The problem with subsidised art (or subsidised anything really) is that the money in large part goes to the people who are well connected and great at weaseling their way into funding. So, there's a constant stream of always-mediocre French, German etc. (state-funded) movies in local artsy cinemas in Poland, which no one wants to watch, because they're mediocre.

In other words, the film makers are not subject to the market forces, they don't need to make something that the audience actually wants. The official stats of the PISF (polish state institute which funds movies) say that only 4 out of hundreds funded movies have recouped the state investment via tickets and other sales. The rests are flops, which is not a problem for anyone involved. That's how you get bad art.