Wednesday, February 10, 2021

The Trouble with Art Museums

A few years ago I had the pleasure of visiting the Barnes Foundation art museum in Philadelphia. It is extraordinary, and I highly recommend it. The history of this art collection and why it is where it is today is very interesting. And that's where the trouble begins.

Supposedly, the art collection is worth $25 billion! Wow, that's a big number. If your first thought upon hearing that is, "how would we know?", you are thinking like an economist.

If the museum burned to the ground losing all the art inside, would the loss to society actually be $25 billion? How would we know? Without robust and recent market transactions, we wouldn't. Yet that is just the beginning of the problem. 

The reason the art is in its current location is because in the 1990s the foundation was in financial trouble. One solution was to take some of the art on a world tour and then move the collection, the Barnes, to Philly. Maybe I'm just na├»ve or cynical, but things worth $25 billion aren't that hard to cash flow normally. 

The foundation raised about $150 million dollars to relocate a few miles into Philly from Merion Station, PA building a new facility and presumably using the remainder as an on-going endowment for maintenance. While there are many minor points to reconcile in all the legal and financial battle involving the move, there is a bigger point I'd like to make. Admission to the museum is at most $25. What's more, capacity is very limited--it is a relatively small space with limited hours of operation. At $25 billion in value why isn't there a line out the door and/or a very high-priced secondary market for tickets? Seems like a steal. Well, it is part of the art market; therefore, it probably is . . . just not in the way my questions would indicate. 

The art world is not designed--no system this involved ever is. It is the result of an emergent evolution. The spontaneous order that created it and drives it is not entirely or even largely benign. It is the result of a series of intentional manipulations and unintentional consequences from private, selfish, and in some cases socially-negative ulterior motives. Art museums aren't about public access to refined artistic culture. 

Allow me to begin the disillusionment with an excellent EconTalk, Michael O'Hare on Art Museums. The most forbidden thing an art museum can do is sell any of its collection. Even if it means some art will never be seen, it is somehow better that it stay in cold storage than be sullied by commercial activity. For the short version on why, see this episode of Adam Ruins Everything. For the longer version, see this article from Quartz

Value is like water--it seeks its own level. Interferences with this natural process can be expensive and often are resource destructive. One version of this is politically powerful people, who are otherwise unwilling to put their money where their advocacy mouth is, working to stop market transactions. Consider also cases like when the city of Detroit's bankruptcy reorganization had creditors pursuing the collection at the Detroit Institute of Art

This is the kind of example where preventing "priceless" collections from being sold or commercialized might mean very hard choices for governments facing enormous pension liabilities. If those assets are off limits, there are two big problems. The first is how the liability problem gets solved once a great option (selling off valuable assets) is removed. The second is how well can that same entity be a good steward for the art. They have already gotten themselves into financial difficulty, and now they are additionally constrained by having to at least store the art. 

I enjoy art museums generally and some in particular. The idea of art museums is something I support in theory, but in practice it has become rather fraught with very undesirable aspects. The pretentiousness is not just a bug. It is a feature of a bigger bug. Art museums are about exclusion despite the conventional marketing otherwise. Perhaps they are simply fancy, tax-favored institutions for hoarders? Malcolm Gladwell's Revisionist History makes the case in two episodes

Speaking of taxes, that is yet another troubling aspect of the art market with museums playing a key role. I'll explore that in the next post



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