Opinion

Felix Salmon

Why art isn’t a commodity, Cady Noland edition

Felix Salmon
Feb 13, 2012 21:32 UTC

Dan Duray had the news on Friday of the latest big-money lawsuit in the New York art world: dealer Marc Jancou is suing Sotheby’s and artist Cady Noland for $26 million.

The lawsuit is here, and there’s absolutely no indication whatsoever of where the $26 million number comes from; I suspect it’s just an attempt to make a splash in the press. Jancou had consigned a Noland work to Sotheby’s, which slapped an estimate of $250,000 to $350,000 on it. But then Noland “apparently disavowed the work,” according to Baer Faxt — and as a result, Sotheby’s pulled it from their auction. Jancou’s upset, and is on the legal warpath.

I see no fault of Sotheby’s here — if I were in their shoes, I’d do the exact same thing. Sotheby’s clearly has — or had — a good relationship with Jancou: according to the consignment agreement attached to the complaint, they were charging him zero seller’s commission, and neither were they charging him for things like insurance, catalogue illustration, packing, and shipping, which they normally charge sellers.

But in terms of art-world importance, Cady Noland trumps Marc Jancou — and it’s easy to see why, when her piece Oozewald just sold for $6.6 million. As Daniel Grant explains at some length, so long as an artist is alive, and especially if that artist is producing expensive work, the art world tends to bend over backwards to honor that artist’s wishes.

As a general rule, it’s pretty important, when buying or selling work by a living artist, that the artist be reasonably happy about the deal. If the artist is dead, then you need to be on good terms with the estate. It’s a significant risk, in contemporary art, especially given the fact that artists, by their nature, can be mercurial and temperamental.

All of which is yet another reason why art isn’t a commodity which can simply be bought and sold at a market price. It’s always encrusted in various egos, none more than that of the artist. They might have sold the work, but it’s still theirs, on some level, and that does give them certain rights of authorship. The artist nearly always retains copyright in the work, for instance (which is why you’ll never see images of Richard Prince works from the mid-70s), and increasingly the institution of resale royalties is being enforced, at least in California and the UK.

Marc Jancou has no real excuse: he should have known, before consigning Noland’s work to a very public auction, if she was OK with that. It’s not like he’s some kind of art-world naïf. It’s very unclear what Noland did; Jancou’s suit says only that she “tortiously interfered with the consignment agreement by persuading Sotheby’s to breach the agreement by refusing to put the work up for auction”. Jancou does say — or at least imply — that even after Noland’s complaint there was no doubt as to the authenticity of the work; she doesn’t seem to have denied making it.

But the art world is a fuzzy place, and there can be a big difference between a work made by Cady Noland, on the one hand, and a Cady Noland work, on the other. And Jancou’s being incredibly disingenuous if he’s pretending he didn’t know that.

COMMENT

Hugh, you can contact the artist and either become partners/joint venturers, or negotiate the purchase of the copyright from the artist and take the risk of loss from manufacturing and marketing the cards yourself. A copyright can be bought and sold, but as you say, it does not transfer automatically with the purchase of an original work of art. Even a commissioned work might not transfer the copyright. It’s all negotiable.

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Weird art-valuation justifications of the day, Sarah Thornton edition

Felix Salmon
Feb 8, 2012 23:38 UTC

Sarah Thornton has an interesting theory on why art prices keep on spiraling upwards:

The burden for the stinking rich is what to do with their money. There is currently no interest to be earned on cash, so they can’t leave it in the bank. The property market is nearly paralyzed and, for these globetrotters, the drawback of real estate is that it is tied to specific currencies. A Mayfair flat sells in pounds, but the Francis Bacon painting that hangs on its wall could sell in Hong Kong dollars and take up residence on a yacht in the South Pacific. Like historic or extra-large diamonds, works by artists with international recognition are a hedge against volatile currency fluctuations.

Fifteen years ago financial advisers were not in the practice of recommending that rich people diversify their portfolios by buying art. Now it is the norm. While buying emergent art is high-risk, speculative investment, acquiring established masterpieces is perceived as the opposite – a back-up in hard times. If all goes wrong in the world, if the eurozone cracks, the Middle East erupts in war, and a tsunami hits Manhattan, that rare, portable 1964 Marilyn by Andy Warhol will still be worth something.

This would be a lot more convincing if Thornton actually named or quoted any of the financial advisers who are reportedly “recommending” buying art as an investment. Because I’d love to talk to one. Art’s a dreadful investment: it’s got a negative carry, it’s highly unpredictable in terms of value, there’s no reason whatsoever why prices should go up rather than down, and, of course, you can put your elbow through it at any time.

In my experience, the only people who ever recommend that rich people diversify their portfolios by buying art are people who are going to make money, somehow, from the deal: people selling art investment or advisory services. Everybody else is generally pretty sensible, and sticks to saying the simple truth: Buy art because you love it, not because you think it’s going to rise in value.

More generally, the stinking rich are, as a rule, swamped with bright ideas from people guiding them on what to do with their money. They all have family offices, replete with highly-paid investment managers: The alternative here is not to simply leave the money in the bank, earning no interest. (More likely, they own the bank, take other people’s deposits, and lend them out at a healthy profit.)

And the idea of art as “a hedge against volatile currency fluctuations” is just bonkers; I’m not at all surprised that the line appears in a column for the Guardian, rather than in Thornton’s normal home of the Economist. If you have billions of dollars and you want to hedge against currency fluctuations, then — and I hope you’re sitting down for this — you hedge against currency fluctuations. Options and swaps and futures and forwards and the like are as commoditized as they come in the foreign-exchange markets, and much easier and cheaper to buy and sell than any major artwork.

