George Sugarman, in an unapologetically elitist endorsement of Tilted Arc, insisted that the work should stay in place even if — or perhaps because — it did “not appeal to a TV taste or a McDonald’s hamburger quick taste.”[6]

Bowing to public pressure, the GSA decided to remove Serra’s sculpture, which was finally dismantled in 1989. Contrary to the fears of the sculpture’s supporters, however, Tilted Arc’s fate did not sound the death knell for public support for the arts. While federal arts funding would become increasingly volatile, especially in the 1990s, New York City itself was in the middle of an arts boom—thanks in large part to the growth in municipal funding for arts and culture, which also helped spur an expanding constituency of private benefactors and buyers. Indeed, the critics who lamented the use of taxpayer dollars to pay for Tilted Arc were pointing to a growing trend of government support for the arts even as other forms of public spending were slashed.

The 1980s are often associated with the so-called “culture wars,” when conservatives attacked government arts funding as an elitist project that threatened traditional values. But while arts appropriations were a frequent target of right-wing critique, over the course of the decade they remained remarkably consistent at the federal and state levels. Meanwhile, municipal spending in New York went up significantly.[7] For instance, taking inflation into account, the budget of New York’s Department of Cultural Affairs more than doubled between 1980 and 1990, going from $27.2 million to $88.7 million.[8]

That municipal arts funding was on the rise in a time of broader fiscal austerity may seem incongruous. Yet this increase occurred not in spite of the fiscal crisis, but in direct response to it. Municipal officials and arts supporters in the private sector came to believe that strengthening New York’s arts and culture industries would help rescue the city’s economy by reviving its reputation as an appealing place to live and work, which would in turn expand the city’s tax revenues. This was part of a broader transformation in municipal priorities in the post-fiscal crisis era — away from an emphasis on service provision for ordinary New Yorkers and toward an outward-looking mission to lure external business, residents, and capital. In the neoliberal city that came out of the fiscal crisis, as historian Kim Phillips-Fein writes, New York’s municipal government became a vehicle whose primary purpose was “to attract and maintain private investment.”[9] Phillips-Fein and other scholars have identified the fiscal crisis as the origin point of a series of pro-business policies that favored elite New Yorkers over the rest of the city’s population, eventually helping to make the New York City one of the most unequal places in the United States.[10]

To be sure, city officials in the 1970s and 1980s were faced with a real dilemma. New York’s manufacturing industry for generations the city’s leading economic sector — was in decline, mirroring postwar national trends as factories moved away from their traditional regional base in the Northeast to the Sun Belt, where trade unions were weak, and to locations overseas.[11] The health of other industries fundamental to the city’s economy was also in doubt. New York had long been the national center for corporate headquarters, but now corporations were increasingly fleeing to nearby suburbs and Sun Belt cities offering tax incentives, cheaper rents, and lower labor costs. At its peak the city was home to the main offices of 140 of the nation’s top 500 companies; by 1976 that number had dwindled to 89.[12] Even Wall Street was facing down a bleak future in the mid-1970s. Some eight million square feet of financial district office space sat empty and brokerage houses were shuttering at a rate of more than one per day.[13] Meanwhile, middle-class white families, prompted by cheap, federally-backed mortgages and fueled by racism against the city’s growing nonwhite population, had also been leaving the city for the suburbs, further eroding the municipal tax base.[14] Between 1970 and 1980 the city lost over 800,000 residents — this despite a growing immigrant population and the continued influx of migrants from Puerto Rico.[15]

To stem this corporate and human “exodus,” City Hall and various business groups coalesced around the idea that the city’s top concern should be actively courting business.[16] When the creation of the Mayor’s Office of Economic Development was announced in 1976, publicity materials emphasized a belief in the importance of private sector economic activity above other elements of urban life. “Rarely recognized as such, economic development is as much an urban life support system as police and fire protection, medical care and education,” a brochure declared. “Indeed, it pays for all of them.”[17]

The Office of Economic Development was one among a slew of new municipal initiatives aimed at encouraging business and investment in the city, particularly in the financial and services sectors, which brought with them high-earning residents. Support for New York’s arts and cultural institutions was a key part of this wider strategy, with many arguing that a flourishing arts scene would help the city overcome its economic predicament. “We live in troubled times, surrounded by the problems of unemployment, discrimination, international tensions, and the need for better health, education, housing and economic security,” said Martin Segal, a businessman and one of the city’s key players in promoting both public and private funding for the arts in the 1970 and 1980s. “The arts and cultural life of our city are not apart from these problems; they can make a real contribution toward their solution.”[18]

