Nouriel Roubini has gone back to the well on the art market regulation but he’s still not bringing up much water. Today he has posted another statement on art market regulation that is valuelessly vague and contains one important mis-representation. First let’s talk about Roubini’s ideas. “In addition to debates over whether or not the art market should be regulated,” Roubini writes, ” there will also need to be an ongoing debate about how the art market ought be regulated.”
Sure. But ever since Roubini’s Davos stunt with the Financial Times we’ve been waiting to hear the “how” and the “ought.” But that never comes. The reason Roubini produces no specifics would appear to be that although he is an art lover, he doesn’t seem to have done much research on how the art market actually works.
His post contains this example where talks about Sotheby’s and Christie’s famous price-fixing scandal that emerged nearly 15 years ago. In that case, the companies colluded on fixing fees, not the prices of art works.
Price collusion has absolutely occurred in the art market in the past — most notably between Christie’s and Sotheby’s auction houses. In the late 1990s, a criminal investigation was launched on both auction houses, and in the year 2000, both agreed to collectively pay $512 million to settle claims. In fact, the principal owner and chairman of Sotheby’s auction house was convicted of criminal activity and was sentenced to a year in federal prison.
This isn’t a matter of semantics. Fees are important to the price collectors actually pay for a work of art. But the auction houses’ collusion on those fees is not remotely relevant to the issues of money-laundering, fakes or “insider” trading that Roubini has raised.
Seven Things You Should Know About the Art Market (Econmonitor)