From The Economist:
St John’s, a district in central Manchester, has long reflected the city’s ambitions. Thanks to its proximity to the River Irwell, the site became a hub for the booming cotton and timber trades during the Industrial Revolution. After the second world war, as the city’s economy turned towards services, Britain’s first purpose-built television studios were set up there. (Most of the studios were closed or relocated in 2013.) Now the area is undergoing yet another transformation. On June 30th a multi-use arts venue on the banks of the river—costing £211m ($268m) and spanning more than 140,000 square feet—welcomed its first visitors.
The building, initially called Factory International but recently rebranded as Aviva Studios, was announced in 2014 by George Osborne, then the chancellor of the exchequer. It is mostly funded by the government and Manchester City Council and is the biggest investment in a cultural project in Britain since Tate Modern in 2000.
Mr Osborne saw Factory International as part of his “northern powerhouse” policy, which aimed to boost the economies of places such as Manchester and Newcastle, and to shift jobs, investment and influence away from the south-east of England. According to recent data from the Office for National Statistics, London’s gross value added (gva, a measure of output) is around 10% higher than the total of 11 other “core” cities, including Manchester. Mr Osborne has since left politics—he is now chairman of the British Museum—but talk of “levelling up” continues.
The venue was designed by Ellen van Loon of oma, an esteemed architecture firm, and its façade evokes Manchester’s mishmash of period buildings. Inside, a vast warehouse space can be configured in various ways; thanks to high-tech acoustic walls, different events can take place simultaneously. It will be the permanent home of the Manchester International Festival, a biennial event founded in 2007.
The venue can host enormous installations. The inaugural exhibition, “You, Me and the Balloons”, is the largest-ever show by Yayoi Kusama, a blockbuster Japanese artist (see picture). For the full launch in October, Danny Boyle, a Mancunian film-maker, has created an immersive production inspired by “The Matrix”.
Aviva Studios’s aims are grandiose, too: executives say it will contribute £1.1bn in gva in the next decade and directly and indirectly create more than 1,500 jobs. The Factory Academy, established in 2018, provides people with the technical skills needed by the venue and by the arts sector at large. “Yes, we’ve built a really exciting international arts venue that people across the world will travel to see,” says Bev Craig, the leader of Manchester City Council, but “that’s only half the story…It’s purposeful growth, not just any old growth.”
Manchester is not alone in betting on culture as a catalyst of regeneration. In America, Jersey City hopes to become a “destination for the arts” and is footing the bill for Centre Pompidou’s first North American outpost, due to open in 2026. In 2021 Abu Dhabi confirmed it would spend $6bn on its creative industries over five years in an attempt to diversify from oil; Muhammad bin Salman hopes to turn Al Ula into Saudi Arabia’s capital of culture. China has opened scores of new museums in recent years, as has South Korea.
. . . .
The idea of state support for culture can be a controversial one, as the well-off are most likely to participate in the arts; detractors would often rather see the money spent on hospitals or schools. Yet evidence suggests that a vibrant culture scene brings several benefits. Research by Centre for Cities, a think-tank, found that proximity to recreation facilities is important to 25- to 34-year-olds and influences their decisions about where to live.
Culture has an impact on well-being, too. Researchers at University College London analysed a series of longitudinal studies conducted between 2017 and 2022 in America and Britain. Controlling for income, education and other demographic factors, they found that enjoying the arts was good for your health. Whether you are reading a book or going to the opera, you are guarding against depression, dementia and chronic pain.
In the 19th century, as Americans and Europeans moved to the city, governments built public institutions to enrich people’s lives. Some economists have long sensed that this kind of investment can pay dividends. In Britain the Arts Council was established in the wake of the second world war to distribute government money across England, Scotland and Wales. John Maynard Keynes, a lover of opera and ballet, was its first chairman. “At last the public exchequer has recognised the support and encouragement of the civilising arts of life as a part of their duty,” he said.
. . . .
The idea of state support for culture can be a controversial one, as the well-off are most likely to participate in the arts; detractors would often rather see the money spent on hospitals or schools. Yet evidence suggests that a vibrant culture scene brings several benefits. Research by Centre for Cities, a think-tank, found that proximity to recreation facilities is important to 25- to 34-year-olds and influences their decisions about where to live.
