There's an interesting and important essay over at The Federalist (which you should be reading!) by David Marcus on the subsidizing of art by the government. Here are his three main points:
There are three compelling reasons why we need to reexamine the role of government in the arts, and specifically in theater. First and most importantly it is failing. Less and less people go to theater even though the federal dollars keep rolling in. Second, these government dollars are not expanding the base of arts attendees, but rather subsidizing the entertainment of wealthy, white people. Thirdly, government dollars are not content neutral, a cultural ground game is being executed by the progressive Non Profit community to ensure that culture remains the sole preserve of leftist ideology.
The argument that such subsidies are stifling diversity and "subsidizing the entertainment of wealthy, white people" is both fascinating and, from a purely tactical (some might say, manichean) view, somewhat ingenious. It is a knife aimed squarely at the heart of progressivism: Your policy preference is killing diversity (which you cherish more than anything) and propping up the wealthy (whom you hate more than anyone) so it must be bad.
As I said, it is worth reading in whole. Part of Marcus' argument reminds me of an essay from David Mamet's Theatre, in which the great American playwright discusses the theater as one of the purest forms of capitalism—you put butts in seats or you get shut down—and decries its tailspin as grant money replaces the needs of audiences. Here's Mamet:
The theatre is a magnificent example of the workings of that particular bulwark of democracy, the free-market economy. It is the most democratic of arts, for if the play does not appeal in its immediate presentation to the imagination or understanding of a sufficient constituency, it is replaced. The theatre especially exemplifies the democratic free market in that interactions between playgoer and presenter, between consumer and purveyor, are immediate, unfettered, not subject to regulation—interactions do not require verification by third parties (the seller need not explain why he has presented his particular good, the buyer why he has chosen or rejected it). …
It is only in state-subsidized theatre (whether the subsidy is direct, in the form of grants, or indirect, as tax-deductible donations to universities or arts organizations) that the ideologue can hold sway, for he is then subject not to the immediate verdict of the audience but to the good wishes of the granting authority, whose good wishes he will, thus, devote his energies to obtaining. See the spate of Soviet bloc directors and playwrights inundating our shores from the sixties on, staging, in effect, son et lumières onto which a captive audience was sufficiently bored into projecting meaning. See also their American imitators: mime troupes, puppet troupes, university-funded laboratories, agitprop ensembles, et cetera, offering meaningless, essentially constructivist, spectacles, which the audience was invited (as under communism) to understand as ineffable presentations of the struggle against oppression—a struggle so deep as to be incapable of being expressed in mere words—a lot of jumping about. …
Champions of so-called theory, whether feminist, Marxist, multiculturalist, or other, in an attempt (supposedly) to cleanse expression of bias, are involved in a postmodern rendition of book burning. For the question of art is neither "How does it serve the state?" (Stalinist) nor its wily modification into "How does it serve humanity?" but "How does it serve the audience?"
Now, I'm sure there are many artists who will stand up and cry "But I don't care about the audience! My art is my own! If it fails to find an audience, it is no less valid than any other artistic expression!" These are the sort of artists we're propping up through the tax code. These are the sort of artists who are chasing audiences away from the arts. These are the sort of artists that, frankly, we'd be better off without.