It seems humans feel that way about most things.
Washington Post did a fun little experiment with virtuoso violinist, Joshua Bell. He played to a sold out theater just a couple days prior to donning a t-shirt and jeans and playing for tips in a subway arcade. I think he made $100 ($20 of it from a person who recognized him and wished to give him more), which is about the cost of a single ticket from the sold out show.
We need to understand why we think it has value I guess. We need some sort of anchor.
Roanoke covered one angle of this well, so I’ll leave the idea of relative value alone for now. Instead I will talk about the thing many people don’t realize about the high end art market and why laughing off how dumb it is... is a bit ignorant.
When you have tons of money it can be hard to find places to put it. Banks often can only insure money up to a limit, etc etc. art is something you can buy at a physical value and insure against that value. It can act as a place to store money. It’s perhaps not the best place- even for the super rich- but that’s not all it’s good for.
You see- art works very well as an instrument. Moving large sums of money can be surprisingly difficult. Many countries have strict rules about importing or exporting large sums of cash, sometimes there can be legal issues with electronic transfers as well- as these tend to be traceable.
Roanoke covered one angle of this well, so I’ll leave the idea of relative value alone for now. Instead I will talk about the thing many people don’t realize about the high end art market and why laughing off how dumb it is... is a bit ignorant.
When you have tons of money it can be hard to find places to put it. Banks often can only insure money up to a limit, etc etc. art is something you can buy at a physical value and insure against that value. It can act as a place to store money. It’s perhaps not the best place- even for the super rich- but that’s not all it’s good for.
You see- art works very well as an instrument. Moving large sums of money can be surprisingly difficult. Many countries have strict rules about importing or exporting large sums of cash, sometimes there can be legal issues with electronic transfers as well- as these tend to be traceable.
In fact- most things you can buy for large sums of money and do t look suspicious- have lots of paper work and other logistics issues. Not so much art. If I pay you hundreds of thousands of dollars for some illegal act or property- that transfer might look very suspicious. How do we justify the transfer? Under scrutiny or investigation- most lies would break down. Saying it was a “bet” in most places would be illegal- and that is also still somewhat suspect unless you’re known to make side gambles for large sums. Etc etc. but it isn’t so strange- in fact it’s a trope- that rich people may pay millions for something like a banana taped to drywall. It’s absurd but believable as opposed to “meh. I just decided to give this specific person a million bucks for no reason.” Both are possible- one is way less suspicious.
What’s more- there are entire industries that legitimize the transfer and offer measures of security and plausibility. Auctions being a big one- and not only do you generally need little to no paperwork to transfer art- the regulations are often extremely lax. As opposed to almost any other legitimate transfer of that much money- the person Recieving the money can often remain completely anonymous. Not even a need to present ID. The auction house may have little or nothing to report of the buyer and seller, and the buyer and seller can never meet- meaning even if somehow the sale is traced to the seller- and the seller is some sort of criminal- you had no way of knowing and aren’t tied to them.
Large art sales make great ways to transfer money out of a country such as communist countries with controlled economies and strict regulations on moving cash out. It can be used to discreetly pay bribes or fees for other illegal services without linking the person paying to the person Recieving. Using proxies and shells- the buyer can have a third party act for them- the money can be traced to their accounts but the decision can’t be placed on them as their agent such as their collector, decorator, investor, curator, etc made the decision- and the seller can use an anonymizes proxy to make the sale and then anonymously collect minus a cut for the proxy- thereby creating another layer of protection.
Art also can be used as a tax instrument to mitigate tax burdens- sometimes you WANT to make a bad investment- so you can claim depreciation or loss. Using things like foundations and trusts you can also shelter money and achieve other goals.
Art also can be used as a tax instrument to mitigate tax burdens- sometimes you WANT to make a bad investment- so you can claim depreciation or loss. Using things like foundations and trusts you can also shelter money and achieve other goals.
Remember that many “friendships” and relationships at high levels of wealth are about need- people with money who want to keep it and be successful generally have to grease wheels. Auctions and galleries and such make commissions. A cut of a sale. Rich people and wealthy communities know how to keep their money “in the circle” as much as possible. Money paid in commissions to the art dealer etc gives you clout and makes them rely on you- makes you valuable. Speaking in relationships- there are many rules about who you can give money, how much, what the taxes look like... so say that you wanted to support someone- you could often do so more efficiently by buying art from them than trying to gift them money. The taxes on a sale are often much better than they are on things like gifts- more money stays with you or them and less goes to the government.
There are tons of ways that one can use art as an instrument to store or move money. For most cases, especially for the less than Uber wealthy- storing money in art isn’t the wisest choice- asides volatility, it’s often not very liquid- if you have a painting with $1 million- to get the million you have to find someone with that much money that wants to pay it for that exact painting. But there are many examples such as above where art can be useful, and often the best or only option. Speaking on relationships- asides clout or closed financial loops or greasing wheels- art sales can buy you publicity.