Thornton’s wrong, too, about the intrinsic value of a 1964 Marilyn by Andy Warhol. If it was worth 10% of its current value a few years ago, it can be worth 10% of its current value in a few years’ time, too. Admittedly, 10% of its current value is still “something”. But that hardly makes the Warhol a remotely sensible investment. The whole point of art is that it has no intrinsic value: that its financial value is a magical number which is some highly variable function of how much various incredibly rich people love and covet the work.

But she’s right about this aspect of why the two big auction houses are doing so well these days:

Christie’s and Sotheby’s are superlative marketers who are getting better at funnelling demand for objects by a small group of well-tested artist brands.

The key word here is “brands”. CNBC’s Zac Bissonnette recently wrote to me saying that what he hates about contemporary art is the way in which “you can just put it there and all your friends will know what it is. People might as well hang a Nike swoosh over their couches.”

Zac’s exactly right about this: the one thing that pretty much all ultra-expensive art has in common is that it’s instantly recognizable as the work of a given artist. (And that goes for Cézanne as much as it does for Jeff Koons.) Fine art has become the billionaire’s-club equivalent of a Louis Vuitton bag, slathered in logos. It’s not connoisseurship which drives values, so much as recognizability. Which in turn helps to explain why the most prolific artists (Picasso, Warhol, Hirst) are also the most expensive: the more of their work there is, the more exposed to it people become, the more they’ll recognize it, and therefore the more desirable it is.

I do hold out some small hope that the Chinese art market will provide a correction to this syndrome — there, I’m told, the value of an art work is (at least sometimes) much less a function of its recognizability as the work of a certain artist, and much more a function of the way that it can fit itself into a long artistic tradition.

Once upon a time, the western art market worked that way too: there were genres, and artists worked within them, and then would be judged on how well they painted within the constraints of that genre. Those days, of course, are over now. But that doesn’t mean for a minute that the value of a Warhol is somehow forever. As with any other investment, what goes up can always go down.

COMMENT

While contemporary and super-high-value art (like Warhol) are highly speculative, there are thousands of 19th and 20th century artists in the $5,000 to $250,000 price range whose auction prices are stable, predictable and logical. 1930′s and 1940′s oil paintings by the popular Cape Ann / Gloucester Impressionist Emile Gruppe (harbor and winter scenes priced at $5,000 to $25,000) are just one of many examples of beautiful and affordable art that will probably appreciate over the next 10 to 20 years, although prices peaked at about 25% higher 7 years ago. As art goes into the seven and eight figures, it’s much more like The Emperor’s New Clothes where powerful dealers and influential critics artificially influence prices and often create thin and highly volatile markets. Learning about art, visiting museums and studying auction records is the best way to understand what is worth buying at relatively low risk and with a reasonable expectation of making a profit over longer periods of time. You will enjoy our new book The Art Hunters Handbook. It’s about how to find valuable art at garage sales and flea markets, but it can also point you in the right direction if you’d like to be an independent-minded, well informed art collector who does not follow irrational trends.

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Art market datapoints of the day

Felix Salmon
Feb 7, 2012 00:21 UTC

Many thanks to Zac Bissonnette for fisking the latest Bloomberg gushery on art funds for me, so I don’t have to. This fund isn’t going to produce disappointing returns: it’s probably not even going to get off the ground to begin with. Does Bloomberg’s Scott Reyburn have a clue what “unconfirmed commitments” are? I suspect they’re the fund-world equivalent of vaporware.

But the fact is that the intersection of money and art is a busy place these days. You have what John Powers cleverly calls Spot Markets, for starters — the global Hirst-spot bazaar is in full flower right now. And then there’s that $250 million Cézanne — a figure confirmed by “multiple sources” of Alexandra Peers, and which, as Marion Maneker says, serves to validate other nine-figure prices paid for important works.

Interestingly, the Cézanne is particularly special in that it’s a 19th-Century work: everything else north of $100 million has been 20th Century. This could be the beginning of a relative-value trade, where older masterpieces finally converge in value on the silly prices being paid for modern and contemporary works. Or it could just be an outlier: there are precious few undisputed masterpieces of this sheer size in private hands. The Cézanne is 130 centimeters wide — that’s over 51 inches, which is huge by the artist’s standards. (Some of The Bathers are significantly bigger, but all of those are in museums.) If you want a trophy painting, it’s still the case that you’re going to want something big.

So when Peers quotes the venerable Gary Tinterow describing the Cézanne as “the darkest, the most stripped down and essential” of its series, that’s all well and good — but the real driver of the $250 million price was, I suspect, its square footage.

Alice Gregory has a great piece in the latest n+1 magazine about working at Sotheby’s during the run-up in prices following the 2009 crash. Here’s a taster:

After a few months on the job, I was assigned a new duty—writing the essays that are printed beneath and between the reproduced images in the sale catalogue…

I sprinkled about twenty adjectives (“fey,” “gestural,” “restrained”) amid a small repertory of active verbs (“explore,” “trace,” “question” ). I inserted the phrases “negative space,” “balanced composition,” and “challenges the viewer” every so often. X’s lyrical abstraction and visual vocabulary—which is marked by dogged muscularity and a singular preoccupation with the formal qualities of light—ushered in some of the most important art to hit the postwar market in decades… It was embarrassingly easy, and might have been the only truly dishonest part of the Sotheby’s enterprise. In most ways, the auction house is unshackled from intellectual pretense by its pure attention to the marketplace…

Sotheby’s felt detached from the posturing that happens in Chelsea galleries and the gnomic garbage that counts for art-world conversation. Auction house employees don’t invoke half-remembered poststructuralism or make inapt analogies. They don’t have to. The prices speak for themselves.

