Last week at Christie's contemporary auction in New York, Francis Bacon's "Three Studies of Lucian Freud" sold for $142.4 million, the highest price an artwork has ever fetched at an auction.
Naturally, news of the sale prompted a rush of criticism over skyrocketing art prices. How can a commodity with a value based almost entirely on taste demand such an astronomical sum?
Many argue that the industry has evolved into the Olympics of pissing contests for the world's billionaires. As Noah Horowitz said in Newsweek in 2011, "The people who are spending record amounts on art buy more than just that glow. (And much more than the pleasure of contemplating pictures, which they could get for $20 at any museum.) They've purchased boasting rights."
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It's a fair point, but it leaves out a well-known feature of the art world: That many sales are shrouded in secrecy. Many art transactions are unique because both the buyer and seller of a work can list themselves as a "private collection," says The New York Times. And many astronomically expensive works of art linger in storage facilities collecting value, rather than the walls of billionaire's mansions for guests to gawk over.
One reason, says The Times, may be that more of the illicitly wealthy are using the art world to launder money.
But art collectors don't have to break the law to jack up prices. As Allison Schrager explained in Quartz this summer, galleries keep a tight rein on prices, even in the secondary market.
Some tricks are even craftier. In USA Today, Michael Wolff explains other tricks buyers and sellers use to puff up prices:
In this way, some enormously expensive works seem less like an expression of taste or a bragging right, and more like a financial instrument — one that isn't subject to tough regulation, like most big investments. It's easy to see then why bankers are historically some of the art world's best customers.
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