Recognition. There are plenty of rich people. Many of know millionaires or pass by multi millionaires and may never realize it. You might have met a billionaire and not know it. A large number of wealthy people aren’t famous, lots of famous folk aren’t actually very wealthy. But some people specifically want to be known- or at least known in certain circles. Buying high end art, especially the sort that stirs controversy or discussion- is a great way to get your name known. It can also be a way to get that art fee advertising- as news or social media discuss it- someone out there who likes notoriety may decide they have to own that prince since it is so topical or divisive. In this sense- a patron with money can support or even create an artist who makes art, the patron buys, hypes up, resells, the artist and patron have a deal on cuts for each, money gets made all around except possibly by the final buyer...
High end art can be a very interesting world, one where often times you aren’t getting the full story. Sometimes there is quite a bit more going on than meets the eye- and it is somewhat rare for these scandals to make the mainstream or even be investigated- so watching what’s going on and meeting the people involved and such.... you can often piece together some or even most of a hidden story.
Why this can be important is because art can be and often is used as a tool- it underpins things like business and politics and economics driving our world- and most people just sort of laugh- or at best think about it hard enough to ponder the meaning of art or the relativity of value- without looking close enough to figure out that sometimes, you’re watching laundering or embezzling or bribery or smuggling etc- and it’s happening in broad daylight. But prove it. You generally can’t. As I said- the nature of these things is such that unless someone involved makes a serious mistake or has a change or heart and manages to stay vertical- there isn’t much evidence of anything more sinister than bad taste or poor impulse control.
We like to distill things down to simplest terms- and at their core perhaps they often are. In practice though- the way the world works- the things hiding in plain sight.... it can be complex. That’s the point. Like EULA etc- by design these things are made complex so that most people don’t want to bother looking- and the majority of those who bother to poke further will get confused or frustrated. The art world has its own politics and hidden mechanisms that tend to be inaccessible to people outside the fold. This can be true all over- from Garbage collectors to mayors to the relationships in a workplace- there are often certain unwritten rules. “My boss will get furious if I come in late but doesn’t care if I come back late from lunch..” or “if I take a 30 minute break I’ll get flack but if I take 5 10 minute breaks in a day- my boss doesn’t care...” “always make sure Lindsay in department X is happy or your life here will be miserable...” blah blah.
We like to distill things down to simplest terms- and at their core perhaps they often are. In practice though- the way the world works- the things hiding in plain sight.... it can be complex. That’s the point. Like EULA etc- by design these things are made complex so that most people don’t want to bother looking- and the majority of those who bother to poke further will get confused or frustrated. The art world has its own politics and hidden mechanisms that tend to be inaccessible to people outside the fold. This can be true all over- from Garbage collectors to mayors to the relationships in a workplace- there are often certain unwritten rules. “My boss will get furious if I come in late but doesn’t care if I come back late from lunch..” or “if I take a 30 minute break I’ll get flack but if I take 5 10 minute breaks in a day- my boss doesn’t care...” “always make sure Lindsay in department X is happy or your life here will be miserable...” blah blah.
slipping your boss or an inspector etc. cash is generally crass and may not go well. A well placed muffin or bagel or even a bottle of scotch etc... an occasional nice lunch or such.... that can often get you favor that your cash couldn’t buy or would take 100x as much cold cash to buy. There is much more to high end art than just people with too much money paying the cost of a house for a vase smeared with hippo turd by a person who’s name is an emoji.
Washington Post did a fun little experiment with virtuoso violinist, Joshua Bell. He played to a sold out theater just a couple days prior to donning a t-shirt and jeans and playing for tips in a subway arcade. I think he made $100 ($20 of it from a person who recognized him and wished to give him more), which is about the cost of a single ticket from the sold out show.
We need to understand why we think it has value I guess. We need some sort of anchor.
When you have tons of money it can be hard to find places to put it. Banks often can only insure money up to a limit, etc etc. art is something you can buy at a physical value and insure against that value. It can act as a place to store money. It’s perhaps not the best place- even for the super rich- but that’s not all it’s good for.
You see- art works very well as an instrument. Moving large sums of money can be surprisingly difficult. Many countries have strict rules about importing or exporting large sums of cash, sometimes there can be legal issues with electronic transfers as well- as these tend to be traceable.
When you have tons of money it can be hard to find places to put it. Banks often can only insure money up to a limit, etc etc. art is something you can buy at a physical value and insure against that value. It can act as a place to store money. It’s perhaps not the best place- even for the super rich- but that’s not all it’s good for.
You see- art works very well as an instrument. Moving large sums of money can be surprisingly difficult. Many countries have strict rules about importing or exporting large sums of cash, sometimes there can be legal issues with electronic transfers as well- as these tend to be traceable.