I suppose the former is true if one takes 'the Arts' to mean arts organisations, particularly as they rely for their existence on the assumption that attention is a social good. Yet what have arts organisations got to do with art? Here the answer is self-evident.
So what are the unpalatable truths? John Carey argued (uncontroversially, I'd say) that the arts do not make people better and might even make them worse. Clark says:
He went on to claim that the arts, far from leading to democratic improvement, led to the reinforcement of social distinctions. As for ecstatic experience, he showed that sex and drugs were far more efficacious.I wonder how he showed that? Anyway, he was seconded by Blake Morrison who attacked the Bloomsbury Group, though on what grounds we're not told. Carey also criticised the group as snobbish and elitist in The Intellectuals and the Masses, the seminal tract of Little Englander philistinism, so we might guess where he was coming from.
Opposing Carey and Morrison was the novelist Howard Jacobson who said something witty and unconvincing about Middlemarch but who basically believes the arts have "a functional role in freeing us the better to enjoy and endure life”. This is true of my own experience of art at least (though 'enjoy' is perhaps overstating it). It's what draws me to specific works of art rather than 'the arts'. The experience of reading a great novel is dialectical rather than solely (or ever) ecstatic. It's not easily explained or shared. It's why teenagers tend not to read Proust and why philistines are, in effect, perennial teenagers: 'Modernism?! Oh no, it's so unfair'. Whether this makes me a better person is another question and perhaps the individual confuses their own enjoyment and endurance with goodness, or at least the potential for goodness.
(By the way, it's no coincidence here that Carey dislikes In Search of Lost Time and frames the author as a snob, though whether he really means 'Marcel' is unclear).
Once the main speakers had had their go, Clark was the first to speak from the floor. He expressed resentment that his income was being taxed "to subsidise opera seats for those who can afford to pay for them themselves". Quite what this has to do with art escapes me. What opera has to do with art anymore also escapes me (though I can appreciate it is often wonderful entertainment).
The question really is not What Good are the Arts? but 'how might a work of art be good?' And in that instance, I would say that being good includes being bad. Or rather, that art must include the question of itself in its being as art. ("Let us suppose that literature begins at the moment literature becomes a question"). In this sense it can be as much a work of criticism as contained genre.
Human beings still long for narrative but narrative itself is evidently not enough, hence debates like this one. They really shouldn't be so separate. But such discussions in this country invariably steer clear of the foundational question, just as current political discussion, as emphasised by the New Labour columnist chairing the debate, excludes ideological doubt. (Don't hold your breath for a debate entitled "What good is capitalism?").
In the end, it is up to the individual to find their own way with art. It can't be outlined in a White Paper about arts funding. There will be losers as well as winners - Lichtenberg's asses and Lichtenberg's apostles - but maybe our cultural products themselves (I hestitate to call them works of art as yet) can guide more people to being winners if they confront the fundamental question rather than habitually avoid it.
Make it new, like the tea.