Art prices reflect income inequality
Art and money have been making news lately.
A record price was tallied Wednesday night for Roy Lichtenstein’s “Sleeping Girl,” a 1964 comic-strip painting that reverberates against Constantin Brancusi’s 1908 sculpture “Sleeping Muse.” London’s Frieze Art Fair just had its first outing on an East River island adjacent to Manhattan, charging $40 a head to enter a specially constructed display tent that alone cost $1.5 million to erect. Just days after Edvard Munch’s iconic “The Scream” -- one of four versions -- sold for $120 million at auction and garnered thousands of headlines as the most expensive work of art ever publicly sold, a 1961 Mark Rothko abstraction fetched $87 million, more than the initial estimate for “The Scream.”
And don’t you love the doggy term “fetch” for auction prices?
The hand-wringing over this Pavlovian confluence of art and money has been audible, but it has generated more heat than light. Most of the shrieks center on the confusion of authentic value, represented by a degradation of art’s capacity for meaning in the hard face of promiscuous cash. One art expert even went on a network morning news program to denounce “The Scream” sale as “a freak show” -- an observation I’d say misses the point entirely.
After all, what price for a pastel drawing would transform a freak show into a respectable sale: $40 million? $10 million? $50,000? Even that last sum bumps up against the annual median income of an American family.
And that’s where the actual point about current art prices might be found. The obscenity isn’t in the astronomical sums art has been fetching, it’s in the circumstances that make those prices possible.
Two years ago a team of economists at Yale School of Management and Tilburg University in the Netherlands crunched the art market numbers and came to some sobering conclusions. Using mostly British art-market data compiled since 1765, William Goetzmann, Luc Renneboog and Christophe Spaenjers found a variety of factors were involved in today’s stratospheric art prices. They include things like the new globalization of the buying pool. More wealthy buyers equals more competitive bidding.
However, for the period between 1908 and 2005, one factor edged out all others: Art prices rise -- and rise faster -- when income inequality goes up.
Occupy Wall Street gave visibility to today’s stark income inequality, which is the real freak show. Since Ronald Reagan took office, the average 1-percenter has nearly tripled his share, growing from 12 1/2 times the median household income to a staggering 36 times greater. The Senate Budget Committee was told in February that CEO-to-worker pay rose from 42-to-1 in 1980 to 325-to-1 in 2010. The national income held by the top 1% is at roughly the level it was in 1928, just before the Roaring Twenties erupted in the fireball of the Great Depression.
Art prices have followed. The study’s authors found that a “one percentage point increase in the share of total income earned by the top 0.1% triggers an increase in art prices of about 14 percent.” Dyspeptic Edvard Munch would probably agree: That’s quite a multiplier.
I’m not an economist and can’t assess the researchers’ sources and methodology. But Supreme Court Justice Louis D. Brandeis once said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.” An art critic might add: We may have wealth concentrated in the hands of a few, or we may have an art market that is not a freak show, but we cannot have both. Shrieking about “The Scream” rather than income inequality is spitting in the wind.
Follow Christopher Knight on Twitter at @twitter.com/KnightLAT
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