> If you can't attract an audience for your art, does it deserve funding? How do we decide that? Can anyone just make a papier-mache turd and get funding for it? If not, then who decides what is worth funding? On what basis? How do we stop nepotism and elitism from being the main factors for arts funding?

Slovenia has I think a pretty good solution to this: If you are registered as an independent artist, don't have a full-time job, and fulfill some reasonable criteria for being active (art exhibitions per year, poems published, etc), then the government pays you minimum wage. You are welcome and encouraged to freelance (or make royalties) for more.

It's basically UBI for the arts.