We’re in a world right now where distinctions between art and money and value are becoming increasingly blurred, in a way which plays straight into the hands of the nouveau riche and the hedge-fund managers who love to splash millions on big and shiny work. This is a fad, and it will pass, along with former M&A dealmakers who think that owning an expensive art collection gives them the ability to make money flipping paintings on a six-year time horizon. Sociologically, it’s fascinating. But when the crash comes, it’s going to be very, very painful for anybody in the art world who’s gotten used to today’s excesses.

COMMENT

A nice Monet, never exposed to the public, fetches 9.8 million euros.

A huge Miro, supposedly the highlight of the session, fails to find an acquirer.

http://www.lemonde.fr/culture/article/20 12/02/09/un-monet-jamais-expose-au-publi c-adjuge-pour-9-8-millions-d-euros_16414 22_3246.html

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The hot-young-artists league table

Felix Salmon
Jan 20, 2012 16:54 UTC

Many thanks to Amy King at Artnet, who put this league table together for me, showing the artists who have grossed the most money at auction before their 30th birthday. (Technically, it’s total auction revenue up to and including the full year in which they turn 30.)

Name Nationality Birth year Auction revenue by 30th birthday
Jean-Michel Basquiat American 1960 $16,623,449
Gao Yu Chinese 1981 $2,333,052
Choi So Young Korean 1980 $2,103,046
Jacob Kassay American 1984 $1,777,942
Hernan Bas American 1978 $1,698,134
Ayako Rokkaku Japanese 1982 $1,206,408
Han Yajuan Chinese 1980 $962,410
Dan Colen American 1979 $864,271
Ilkka Lammi Finnish 1976 $662,156
Chen Ke Chinese 1978 $556,561

In first place, and vastly ahead of anybody else, is Jean-Michel Basquiat, who of course died in 1988 at the age of 27. The overwhelming majority of his $16.6 million was posthumous: $15.3 million came in 1989 and 1990. And dying young is not a career strategy I’d necessarily recommend to any artist.

Basquiat aside, there’s an impressively Asian tinge to this list, with 5 of the other 9 artists coming from China, Korea, or Japan. Notably, the appositely-named Choi So Young saw more than $2 million of her work sold at auction before she was 30 — an achievement which, historically, neither female artists nor Korean artists would ever dream of.

This does not mean that Asian artists have more success at a younger age than their US and European counterparts; it probably just means that hot young US and European artists have galleries which are better at keeping close tabs on their work and preventing it from coming up for auction. But still, it’s a glimpse at just how incredibly successful young artists can be, these days.

COMMENT

This is all in nominal dollars. Which only serves to underline just how far ahead of the pack Basquiat is. For everybody else, it doesn’t make much difference.

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Art market datapoints of the day, China edition

Felix Salmon
Jan 13, 2012 14:20 UTC

I suspect we’re still only in its early days, but there’s no doubt that we’re in a massive Chinese-art bubble right now. And for proof, all you need to do is look at the league table of the highest-grossing artists of 2011.

If you look at the artists who made the most money at auction in any given year, it’s normally pretty predictable, with Picasso at the top of the list and Warhol increasingly dominating. But here, courtesy of ArtPrice and Bloomberg’s write-up of ArtPrice’s results, is the top of the 2011 league table:

1. Zhang Daqian, $506.7 million

2. Qi Bashi, $445.1 million

3. Andy Warhol, $324.8 million

4. Pablo Picasso, $311.6 million

5. Xu Beihong, $212.9 million

This is in many ways the tip of the art-market iceberg, where most deals — especially in the white-hot contemporary-art scene — are still done privately, rather than at auction. The reason no living artist is on this list is mainly that living artists have gallery representation, and galleries don’t like buying and selling at auction.

But still, the rise of Chinese artists on this league table is nothing short of astonishing. The most expensive artwork sold at auction in 2011 was Qi’s Eagle Standing on Pine Tree; Four-Character Couplet in Seal Script, which sold for $65.5 million in Beijing in May; it beat a major Clyfford Still into second place. (And remember too that this is using a value for the yuan which in many ways is artificially low.)

And the sheer levels here! Picasso has never grossed more than $362.7 million in one year; both Zhang and Qi handily beat that figure in 2011, without anything approaching Picasso’s place in the canon. And the way that these artists came out of nowhere makes Groupon’s growth seem positively sluggish. Here are the Artnet reports for Zhang and Qi:

zhang.tiff

qi.tiff

And lest you think that the growth from 2010 to 2011 isn’t all that impressive, note the little footnote. The 2011 numbers are for the first half of the year only.

Precisely because these artists have almost nothing in the way of a long-term auction history, they’re not going to be showing up in the Mei-Moses art index for a while. That requires paintings to have been sold twice. But when that happens, we’re going to have some very crazy results. Either the index will soar, due to the bubble, or else the first datapoints will come when the paintings being bought today are eventually sold. And that might well be for prices much lower than we’re seeing right now.

