The Art of Luxury

If you want to know how the upper crust is doing, there are certain key market indicators -- luxury cars, private planes, yachts, estates, and... high-end art. And it seems that that last item is suffering some substantial losses of late (and I wonder if the people who spent all last summer spending tens of millions on Francis Bacon are starting to feel a little bit conned?). Why, Sotheby's is actually laying off staff, and Christies' is "consolidating" (which means "shrinking"). I don't know about the luxury car, private plane, yacht, and estate markets, but one might think they're experiencing some of the same woes, and the question then becomes "why?" Because, as any good conspiracy theorist knows, the rich not only will inherit the earth, but they already own it. And the rest of us are just serfs who were born into this world to do their bidding or suffer the consequences. And -- it follows -- the current world economic crisis is nothing but a conspiracy to take even more money out of the hands of the truly productive (i.e. the middle class and the real working class) and put it into the hands of the elite. Plus, historical experience shows that, in times of general economic trouble, the upper crust tends to suffer little, if at all. When were the longest and heaviest cars ever made made? Why, during the Depression, of course. That was also the era that introduced private planes and "land yachts", along with traditional yachts, and it was at the end of the private railroad car era. In other words, it was a kind of aggregate high water mark in the toys of the super-rich. And in terms of housing, they had moved from mere mansions to estates, and then to "compounds" with their own chapels and post offices, like the duchies of old Europe. But in this case -- not nearly as bad as the Depression, it is claimed -- the rich are feeling the pinch, or so they say.

But there's another possibility. In the case of art, it is at least as likely that, since most of the purchases are investment-based rather than taste-based (that's easy to establish!), the real concern is that the owners would be unlikely to make money on their investment. This, in turn, is based on the reality that a large proportion of purchasers of art are not private individuals but institutions -- museums, in other words -- that depend for their survival on donations from "the little people", i.e. the middle class. So the chain of logic is quite simple. The middle class is impoverished, which means the museums get less in the way of donations (from people who want to fancy they "own" one molecule of a Francis Bacon masterpiece), which means they have less to spend on art, which means the "art lovers" who throng into Christie's and Sotheby's have a diminished chance of making a bundle on whatever they've purchased, which nullifies their main reason for purchasing it. So, bottom line, the art market contracts. Now, if someone would compare the art market with the other luxury markets named above -- where resale is a factor but not the main one -- we might have a clearer picture of the situation. In the meantime, color me skeptical -- I don't think the rich are suffering any more than ever. I think they are above the fray, for the simple reason that the fray was their idea.