Underscoring this new reverence for arts and culture, the Department of Cultural Affairs was hived off from Parks and Recreation in 1975, at the height of the fiscal crisis. The new department would focus on providing for the operating costs of the city’s established museums and other cultural institutions—the kinds of places that appealed to elite New Yorkers and well-heeled tourists. Funding for arts and culture was framed as a high-return investment. The report proposing the Department of Cultural Affairs claimed New York’s arts and cultural resources were “an indispensable element in the city’s economy,” generating $3 billion in spending annually and contributing some $102 million in tax revenues. Moreover, beyond their direct economic effects, arts and culture were “vital in attracting business to New York and in keeping it here” and in “strengthening and stabilizing real estate development” by raising the property values in the neighborhoods around cultural institutions.[19]

This language was in stark contrast to that used to justify the establishment of the New York State Council on the Arts — a pioneer in postwar public arts funding that helped lead to the founding of the National Endowment for the Arts in 1965. When NYSCA was created in 1960, its mission was to ensure that arts and cultural institutions would “give the artistic impulses of our society a vital and continuing expression” and “provide a framework within which talent can be nurtured and fulfilled.”[20] A decade and a half later, and in a very different economy, such idealistic rhetoric had given way to market discourse that understood the value of arts and culture in terms of the role they played in making the city more accommodating to capital.

Although appropriations for arts and cultural institutions were a relatively small slice of the overall municipal budget, the doubling of its funding during the 1980s is notable when compared to the trajectory of other municipal expenditures. This was a development that reflected a prioritization of “high arts” directed at moneyed audiences over activities and services geared toward a broader urban demographic. Parks and Recreation, whose remit was more oriented toward working class and local residents than Cultural Affairs, increased at a much slower rate of 39% over the 1980s, while the New York Public Library budget actually saw a slight decline. Significantly, with the exception of a few magnet high schools, arts education for New York’s schoolchildren was all but eliminated after the fiscal crisis (it would only begin to recover in the 1990s). Instead, school arts programming often took the form of the occasional visit to a museum, where students could view art rather than make it. And various other agencies and departments — among them the city’s planning department, municipal hospitals, and City University — had their budgets decreased, in some cases dramatically, despite their long-standing role serving the needs of a wide range of city residents. [21]

The Metropolitan Museum of Art

The institutions supported by Cultural Affairs disproportionately served affluent Manhattanites and tourists. While Manhattan — the city’s third largest borough — was home to nine Cultural Affairs-subsidized organizations, the other four boroughs had only five or six each. Perhaps more importantly, the institution that consistently received the most funding was the Metropolitan Museum of Art, among the city’s most popular visitor destinations and located on the Upper East Side, one of the richest neighborhoods in the world. In 1986, Cultural Affairs funding for the Met alone constituted nearly 20% of the entire departmental budget.[22] Meanwhile, visitors to the museum “skewed toward the higher income brackets,” according to a 1983 report, which found that around one third of museum-goers had household incomes of $50,000 or more.[23]

By focusing on the cultural institutions patronized by high-earning consumers, municipal arts funding abetted the city’s transition to a post-industrial economy based around finance and related services.[24] With the growth of these industries, the city’s new white-collar workers flocked to its museums, theaters, and art galleries. Their employers, meanwhile, came to see support for the arts as good corporate practice. With the city covering the basic running costs of its major cultural institutions, businesses were able to burnish their public image through the sponsorship of particular events and exhibits and through attendance at high-profile fundraisers. In an early example of the deepening bond between the city and corporate supporters of the arts, in 1976 the conglomerate Gulf + Western purchased 2 Columbus Circle — colloquially referred to as the “Lollipop Building” — as a gift for the Department of Cultural Affairs to use as its headquarters.[25]