Update: Marion Maneker doesn’t believe these numbers. “The tables mysteriously omit Gerhard Richter—a very important living artist—whose auction sales in 2011 were massive,” he writes. “So Artprice may have excluded living artists or have a faulty method for assembling the rankings.”

But the fact is that the tables don’t mysteriously omit Gerhard Richter. According to Artnet — which agrees with Artprice here — Richter sales at auction in 2011 came to a total of $199,897,823 — not enough to crack the top five. that’s a record for the artist, but you can see how it’s much more in line with previous totals than we’re seeing with the Chinese artists. This graph, of Richter’s auction sales, includes all of 2011:

Update 2: Thanks to commenter TWAndrews/Alex Tabarrok/Daniel Lippman for pointing to another possibility here:

There are rigged auction houses all over China and they become the most suitable places for elegant corruption. The briber, first of all, gets a fake painting either from a gallery or a fake painting factory. Then, s/he provides relevant document proof of scholars and experts to take care of the problem of authenticity. These scholars and experts are paid to confirm the authenticity of this fake painting. They falsify every historical detail, evidence of painting style and scientific verification of the materials used. The forged painting is then given to the official as a gift and is auctioned at a very high price. Eventually, there is always someone coming from nowhere who wins the bid. Again, the bidder is a trusted person of the briber. These auction houses get hush money before the whole corruption process is completed.

COMMENT

Isn’t the purchase of expensive art a scheme for managed bribery in China. Alex Taberrok had something on this here: http://marginalrevolution.com/marginalre volution/2011/07/the-art-of-bribery.html

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Art is not an investment, part 872

Felix Salmon
Jan 12, 2012 07:20 UTC

I’m not sure what’s more offensive, the SWAG acronym (it stands for Silver, Wine, Art, Gold), or Patrick Mathurin’s lede in Monday’s FT:

The art market defied the economic gloom to return 11 per cent to investors in 2011, outpacing stock market returns for a second consecutive year.

No, Patrick, it didn’t. Art doesn’t have returns, it just sits there, being expensively insured. It pays no dividends, and it can’t be marked to market, since the only way to find out the market price for an artwork is to sell it. Even the auction houses have no real idea what any given artwork is worth: look how many pieces fail to sell at auction, or sell for multiples of their estimate. For instance, Roy Lichtenstein’s I Can See the Whole Room . . . and There’s Nobody in It! sold at Christie’s in 1988 for $2.09 million, double its estimate of $800,000 to $1.2 million.

Besides, who are these “investors” who purportedly saw an 11% return in the art asset class in 2011? It’s not people who own art generally: a lot of people own art, but it’s not generally worth anything — we couldn’t sell it, for cash, if we needed to. A tiny sliver of the art world deals in works which really do have resale value, but it’s not true to say that even they went up in value by 11% in 2011, not with all the survivorship-bias and other problems in the Mei-Moses index Mathurin is citing.

Besides, Mathurin seems to be very bad at calculating returns even when he knows the sale price. That Lichtenstein, for instance, was sold again in 2011:

There were record auctions for paintings such Roy Lichtenstein’s I Can See the Whole Room . . . and There’s Nobody in It! which sold at Christie’s in November, making gains in excess of $40m for its seller, who bought it for $2m in 1988.

Again, no, Patrick, it didn’t. For one thing, the hammer price on the painting was $38.5 million, and it’s really hard to make a gain of more than $40 million when your gross income is no higher than $38.5 million. And then there’s the fact that Christie’s slapped a guarantee on the painting, almost certainly at $35 million. What that means is the seller only got 70% of the excess over that amount.

So the total amount going to the seller — assuming zero seller’s premium — would be $35 million plus 70% of $3.5 million, which comes to a total of $37.45 million. Subtract the $2.09 million purchase price, and you get a total capital gain of $35.36 million. Which is, admittedly, a lot of money, but it’s a good $5 million short of Mathurin’s $40 million.

And incidentally, if $2.09 million becomes $37.45 million over the course of 23 years, that works out at an annualized return of just over 13%. Again, that’s very good, if not spectacular. But that’s your winner. Set it off against your losers — and you’re always going to have more losers than winners — and your total art return is going to be substantially lower. If you bought $2.09 million of Apple stock in 1988, it would be worth more than $80 million today. But you didn’t just buy Apple, you bought lots of other stocks as well (even assuming you were buying stocks at all in 1988), and overall they didn’t do nearly as well. Single datapoints, as a rule, mean very little.

But if Mathurin can wheel out his Lichtenstein, I’ll wheel out my 2008 Lafite:

The greatest loser was Chateau Lafite 2008, which peaked in January 2011 at £14,043 a case and whose last average trade price, this month, was £8,108, a fall of some 45%.

I’m all in favor of buying art and wine, but they’re not investments. There’s never any shortage of wine shills and art shills who will talk about them as asset classes when they go up in value. All those people should be ignored. And there should be an absolute ban on talk of how the art market “returned 11 percent to investors” and the like. We should be getting smarter about this stuff — and, in fact, the art and wine press is quite good on such matters. It’s just the financial press which perennially falls down.

COMMENT

I do not know about art but certainly wine can be marked to market. When we look at statistics such as production and consumption growth (or a lack of) we can establish or at least forecast prices.

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Golden ticket economics, part 2: Damien Hirst

Felix Salmon
Jan 7, 2012 00:46 UTC

Yes, the Damien Hirst Complete Spot Challenge is a thing:

Visit all eleven Gagosian Gallery locations during the exhibition The Complete Spot Paintings 1986–2011 and receive a signed spot print by Damien Hirst, dedicated personally to you.

Carol Vogel, who says that the price of spot prints is somewhere in the $3,500 to $50,000 range, managed to get Hirst to explain the thinking:

Asked how he came up with the idea, Mr. Hirst responded in an e-mail: “I figured it would be pretty difficult to visit all the galleries, and totally admirable if anyone managed it, so admirable in fact that I thought they would deserve a work of art, so we came up with the idea to do the challenge. I’d love it if people manage it. I remember the golden tickets in Willy Wonka, maybe it’s a bit like that.”

And Greg Allen comments, calling the whole thing “a Black Friday riot for billionaires”:

How awesome that he invokes the utterly deranged Willy Wonka for this thing, which goes beyond difficult; I think it’d be positively hellish. Which is really perfect.

But does it have to be hellish? Even if you don’t have access to a private jet? I decided, with the help of Nick Rizzo, to put together an itinerary for an imaginary plutocrat — let’s call him Pictor Vinchuk — who wanted to curry favor with Hirst and take this bonkers challenge. The rules: he had to fly commercial all the way (I guess his jet’s in the shop), but he would travel first class and stay in the best rooms at the grandest hotels. And, just to make it a bit more interesting, he had to wait until after Davos to start his trip.

Mr Vinchuk’s itinerary starts in Geneva — an easy hop from Davos. We’re trying to make this trip as un-hellish as possible, so we’ve booked him in to the Beau Rivage hotel, arriving on Sunday January 29, where two nights in a lake-facing historical suite will run $10,471. Then on Tuesday January 31, we’ve booked Mr Vinchuk and his companion onto the short flight to Rome. Still, a pair of first-class tickets is $2,682. Another two nights in Rome, at the Hassler Roma Classic Suite, will cost $6,717.

And then comes the low point of the whole journey: there aren’t any flights with first-class seats from Rome to Athens! Poor Mr Vinchuk has to make do with business-class seats, at a minuscule $439.10 apiece. And then slum it at the King George Palace hotel, where his junior suite is a mere $469. All very low-rent. Fortunately we’re only spending one night there, before we hold our nose and get on the final business-class leg of the trip, two tickets at $655 each to Paris.

From here on in, things get much more familiar. There’s the premier suite at the George V hotel, which is $11,450 for two nights. There’s the pleasant train journey to London on Eurostar, $948 for two tickets in first class. And then there’s the lovely Linley Suite at Claridge’s in London, where we spend three nights, which is more than enough time to visit both the Britannia Street and Davies Street Gagosians. That stay will run us $7,288.

Then on February 8 we hop over the pond to New York. Those tickets are a pretty impressive $9,276 each. And we need to spend some time in New York, too, to catch up on friends and make sure to visit the three different Gagosians — on 21st Street, 24th Street, and Madison Avenue. So we’ve booked Mr Vinchuk in to a grand suite at the Pierre, which runs $16,077 for four nights.
On February 12 we leave for Los Angeles: a first-class ticket for that leg is $3,108, and three nights in a deluxe bungalow at the Beverly Hills Hotel is another $8,341. And finally on February 15 we hop a plane to Hong Kong — that’s $15,682 for two first-class tickets — in order to catch the show there before it closes on the 18th. We’ll spend two nights in the presidential suite at the Landmark Mandarin Oriental: that’s $2,524, checking out on the 17th.

Add it all up, and the trip comes to $108,572 for a 19-day itinerary, or about $5,700 per day. And of course there are incidentals, too: meals, cars, helicopters to Geneva, tchotchkes at Harry Winston, that kind of thing. But the main thing, of course, is that you end up spending more money touring the eleven different Gagosians than the value of the print you get for doing so. Otherwise, Damien might think you were taking advantage. And I think we’ve safely managed to do that.

Update: OK, back to the drawing board here: the eagle-eyed Greg Allen notes that the LA show ends on Feb 10, which means that if we get there on Feb 12, we’ll be too late. He also says that “the Spot Challenge is really a challenge to fill the vast emptiness of someone’s life, to provide purpose [sic of the biggest kind] to someone’s leisure time. It’s literally the answer for someone who doesn’t know what to do–not just with their money, but at all.” I feel offended on behalf of Mr Vinchuk!

Meanwhile, Jennifer Bostic reckons she can do the whole trip, for two people, for $13,206, including some pretty grand hotels at some decidedly cheap prices. Of course, the real cost here, as Allen says, is time rather than money. But I would be tickled very pink if a pair of underemployed hipsters did the whole tour for less than the value of the prints, sold them, and made a profit. Listen all y’all, it’s an arbitrage!

COMMENT

for a second, i wished i was an underemployed hipster. i want an itinerary with hostels, lets get this dirt cheap.

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How Alice Walton has improved America

Felix Salmon
Dec 13, 2011 16:26 UTC

Jeffrey Goldberg is on something of an anti-Walmart campaign — and there’s nothing particularly wrong with that. There’s a lot of things to dislike about Walmart, including the fact, as Goldberg notes in his latest Bloomberg View column, that its stores don’t have windows. But having decided that he doesn’t like Walmart, Goldberg is attacking the company and its founding family on grounds which don’t stand up to scrutiny.

For instance, take this seemingly damning statistic from Goldberg’s column:

In 2007, according to the labor economist Sylvia Allegretto, the six Walton family members on the Forbes 400 had a net worth equal to the bottom 30 percent of all Americans. The Waltons are now collectively worth about $93 billion, according to Forbes.

This sounds outrageous, until you stop for a second and take note of the fact that Jeffrey Goldberg, individually, has a net worth greater than the bottom 25% of all Americans.

According to the latest data we have, 24.8% of American households had zero or negative net worth — add them all together, and you get zero. Jeffrey Goldberg’s net worth, it’s safe to say, is greater than zero. And while it’s definitely a bad thing that one in four Americans have no net worth at all, I don’t think you can really blame Walmart for that. Indeed, Walmart saves money for poor Americans — while it might not be a great employer, there are many more poor Americans than there are poor Walmart employees. From a financial perspective, Walmart has been a decidedly positive force in terms of bringing down the cost of living for those on extremely limited budgets.

Goldberg’s thoughts, on the other hand, are in a higher place. The main subject of his column is the new Crystal Bridges Museum of American Art, in Bentonville — a museum which Goldberg (or at least his headline writer) considers “a moral blight”.

What makes Goldberg say that? Well, while the museum itself is beautiful, he says, and contains much beautiful art, the “American landscape has been systematically disfigured by thousands of hangar-sized warehouses bearing the Wal-Mart name”.

This might be true — although to be honest I can’t recall ever seeing a Walmart erected anywhere particularly beautiful; they tend to pop up, in my experience, in vast and dreary expanses of exurbia. But even if Walmart is a beauty-destroying monster, that hardly makes Crystal Bridges equally monstrous.

Warming to his theme, Goldberg notes that the messages of Norman Rockwell’s “Rosie the Riveter” and Jacob Lawrence’s “Ambulance Call” stands in contrast to, respectively, the way that Walmart treats its female employees, and the way in which it’s denying many of them healthcare coverage.

Does Goldberg celebrate the fact that these messages are being displayed for perpetuity in the town where Walmart has its headquarters, and might somehow serve to remind Walmart’s executives of the broader American context in which they’re making their decisions? He does not. Instead, he thinks that this art does not deserve to be in Bentonville at all:

I’m not begrudging Alice Walton her inherited wealth. What I am begrudging are her priorities. Walton has the influence to help Wal-Mart workers, especially women, earn more money and gain access to affordable health care.

But her response so far to the needs of the people whose sweat pays for her paintings is a simple one: Let them eat art.

Talk about looking a gift horse in the mouth. Firstly, it’s not clear that Alice Walton does have a lot of influence within Walmart’s senior managerial ranks. Could Walton really help Wal-Mart’s workers earn more money and get better healthcare? Maybe she could; I’m not convinced. But here’s the thing: in what way does building a beautiful museum prevent her from doing just that? The only way, it seems to me, is if we’re in some kind of a zero-sum game, here, where the alternative to building the museum would be for Walton to take the money she would otherwise have spent on Crystal Bridges, and give it directly to Walmart workers.

Except, Goldberg says quite explicitly that he doesn’t begrudge Walton her wealth. Does he want her to give it away or not?

Let’s say that Walton has spent a total of $1 billion on this museum. According to its latest annual report, Walmart has 2.1 million “associates”: if you shared $1 billion between them, that would be an investment of $476 apiece in giving them more money and better healthcare on an ongoing basis. Even if you could somehow manage to use 10% of that value every year on a sustainable basis, that’s less than a buck a week.

Walmart is a public company, now — it’s owned by hundreds of thousands of individual and institutional shareholders. (Goldberg himself is probably a beneficial shareholder somehow, through a pension plan or insurance policy somewhere.) Walmart has been good to Alice Walton, and she’s giving back to Bentonville and to America by building a fine museum in a part of the country which is relatively starved for cultural goodness. Her impulses and her museum are admirable, whatever you think of Walmart.

When the East Coast liberal elite, in the form of Jeffrey Goldberg, sneers at Walton’s generosity and calls her museum a moral blight, that only serves to make us seem even more elitist and out of touch. It’s pretty clear that Goldberg would have preferred Asher Durand’s “Kindred Spirits” to have remained in New York, rather than being moved to Bentonville — maybe we have finer aesthetic sensibilities up here, and therefore the painting would be better housed in the Stephen A. Schwarzman Building on the corner of Fifth Avenue and 42nd Street. I’m sure that Stephen A. Schwarzman, for one, would like that.

But Arkansas is America too. And it’s fantastic that a wide range of exciting American art — including the likes of Jenny Holzer and Kara Walker — is being displayed in the heart of Red State America. Well done to Alice Walton for making that happen. Arkansas is a better place, now, thanks to Crystal Bridges, and Walton deserves our thanks. Not brickbats.

COMMENT

I noticed Mr. Goldberg wrote another article today on Alice Walton. I sent him the following after the first article.

I read your article about Alice Walton and the new Crystal Bridges Art Museum and have to say your research is either lacking or you just have a problem with the Walton family and Wal-Mart. It is easy to jump on the bandwagon that paints the Walton’s and Wal-Mart as an evil empire, rather than look at the many good deeds the family, Wal-Mart and their foundation does for the general public. I realize this is just an opinion piece and you can simply write your view, but I believe it is irresponsible to continue to fuel the flames against this family and the company. Actually, if you were any sort of real journalist, you would actually write something that doesn’t cater to popular opinion. For full disclosure, I grew up in Arkansas and lived there until I was 26. I worked for the Walton family bank for 7 years and knew many of them personally. It was the best job anyone in my family ever had and had my husband not been transferred to Los Angeles, I would still be working for them. I now live in Chicago and work for one of the largest banks in the country.

As to some of your statements, I take offence that you believe it is a moral tragedy to build a billion dollar art museum in a recession. First, do you not think it created much needed jobs? I can tell you that it did, especially for those in construction, a business sector that has suffered considerably during the recession. Maybe you should reach out to some of those contractors who were hired to build Crystal Bridges and get their take on it. Second, were other billionaires on financial lockdown? Given my position, I first hand witnessed the upper 1% continue to build extravagant homes and spend significant sums on art (it was a buyer’s market, after all), but for their own personal collection. I also witnessed them tightening their belts by way of cutting back on their philanthropic giving. Ask anyone who works for a non-profit and they will tell you their major donors were no longer major. I commend Alice and the foundation for giving tremendous amounts of money throughout the recession. While the Walton Family Foundation did give $1.2B to build the museum in 2010 (which created both short term and long term jobs), they gave another $276M to education and conservation programs. With the museum built, the vast majority of those grants will go back to education and conservation like it did in 2009 when the foundation gave $327M to such programs. I do believe only the Gates foundation can claim more.

As far as the building itself, yes, it is indeed a beautiful building and you are right in stating it is the handsomest building ever built by Wal-Mart money. That is because Wal-Mart has never felt the need to build some grandiose monstrosity to flaunt their success, as so many of these enormous corporations feel the need to do. They don’t waste revenues on such extravagances; their buildings are for function, which should make shareholders happy. When companies build such lavish buildings, they are shouting, “Look at us! We are so successful and powerful, we just had to show you by this outlandish display of wealth!” Quite simply, it is nothing more than textbook megalomania. They could have contributed that money to charity.

It is also funny you take a jab at Wal-Mart for selling foreign goods. Did I miss the memo that Target only sells American goods? Or Amazon? Or any other major department store, for that matter? Also, working for Bloomberg, you should know that foreign trade is extremely important to the American economy and without it, the cost of goods would be exorbitant (think of all those foreign manufactures for GE and Apple). It is unfair and quite frankly, irresponsible, to make such a statement. You only fuel the flames of a deeply divided political state that at this point in time, needs more compromise than agitation. Your comments suggest that it is even a possibility to sell only domestic goods, which you well know is impossible.

When you speak of values and the paintings that are the antithesis of the Wal-Mart spirit, I would like to share with you a bit of my own story and suggest you reconsider what you believe to be values. As I said, I grew up in Arkansas. My mother was a single mother who worked for a small diner that did NOT have to pay the state required minimum wage because of the “tip exemption”. At that time, between 1973 and 1995, minimum wage for the state went from $1.20/hour to a whopping $4.25/hour – and my mother made less. Now, if you are working at Morton’s or a high end restaurant, you can make a decent living off of tips. However, if you’re working at a small town diner that serves a 60 cent hamburger, tips don’t amount to much. If my mother received a 50 cent tip, that was high; a $1.00 was almost unheard of. It was not enough money to live on and we lived with my grandmother for 8 years out of necessity. Also, the restaurant did not have to provide health insurance and my mother made just enough to not qualify for Medicaid; all medical expenses were paid for in cash. Needless to say, we were on a very tight budget. So to us, Wal-Mart was the greatest place ever built. We could buy clothing and home goods for a fraction of the cost and a loaf of bread for $.85, instead of $1.10 at the local “mom & pop” store. Which as a side note, the owner of the “mom & pop” in town was the only man who could afford a Cadillac, send his children to the University, and actually take a real vacation (not camping 2 hours from home). To this day, I don’t have a lot of sympathy for the mom & pop retailers of the world. Wal-Mart has done more for the lower 50% of this country than most any person, company or government entity, and a lot of us owe our sheer survival to them. Where my mother could save her tips, they went toward my college education. Literally, nickels, dimes and quarters paid for my education and I went to the cheapest school in the state. After graduation, I was hired to work for the Walton family bank and I made more in one week than my mother made in a month. Wal-Mart’s values was to always to provide the lowest cost and everything about their business model is driven by this mission. Having the lowest cost items means that you support the poorest families, allowing them to stretch their dollars farther. I, for one, am a fan of Wal-Mart’s values.

On your comments about the paintings in the museum and the seeming contrast between the work and the family values, I ask you this: Since when did an art museum have to hold the values and beliefs as the artists exhibited? By that standard, you should walk around the Guggenheim and ask that they take down at least half of all of the works. The Guggenheim fortune was built with old inherited wealth created by gold mining, which exploited workers and their environment, all for their own financial success. In fact, I believe most artists would have related more to Sam Walton with his creativity and vision, as well as his desire to help the poor (including starving artists). I’m beginning to think your issue might be that the museum was built in lowly Arkansas, built by a man of little to no means.

On your point about the inequality of women, I certainly do agree there is a disparity in pay between men and women. But to be fair, that is a national problem and almost every corporation in this country is guilty of it. Even this well regarded bank that employees me discriminates against females in both pay and upper management. It is not fair to only call out Wal-Mart alone on this. This company also does not offer coverage to part time employees, as great majority of companies do not.

