Within the industry and academia, there's been plenty of recent talk about the need for increased regulation of the art market, particularly here in the US. The arguments have merit. Yet they also tend to jump directly from the current state of affairs to an idyllic future where all parties have settled into the new bureaucratic regime with no side effects. So every time I encounter one of these arguments, I wonder the same thing: What exactly happens during the transition phase?
I think Germany is now giving us all a decent preview of the answer––and that answer is "total panic."
The foreshadowing comes courtesy of key German officials' continued consideration of a strict amendment to the country's existing "cultural protection" legislation. For the uninitiated, cultural protection (or "cultural heritage") laws generally empower bureaucrats to block exports of objects judged to have significant historical or aesthetic value that their nation would lose, either temporarily or permanently, upon shipment. If you can't export, you can't exhibit or sell internationally––hence the fact that prominent German gallerists (like Michael Werner), collectors (like SAP co-founder Hasso Plattner), artists (like Georg Baselitz and Gerhard Richter), and now art fair organizers (like Koelnmesse's Gerald Böse) have all drawn their swords at the prospect of a cultural protection statute that breathes real fire.
Crucially, legislators can also conjure any criteria they want for determining what qualifies as a cultural treasure. In this case, artnet News's Henri Neuendorf reports that, "The section of the current draft that nearly everyone involved in the German art market takes issue with is the requirement of individual artworks older than 70 years or valued over €300,000 to undergo a government appraisal process before they may be exported to another European country." That appraisal process would effectively allow officials to travel-ban any high-value artwork any time, for any subtextual reason, forever.
Verbal criticism is one thing, but we may now have some evidence that Germans are channeling their resistance into pre-emptive action. Neuendorf pointed out earlier this month that three high-end pieces sold at Christie's London's latest Impressionist & Modern Art Evening Sale were directly ripped out of German museums so they could be perched on the auction block. All three were more than 70 years old, and their prices all easily crested the €300,000 mark (even without buyer's premiums attached), meaning they would have been subject to government review if the cultural heritage amendment were already in effect. One of the works, Ernst Ludwig Kirchner's "Banhof Königstein" (1916), had even been on loan to the Städel Museum for the previous 75 years.
Now, Neuendorf rightly points out we can't prove that a fear of stricter regulations triggered these consignments. Nor can we prove another data point he mentions (and caveats): the claim made by an executive at German auction house Grisebach that over €1 billion in artwork had been rushed out of the country since the public first learned of the possible amendment. But even if neither of these items is 100 percent accurate, they sculpt the optics in a way that strengthens the case for panic––in Germany now, and in other nations that consider regulation in the future.
Given the US's perennial status as the global art market's center, that means its legislators could actually unleash industry-wide chaos if American dealers and collectors react similarly to their German counterparts. For context, the most recent TEFAF Art Market Report found that, in 2014, Germany accounted for only 4 percent of the global fine-art and antiques market's export value, and just 1 percent of the worldwide auction sector's value. The US, on the other hand, accounted for 32 percent of the entire industry's export value and 35 percent of the global auction sector's value––good for first place in both categories, as usual. Just as in the financial markets then, an American art-market panic would be poised to flash-flood into a worldwide panic.
Objectively speaking, that's not a legitimate reason for US lawmakers to shy away from regulation––not if the industry would ultimately benefit in the long term. (And I tend to think it would.) Change is difficult and scary by definition. But in the short term, it does suggest that if or when American officials begin a serious conversation about reining in the art market, they'd temporarily be trading one type of anarchy for another.