The art market: just as absurd as the banking crisis

By Felix Salmon
October 5, 2011
Gerhard Richter, for one:

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You work hard, have a long and storied career, rise to the top of your profession, and become a multi-millionaire by doing so. How many people, in that situation, will say that the amount of money they’re being paid is “absurd”, “impossible to understand”, and “daft”? Well, Gerhard Richter, for one:

“It’s just as absurd as the banking crisis,” said the 79-year-old German, speaking to reporters on Tuesday at the press launch of a major retrospective of his work opening at London’s Tate Modern.

“It’s impossible to understand and it’s daft,” he added, speaking through an interpreter.

Asked how he thought the art market had changed in the last few years, he replied in English: “It became worse.”

Are there any bankers out there who feel this way? There must be, surely, somewhere — people pulling down seven- or eight-figure salaries, who think that it’s simply ridiculous to imagine that they’re really “earning” that kind of money, or adding that kind of value to the world. At least Gerhard Richter can point to his luminous paintings as an obvious example of how he’s making the world a better place. It’s hard to do anything similar when you’re structuring CDO-squareds.

One thing that bankers and painters have in common is that their services are Veblen-like: the more expensive they become, the more demand there is for what they do. Someone like Adam Lindemann who would evince no interest in an artwork priced at $500 can suddenly become very eager when it’s $500,000. And the phrase “reassuringly expensive” might have been designed to reflect the pricing strategies of banks looking to provide M&A advice to CEOs.

And in art, just like in banking, a healthy ego is often necessary if you want to become wealthy and successful. But occasionally, someone like Gerhard Richter is at least willing to come along and say that the whole market has gotten ridiculously out of hand. According to Artnet, 151 works by Gerhard Richter have sold at auction for more than $1 million, and ten have sold for over $10 million. In 2011 to date he’s already reached $92,412,177 in auction sales, and we haven’t even had the fall auctions yet.

Those sums didn’t go directly to Richter, of course — but they certainly helped to drive up the prices of his new works, which aren’t reflected in the Artnet database. And it is a bit silly: he puts the same amount of effort into creating a new work now as he did decades ago, but now is paid millions for each one. Couldn’t that money be put to better use buying less expensive art?

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