By 1980, the Cultural Assistance Center — a non-profit group that worked closely with the Department of Cultural Affairs to promote arts and culture in New York — reported that corporate support was “the major growth sector for arts funding.” (The reliance of the city’s arts and cultural institutions on private giving would only intensify over the next few decades.) Corporations contributed to the arts out of “self-interest”: to “enhance community relations” and “improve corporations’ public standing.” At the same time, they did so because of a new awareness “of the role of the arts in attracting and keeping employees, in stimulating local economies, and enhancing the social and economic environment that enables business to prosper.”[26] This idea was shared by executives at tobacco giant Philip Morris — a company that invested heavily in the arts, perhaps in an effort to soften its reputation at a time when its product was under increasing scrutiny. According to George Weissman, the company’s vice-chairman, after considering moving its corporate headquarters to another location, Philip Morris decided to stay in New York because of “the excitement and creativity the arts spark and infuse, not only in our city life, but in our corporate life as well.”[27]

Against this background, the arts increasingly came to be viewed as a form of cultural capital — not only for businesses, but for the individual Wall Street executives, real estate moguls, and partners in corporate law firms expanding the ranks of the city’s nouveau-riche and fueling the spectacular growth of New York’s art market. New York magazine, in a cover story on the “frenzy” of art buying in the mid-1980s, attributed the trend to a “new breed of art collector, a modern-day Lucullus who has made a fortune in real estate, communications, or corporate takeovers.” In the 1987 film Wall Street, this “new breed” of buyer was represented by Bud Fox, a hungry junior broker who immediately purchases several contemporary paintings for his new Upper East Side apartment as soon as he cashes in on his first big commission. Buying art was a blaring sign of success in the new economy. As New York described it: “The young developer or arbitrageur who makes his first million hires a chauffeur and an art adviser and makes tracks for [the galleries of] Richard Feigen or William Acquavella or Leo Castelli.” And despite the occasional lapse in knowledge or taste, most of these new collectors actually knew quite a bit about art because of they had been “exposed to the arts through museums, television, and print” and spent time in New York’s burgeoning gallery scene.[28] The city’s effort to encourage the growth of New York’s cultured class appeared to be paying off.

It is impossible to measure the financial contribution of New York’s arts and culture industries to the city’s economic recovery. Yet the nature of their evolution helped shape the city that would emerge from the fiscal crisis. New York has long been a magnet for art and artists, but in the late-20th century the arts took on new purpose as city officials, along with and private benefactors and buyers, worked together to harness artistic expression in service of the neoliberal city. New York’s mostly poor and working class residents — and even many artists themselves, who increasingly found themselves priced out of a skyrocketing housing market — reaped limited rewards from the broader transformation of the urban economy that aided the city’s artistic revival. Indeed, they were never the intended beneficiaries.

Sarah Miller-Davenport is Senior Lecturer in United States history at the University of Sheffield and the Gardiner Foundation Fellow at the New York Historical Society. She is the author of Gateway State: Hawai'i and the Cultural Transformation of American Empire (Princeton University Press, 2019) and is currently working on a project on the reinvention of New York as a global city after the 1975 fiscal crisis.

[1] Michael Brenson, “The Case in Favor of a Controversial Sculpture,” The New York Times, May 19, 1985; Douglas McGill, “Art People,” The New York Times, February 22, 1985.

[2] Donald Thlacker, “Letters: The Leaning Sculpture of Federal Plaza” The New York Times, October 3, 1981; Eleanor Munro, “For an Art Truce in Foley Square, The New York Times, May 18, 1985.

[3] Kim Phillips-Fein, Fear City: New York's Fiscal Crisis and the Rise of Austerity Politics (New York: Metropolitan Books, 2017).

[4] Margot Hornblower, “New Yorkers, Artists Tilt Over ‘Arc,’” The Washington Post, March 7, 1985.

[5] Caroline Levine, “The Paradox of Public Art: Democratic Space, the Avant-Garde, and Richard Serra’s “Tilted Arc,” Philosophy & Geography, Vol. 5, No. 1 (2002), 51-68.

[6] Hornblower.

