The Self-Regulated Art Market Leaves Bureaucrats Concerned about Job Security
The Administrative State has nearly every aspect of American life under its thumb. Many Americans have developed Stockholm syndrome-like feelings toward the deep state, crediting clean rivers, uncontaminated food, and safe airline travel to the virtue-laden hearts of unelected bureaucrats with no constituents to answer to.
But what if we escaped our captors? What if a sliver of a market were permitted to remain free? The true “Wild West”? Such a market indeed exists in the hallowed halls of auction houses like Christie’s and Sotheby’s—the art market.
This market is steeped in mystery and money. Over $500M worth of art was looted from Boston’s Gardner Museum in 1990, never to surface again. Gallery owner Ronald Lauder paid $135M for Gustav Klimt’s portrait of Adele Bloch-Bauer—“the highest ever sum paid for a painting.” And over 1,200 pieces of art looted by the Nazis were found in a Munich apartment just a decade ago. However, outsiders jeer at the secretive, upper-echelon ways of the art world—calling it “utterly unregulated” and demanding complete transparency. But is this lack of regulatory shackles so awful?
One art industry player suggests that the market operates effectively through self-regulation: “Forget right or wrong; art is a handshake business, and if someone treats you poorly, don’t deal with them again.” Just as in other industries, most of today’s businesses are not predatory villains that need to be straightened out by cape-wearing heroes at administrative agencies. Businesses answer consumer demand with or without bureaucratic intervention— look no further than Bud Light and Target.
Art-market critics also bemoan that “there exists no regulatory agency . . . equivalent to the Securities and Exchange Commission overseeing art transactions.” And thank goodness. Just this term the Supreme Court heard all about the SEC’s unconstitutional crowning of agency-appointed Administrative Law Judges. The SEC crafts regulations, prosecutes alleged violations of those regulations, and then dons the robe of appellate adjudicator of those prosecutions. The inmates truly run the asylum. In The Federalist Papers, Madison warned that “the accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, . . . may justly be pronounced the very definition of tyranny.” To say that the art market must be legitimized by taking its lashing from unconstitutional regulatory bodies is illogical.
One art market critic cites the “need for trade organizations and associations to vet and accredit dealers, most prominently through art fair participation.” But what end would more licensing really accomplish? Does getting tangled in red tape ensure safety? The answer is likely no.
One public interest group aptly derides occupational licensing as “permission slips from the government,” with no correlation between the license and public safety. State agencies hit the economy with upwards of $184 billion dollars per year in licensing requirements that are not predictive of better services. Agency control via state licensing schemes is a small-scale version of regulatory suffocation like that of federal agencies. Safety does not always flow from more rules.
The art market’s laissez-faire environment appears to be thriving. It’s not a rite of passage or a means of legitimacy to force all industries to adhere to byzantine regulatory schemes concocted by bureaucrats who are beholden to no one. Agencies operate as mini-governments—often equipped with legislative, executive, and pseudo-judicial powers—yet the largely unregulated art market should serve as Exhibit A in the case against agency power. It proves industries untouched by heavy-handed regulation can flourish, leaving bureaucrats clutching their chests and concerned about job security. Perhaps, one day, the art world will no longer be an anomaly.
June 19, 2023