My final point is in regard to your statement about how Wal-Mart made its money. Wal-Mart was so successful, not because it undercut its employees as you suggest, but by streamlining distribution, creating better technology and simply out-maneuvering the competition. Wal-Mart, particularly Sam Walton, revolutionized business as we know it. Wal-Mart paying employees’ minimum wage is what all companies pay their non-skilled labor. But when Sam and the family managed Wal-Mart, those employees also received stock options. My uncle worked for Wal-Mart for 25 years as a truck driver. At retirement, he received over $350,000 from options – 10 times what he had personally saved for retirement. There are many others who benefited from options as well: secretaries, shelf stockers, and cashiers received significant sums from options, well more than what my uncle received (there was a very memorable stocker that retired with $1mm). There were also those that took what little savings they had and bought additional stock with it, with many of them having 10’s of millions in Wal-Mart stock by the time they retired. Everyone in the company wanted to keep costs down, regardless of what they were, because they had so much to gain on the future success.

So, the next time you want to write an opinion piece, you should consider choosing a topic that might actually make people think and consider that there are multiple sides to every story. As a few suggestions, you can look within your own piece.

1) National pay inequality between men and women, and the fact that women stopped gaining ground in high level executive positions and government in 2006.
2) Large companies sitting on trillions of dollars that could be deployed for goods, buildings and jobs, but are not.
3) Wealthy families that contribute little to none to charity (a shame list would be great and a mile long), yet spend their dollars lobbying for regulations that would benefit them to the great expense of others.
4) Corporate mismanagement and fiscal irresponsibility.
5) The long term affect of low minimum wages and the exemptions.
6) Health care for people who do not qualify for Medicaid.

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When art galleries ratify forgeries

Felix Salmon
Dec 3, 2011 17:50 UTC

Patricia Cohen has uncovered the art-world scandal of the year: it seems as though Knoedler, the 164-year-old Upper East Side institution, closed abruptly on Wednesday in large part to protect itself against a $17 million lawsuit from Pierre Lagrange. Lagrange spent that sum on a Pollock which he then discovered contained two paints which had not been manufactured until after Pollock died. And now it seems that Knoedler regularly sold AbEx paintings procured by Glafira Rosales with the vaguest of provenance:

Neither Ms. Freedman nor Mr. Weissman can identify with precision the collector whom Ms. Rosales has said she represents. They acknowledged that they did not know of any paperwork that documented the provenance of those works. They have said they only know what Ms. Rosales has told them: that the works were bought by a unnamed collector in the 1950s directly from the artists.

In a letter written to Ms. Freedman in 2007, Ms. Rosales said the secret collector acquired the works on the advice of David Herbert, an art dealer who died in 1995. When the collector died, they were inherited by the owner’s son, whom she described as “a close family friend” who lives in Mexico and Switzerland and insists on remaining anonymous.

This “close family friend”, over the years, seems to have been able to come up with seven Diebenkorns, on top of dozens more works by the likes of Motherwell, Pollock, Rothko, Franz Kline, Clyfford Still and Willem de Kooning.

Given that these works had basically zero documented provenance, they were to a first approximation unsellable. Until — and this is key — they found their way to Knoedler, whose reputation was rock-solid.

Current and former Knoedler employees, including the above-mentioned Ann Freedman and Julian Weissman, would accept paintings from Rosales and sell them while quietly whispering all manner of unverifiable assertions about where they came from. This court document is quite a fun read: in the case of one Motherwell, it seems, Weissman first said that it belonged to Shaikha Paula al-Sabah, a princess in the Kuwaiti royal family, and then changed his tune:

By letter dated November 23, 2010, Weissman’s lawyer writes to Killala and reveals that the owner of the work when he had it consigned to him by Glafira Rosales was purportedly John Gerzso, the son of Mexican painter Gunther Gerzso. This is an entirely new twist in the story. Up until now, the owner was supposedly a rich Mexican closet homosexual very close to David Herbert whose family was in the sugar business.

The point here is that the art market, like the stock market, runs on a combination of trust and storytelling ability. The most expensive artists are nearly always those who can be credibly placed into central slot in the history of art; one of the main reasons that Abstract Expressionists in general are so expensive is because they have spent decades as the very heart of MoMA’s collection, which presented them as the pinnacle of 20th Century art, the artists standing on the shoulders of people like Picasso.

When gallerists sell paintings, they tell stories not only about the work, but also about the story behind the work, conjuring up romantic notions of dealings between Robert Motherwell and Mexican sugar magnates, brokered by “man named Alfonso Ossorio”. So long as the institution selling the work is trustworthy, potential buyers tend to take such stories at face value — and, of course, they have a vested financial interest in those stories being true, the minute they actually buy the piece.

Which is why it’s easy to see how Freedman personally owns a “Motherwell”, a “Pollock”, and a “Rothko”, all of which came from Rosales — like all the best salespeople, she probably truly believed what she was saying.

But Freedman would also have found it much harder to sell all those Motherwells if she hadn’t had the full institutional credibility of Knoedler behind her. That’s how galleries can be such lucrative businesses to be in: once you’re established, you can literally add hundreds of thousands or even millions of dollars to the value of a painting, just by hanging it on your wall. A fake Motherwell in a garage in Switzerland is worthless; in an Upper East Side gallery, it’s priceless.

Until the forgery is uncovered, of course.

COMMENT

ErnieD, the artistry is in the act of creation itself. An art market that is focused on dead works by dead artists stifles the new. This goes beyond the financial implications.

As MKCurious notes, plutocrats are attracted to art because it allows them to vicariously share in the greatness of others. They buy the story, the experience, the connection. Yet ironically this has nothing to do with the creation — the art — itself.

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