In a way, it's a classic case of "you reap what you sow." As jazz and related musics became unable to fully support themselves in the open marketplace, the community turned in part to state funding. So jazz became an art music.
PJ (can I call you PJ?) was responding to this post from Peter Hum, on the loss of funding for JazzBaltica. I have some minor quibbles with the piece (jazz became an art music long before public funding came into the picture, but that doesn't actually run counter to PJ's argument), but agree with much of his argument. Public funding can be as capricious as the free market, and jazz is in fact marketable, even as it is allegedly dying. I also love the idea of Canada supporting jazz festivals as tourism initiatives and only secondarily as arts initiatives. Putting a market price on jazz (e.g. "A jazz festival will bring in $X of tourism money to this community.") allows musicians (and their supporters) to translate audience support into financial backing. It's a two-way street, though, so that means the audience (you and me) needs to keep showing up to hear live jazz, lest anyone think it be dead.
UPDATE: Vijay Iyer had this to say about a jazz world with no public funding: