Should the art market be regulated
Lack of transparency is a challenge
The art market is also challenged by a significant amount of intransparency, but lately there has also been an increasing price transparency. There are public auctions that reveal the pricing as well as the aforementioned art indices. However, the market is not yet completely transparent. What is still missing in the equation is regulation. In Roubini's view, however, it is precisely this kind of regulation that the art market will face. These should increase market transparency and perhaps also help to increase sales. Insiders in the art market might prefer to do without this transparency. But if you look at regulation from a broader perspective, and not just from the point of view of dealers and galleries, then Roubini rates the resulting impact on the art market as positive on balance. So it is advantageous to create more confidence in this asset class. In the long term, this could perhaps even serve the interests of art insiders.
What is missing on the art market is also a price model. Except for the mental pleasure that art provides, art does not result in a clear stream of income. Other asset classes, on the other hand, had both an income stream and an opportunity for capital gains. For example, stocks offer dividends, bonds offer interest payments and real estate rental income. From this point of view, art is more closely related to gold. At the same time, however, Kust is less liquid and homogeneous than gold. Copper is copper, gold is gold. A stock from Apple or from General Motors is always the same. On the other hand, one work of art is not like another, and there are different measuring standards even for an individual artist. There are differences between pictures or drawings, and at what point in an artist's career a work of art was created. Due to the lack of a pricing model, art is subject to whims, fashions and manias and there may also be a risk of bubbles. Asset classes with a pricing model are also exposed to the latter risk, but this applies even more if such a pricing model is missing.
On page 7: The art market was also not a one-way street in the past
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