Culture has an impact on well-being, too. Researchers at University College London analysed a series of longitudinal studies conducted between 2017 and 2022 in America and Britain. Controlling for income, education and other demographic factors, they found that enjoying the arts was good for your health. Whether you are reading a book or going to the opera, you are guarding against depression, dementia and chronic pain.
In the 19th century, as Americans and Europeans moved to the city, governments built public institutions to enrich people’s lives. Some economists have long sensed that this kind of investment can pay dividends. In Britain the Arts Council was established in the wake of the second world war to distribute government money across England, Scotland and Wales. John Maynard Keynes, a lover of opera and ballet, was its first chairman. “At last the public exchequer has recognised the support and encouragement of the civilising arts of life as a part of their duty,” he said.
. . . .
A multitude of factors make a city appealing to tourists as well as migrants. Economist Intelligence Unit, a sister company of The Economist, calculates a city’s “liveability” according to five broad categories: culture and environment, education and infrastructure, health care and stability. Abu Dhabi welcomed an outpost of the Louvre in 2017; in recent years, its score has risen thanks to improvements in public services. Yet it still ranks only slightly above the average rating globally.
The authorities in Manchester know there is no single formula for growth. In 2022 it was announced the city would receive £1bn to improve its public-transport system; it is also focusing on attracting technology companies and startups. A wide cultural ecosystem has been established over the past 25 years, with Media City, a bbc outpost, the National Football Museum and home, an arts complex.
“This building is a manifestation of Manchester investing in creative industries as part of its future,” says John McGrath, the artistic director and chief executive of Factory International (the moniker was retained for the organisation that runs Aviva Studios and the arts festival.) That name hints at the city’s particular cultural heritage: between 1978 and 1992 Factory Records, a music label, championed bands including Happy Mondays, Joy Division and New Order.
Link to the rest at The Economist
Cheap rent would do far more to attract writers, artists, and other bohemian types, but that would involve deflating artificially pumped-up real estate values, something The Man definitely does not want.
I have never understood what makes price increases artificial.
Is there another kind of price increase that is real?
One tied to supply and demand? If everyone wants something that’s rare or hard to get, they have to pay more to get it?
Manhattan is an island (for instance) so there is a hard limiter on available space. Lots of people want to be there. They will pay more, or not be there.
I would be curious if one can inflate the price of something that only a few people want, and still sell whatever it is. I doubt it.
On the flip side, I’ve seen people claim that diamonds are actually commonplace, so their high prices are “inflated.” However, none of the claimants ever account for whether the commonly available diamonds are gem-grade, and have the requisite cut, clarity, and color that justifies the “spend three months of your salary” rule. So I suppose the jury is still out on that one.
“I would be curious if one can inflate the price of something that only a few people want, and still sell whatever it is.”
It happens. Within specific markets, usually niches.
Beanie babies. NFTS. Tulip bulbs.
The recipe is to target a niche with a limited supply to create an artificial “economy of scarcity” mentality. Price bubbles follow.
Artificial scarcity is actually common but most typically unintended, from the consequences of economy-illiterate politicians who create runaways as a side-effect of free market manipulation.
In Manhattan that is exactly what residential rent controls did: limit price increases for a part of the supply, thereby forcing investors to shift to a different sector (commercial real estate) until the government allowed new, uncontrolled pricing residential construction post 9/11. At ridiculous prices because the two tier system reduces prices for the grandfathered supply and drives it up for the rest. Suboptimal resource management, really. Most of the vintage rent controlled properties coukd easily support 10x or more residences if allowed to rebuild.
In San Francisco and LA they have the same problem but it is because of NIMBY and a refusal to allow “multifamily” (apartments and row houses) to protect property values. Again, an artificial economy of scarcity. Both have ended up with hordes of homeless and a brand new “civil right” to sleep on public property, according to the still Nutty Ninth.
California is funny.
Oh yes, the niche markets. I might have specified that the thing should be commonly available, but I steadfastly avoided knowing about the beanie babies back when they were a thing.