[7] While appropriations for the National Endowment for the Arts did not keep pace with inflation during the 1980s, its budget remained consistent most years, and increased from $154.6 million in 1980 to $171.3 million in 1990. Severe cuts to the NEA would not come until the 1996, when its budget was cut to $99.5 million from $162.3 million. See the NEA appropriations history here: https://www.arts.gov/open-government/national-endowment-arts-appropriations-history [last accessed 1/29/20]. Similarly, funding for the New York State Council on the Arts did not keep pace with inflation but nonetheless increased during the 1970s and 1980s, going from $20.1 million in 1971 to more than $50 million in 1989. See https://arts.ny.gov/history [last accessed 1/29/20]. Again, severe cuts came in the 1990s, when NYSCA’s budget went from $50.3 million for 1990-91 to $28.2 million for 1991-92. See Nancy Harrison, “Arts Groups Reel from Fiscal Woes,” The New York Times, October 20. 1991.

[8] Independent Budget Office of the City of New York, “Fiscal History: Agency Expenditures,” https://ibo.nyc.ny.us/fiscalhistory.html [last accessed 1/29/20].

[9] Kim Phillips-Fein, “The Legacy of the 1970s Fiscal Crisis,” The Nation, April 16, 2013.

[10] Estelle Sommeiller and Mark Price, “The New Gilded age: Income Inequality in the U.S. by State, Metropolitan Area, and County,” report by the Economic Policy Institute, July 19, 2018, https://www.epi.org/publication/the-new-gilded-age-income-inequality-in-the-u-s-by-state-metropolitan-area-and-county/#epi-toc-10 [last accessed 1/28/20].

[11] Judith Stein, Pivotal Decade: How the United States Traded Factories for Finance in the Seventies (New Haven, CT: Yale University Press, 2011); Jefferson Cowie, Capital Moves: RCA’s Seventy-Year Quest for Cheap Labor (Ithaca, NY: Cornell University Press, 1999).

[12] Michael Sterne, “Beame to Discuss Problems of City with Businessmen,” The New York Times, June 22, 1976.

[13] Shirley Benzer, “Downtown, It’s a Tenants’ Market,” The New York Times, August 11, 1974.

[14] Lizabeth Cohen, A Consumers’ Republic: The Politics of Mass Consumption in Postwar America (New York: Vintage Books, 2003).

[15] New York City Planning Department, Census Information and Data, https://www1.nyc.gov/site/planning/planning-level/nyc-population/historical-population.page [last accessed 1/29/19].

[16] Michael Sterne, “Despite Losses, City Officials Hope to Keep Corporations in New York,” The New York Times, April 10, 1977.

[17] Michael Sterne, “A Plan to Revitalize New York’s Economy is Offered by Beame,” December 21, 1976

[18] Office of Mayor Abraham Beame, press release on the creation of the Commission on Cultural Affairs, April 8, 1975, Martin Segal Papers, New York Public Library, Box 33.

[19] Report of the Mayor’s Committee on Cultural Policy, 1974, Martin Segal Papers, New York Public Library, Box 1.

[20] Report of the New York State Council on the Arts, 1960-1964, https://arts.ny.gov/sites/default/files/1960%20-%201964.pdf [last accessed 1/29/20]

[21] IBO of the City of NY, “Fiscal History: Agency Expenditures;” Public Advocate of the City of New York, “Out of Tune: A Survey on NYC Students’ Access to Arts Education,” June 2008, http://www.nyc.gov/html/records/pdf/govpub/moved/pubadvocate/ArtsEducationReport_web_.pdf [last accessed 1/29/20].

[22] “New York City Department of Cultural Affairs Report, 1985-1987,” New York City Municipal Library. Borough population data found here: https://data.cityofnewyork.us/City-Government/New-York-City-Population-by-Borough-1950-2040/xywu-7bv9 [last accessed 2/7/20].

[23] The Cultural Assistance Center and the Port Authority of New York and New Jersey, “The Arts as an Industry: Their Economic Importance to the New York-New Jersey Metropolitan Region,” May 1983, New York City Municipal Library.

[24] Saskia Sassen, The Global City: New York, London, Tokyo (Princeton, NJ: Princeton University Press, [1991] 2001).

[25] Grace Glueck, “Gulf & Western Gives New York a Culture Center,” The New York Times, December 9, 1976.

[26] Cultural Assistance Center, “Public and Private Support for the Arts in New York City, 1980, Martin Segal Papers, New York Public Library, Box 7.

[27] Amyas Ames, Concerned Citizens for the Arts of New York State, “The Effect of the Arts on Employment and the Economy of the State,” 1976, Martin Segal Papers, New York Public Library, Box 37.

[28] Dinitia Smith, “Art Fever,” New York, April 20, 1987.