A government mandate has the same effect on a free economy as government taxation and spending. It takes money that the free market would use elsewhere and forces it to be used as the government sees fit.

Taxpayer funded art: If the government pays for a half million dollar statue of a snake that looks like a turd, a half million dollars of tax money is used up that most likely would not have been spent on a statue of a turd if the taxpayers had been allowed to decide where to spend it.

Mandated art: If the government forces a business to spend a million dollars on art, it costs the general taxpayers nothing, but money is taken from the business that most likely would have been spent on something more productive if they had been allowed a choice. The economic effect is more localized than the taxpayer example, but it's the same principle.

It kind of goes without saying that many things that require the government to force people to spend money on them, are not things that the people would spend the money on if they had the choice. Otherwise, why would the funding need to be coerced in the first place? This is only one reason government spending tends to be less effective economically than the private sector disbursing funds on its own.