But, this jogs my memory that comics or toys also work in this scenario. A dealer at my first ever Star Trek con assured me my brother’s Mr. Spock doll might have been valuable if he hadn’t let a stray dog wander off with it when we were little. Then there’s the friend who gave me a “collectible” Barbie for my 14th birthday for some reason.
I stand corrected on the futility of the raising prices on stuff few people want. Neat trick, if it can be managed.
The US comic book industry nearly went bankrupt in the 90’s catering to the “collectibles only go up in value” meme. Marvel, for one, really thought that XMEN#1 selling a million copies meant they had that many fans. Ended up *selling* movie rights to their more popular characters to Fox and Universal to stay in business. Mostly selling toys.
Wasn’t looking to correct, just to point out that supply-demand can be gamed.
Try this example:
Back in the 70’s and 80’s, the Cleveland MLB team played in the old, poorly maintained Municipal Stadium they shared with the Foolball team. It had 70-80,000 seats and a handfuly of “luxury” loges. Several times they tried to get a modern domed stadium like Pittburgh, Cincinnatti, Houston, etc played in. Big concrete multisport donuts that seated 50,000+. The proposals all got shut down who didn’t want to give up the added 30,000 seats in the mistake by the lake.
The team would fill the stadium on opening day each year (if not snowed out), the 4th of july, and any weekend the Yankees came to town. The rest of the season? 5-10,000 attendance. If the team managed to put togerher a hotstreak on a road trip, they would often be faced with a flash crowd as 50,000 people would all get the idea to go watch a game. There were always plenty of seats and cheap.
Eventually the team got sokd to a real estate magnate who got together with the owner of the NBA team, which played out in the suburbs in their own giant facility. Their ultimatum: a sports complex with a baseball only facility, a basketball arena, and two big parking buildings. Right at the exit of a freeway, well away from the lake. The arena, good for concerts and conventions was 20000+. The ballpark? 42,000 seats, two levels of glass lined temperature controlled loges with catering and flatscreens for replays. Plus a large restaurant looking out at the playing field.
They went from 75,000 seats in a decrepit from the ’30’s to a smaller, lower capacity modern money-maker. The team became a powerhouse in 1995 with the added *upfront* revenue. It sold out 455 dates in a row, usually before the new season started. Over 5 years. (Until a new cheapskate owner took over. Long tale of woe.) With declining performance and attendance, that saw the upper deck closed at times, and the park was refurbished down to 35,000 seats in 2015.
In its heydey, they pre-sold 20, 40, and 81 game packages and it was common for ordinary folks to group together to buy a 20 game package just to be guaranteed a chance at a couple of games a year.
Limited capacity guaranteed more revenue and scalping became semi-legal. No flash crowds anymore, no empty seats in the early years. And, with the predictable large foot traffic, the area around the GATEWAY COMPLEX, previously abandoned warehouses (yes, straight out of the pulps) bred dozens of restaurants and nightclubs that were guaranteed large crowds from the park, the arena, or both. Plus luxury apartment buildings. In modern political terms, the rest of the warehouse district got gentrified.
Of course, ticket prices went up through the roof and in that business, what goes up, never comes down. 😉
Artificial scarcity can be profitable when correctly targeting a market. The biggest mistake is, in fact, going for market share over all else. The best example there was the PALM PDAs vs Microsoft Pocket Computers.
Palm got first, always werevthe cheapestvand tried to bevall things to everybody. ThevMicrosoft licensees (mostly Dell, Compaq, and HP) didn’t. They focused on a specific upscale market, comparatively, and cherry picked themost profitable market. Less sales, better profits.
Things like Windows’ 90% desktop market share or Amazon’s ebook domination are rarities, more reflective of weak competitors than anything else. More common is identifying a core market and serving it as best as profitable. Occasionally it means niches but some “niches” can get really big.
Capitalism done right can get very interesting.
Every so often I see articles about cities or planners wanting to attract “creatives.” I would imagine this would be easier if the creatives could be employed, so are there jobs there? In some cities this would be tied to crime rates and education levels of the populace, so addressing those would seem like a greater priority to me. It’s hard to hire people for the better paying jobs, if the available pool of candidates can’t read or string sentences together.
Is it easy to start one’s own business? Addressing regulations that choke out businesses, independent or otherwise, would help. If you have a town that requires permits for kids to run lemonade stands, you’re not going to a get a Steve Jobs building Apple out of his garage (or whichever techie it was that built whatever company it was).
I dunno, just putting up a festival or a museum or whatever just looks more like a get-rich-quick scheme if you don’t bother to address the underlying foundation. In college, I knew I was going to enjoy living in Chicago because it had a bookstore on every block. And if you didn’t see one on a given block, just walk around the corner and you’d be in luck. At the same time, I knew I didn’t want to live in Detroit because bookstores were not on every corner. They were … rare. And unusual. Literacy rates, just saying.
A perfect example of a natural supply and demand price increase: Russians invade Ukraine, destroy massive stretches of the world’s best farmland and block grain exports via sea. Meanwhile, Egypt and most of the middle east get their grain from Ukraine. 25% or more reduction in supply. At a time Brazil and Argentina had bad harvests.
That was 2022.
2023 is more of the same *plus* a shortage of fertilizers.
Would anybody expect grain prices to go anywhere but up?
Or how about labor-dependent supply chains in a time of high inflation? If the cost of living goes up 10% shouldn’t salaries and product costs go up too?
Or what about transport dependent products? If oil goes up are “made in china” product cots going to stay the same? And what happens when “Made in China” goes away with the end of globalization? Best case is replacement production will have to be built closer to the consumption market, which will require upfront capital in an age where the last boomers are retiring and givernment argesse is eting up more and more of what is available. Six% inflation is a dream for the next decade. (See above.)
Fact is, most price increases are due to human driven but “natural”, unavoidable causes.
Population growth drives demand which drives prices up; population declines, like China, Korea, Japan, etc reduce the worker pool which drives up salaries (reports say China has seen a 15x increase in labor costs since 2007) which drives up product costs. Lose-lose.
Economists consider a stable 2% inflation rate to be optimum for a healthy economy but that still compounds over time so unless production efficiencies squeeze out costs or profits, prices need to go up over time.
Of course, the math-illiterate will argue for price controls and subsidies like we see all over in the “third world”. And in every single case, the pressure builds up and the cost of paying for those subsidies forces an end. Typically, revolts follow.
As far as anything in economics is natural, that is supply/demand.
Anything else is a pipe dream.
As to the OP, city managers trying to use “culture” to spur their economies would be well adviced to take a course or three in economics. They might then notice that economies are built on production not on culture.
Econ101: Civilization was built on (excess) production which then enabled specialization and trade.
It is the surpluses (aka profits in modern times) that support “culture”, not the other way around. Focusing on second and third tier activities bootstraps no economies. Just look at the tourism-dependent countries for proof. Little better than subsistence agriculture.
https://m.youtube.com/watch?v=tng1IV84WRw&pp=ygURdmlzdWFsZWNvbm9taWsgZW4%3D
You’d think a publication calling itself the Economist would gather the futility of those elite driven projects. Museums and Opera Houses? What’s the net GDP from those? 😉
I’d say price increases that are tagged as artificial are simply prices some people don’t like. I don’t like the price of a Porsche. Never have. But my personal feelings have nothing to do with their being artificial.
Supply can certainly be curtailed by any number of human actions. War, tariff, cartels, price collusion or natural disasters. Prices then adjust to the new supply. That adjustment is not artificial. It’s a function of supply and demand.
Demand can also increase as mentioned above for Beanie Babies. I know a very successful lawyer who still has boxes of Beanies in his basement. When asked why, he says, “That makes sure I never forget the lesson.” But prices are then an adjustment to supply and demand.
There are government price controls which have a history of being dismal failures. They usually hold down prices which then affects supply and shortages result. Shortages then push up prices on the secondary market. These are the controls are usually pushed by folks who think market prices are artificial.
As far as the OP, I’m not sure what it has to do with creatives. It appears to be a mega event center. It could host The Stones or a political convention. There is a new sphere-shaped center opening in Las Vegas, but nobody is expecting it to lure creatives to Las Vegas. It will compete with the other venues in the UK.