It does surprised me that the art market has been unregulated for so long. Considering there is government regulation in so many aspects of our lives, it’s interesting to see that the art world has been given the luxury of self-regulation (which essentially means NO regulation). Well, New York Times blogger William D. Cohan thinks that should maybe end:
Even if buying art is a rich man’s sport, there is still a need for some serious introspection among those who buy and sell art about putting an end to the questionable behavior of some dealers. And if that means that the art market needs to fall under the purview of the Federal Reserve at the newly created Bureau of Consumer Financial Protection — which of course no one in the art market will like — then so be it.
I’m sure many people would be upset by this suggestion but I think it could be a good idea if it includes some practical mechanism that stop exploitation, including more run of the mill stuff like ways for artists to report delinquent dealers.
One commenter on the New York Times post draws parallels between Wall Street’s shady financial products and some artistic ones, though I don’t believe insurance companies actually appraise art and I’m personally a fan of conceptual art:
Just as the ratings agencies have been complicit in the fraud that continues on Wall Street, major insurance companies like AXA and Aetna are complicit in what is happening in the Art World, through appraising and insuring works of “art” for millions of dollars, that in some cases don’t even exist materially — because they are “conceptual art!”
Conceptual art is a dream come true for hustlers, and a new revenue stream for insurance companies, who give credibility to the hustlers. But because there are “no rules” in the art world, who can say they are wrong?
Another commenter points out some facts that may be of interest, though since I am unfamiliar with the data I cannot vouch for its accuracy:
We can thank our tax code for the rich collecting artwork. When artwork is sold it is a 28% tax bracket, which for many years is lower than the rich would pay on capital gains. (With the exception of when President Bush cut the capital gains rate)
Yet, there are those who argue that if we give the rich a tax breaks they will invest it to increase jobs.
People like Jackson Pollack and Picasso can no longer create more jobs.
And I’ll give the final word to this commenter from Seattle, who points out there is a bigger problem with governmental regulation:
Sounds as if these Wall Street savvy businessmen are busy buying up the art worlds equivalent of credit default swaps. The Feds regulating the art markets, really Cohan? There are already laws on the books to deal with fraud but we have seen how well they have worked with Wall Street.