Clinton Howell Antiques

Thinking about it, I don't think I want a leader as president of the USA. I want a manager, someone who will focus on education, infrastructure and health. If those aspects of the country are solid, the country will be able to weather a great deal. If not, this country will lurch into being an also ran in world affairs.

 

The inspiration for my blogs is the four mile walk that I take around the reservoir in Central Park here in NYC. When I think about politics, which I try not to do as a rule, I usually do not want to write about them. Herewith, nonetheless, is my contribution to the political races to date.

What I find interesting about the race for president is how the candidates perceive the electorate. For example, Romney and Clinton seem to want to be all things to all people. Giuliani, on the other hand, has cast himself in a Bushian mould of decisiveness. Edwards is working for the people and Obama seems a little lost. The NY Times doesn't seem to cover the rest of the field that closely and I hate to admit to it, but they are my primary news source.

How the candidates get elected is a very different thing, as our current president has proven, from how he/she leads. Indeed, that is what we really need, a leader. The camouflage of running in the primaries makes it very difficult to know if we have a leader. I would fault the current OOO (Oval Office Occupant) for his leadership abilities, not so much in being able to stir us into action, but more for the choices he has made on which paths to take the USA down. Our nation needs more than he can supply.

Ultimately, the electorate panders to itself in a big way. Hard choices have nothing to do with less or more taxes. Hard choices have to do with deciding to work for the future, not just for today. Toyota has worked for the future since it was founded and is now the world's leading seller of cars. We need to think about things in a fundamental way that might upset temporary profits but prove profitable in the long run. It is a lot to ask, but it is the right question.

The article that I cited yesterday, "The Secrets of the Auction Houses", quotes several econmists talking about the secrecy in the bidding process at auction. This secrecy can lead to the manipulation of bids, according to the article. One economist, George Akerlof, said that capitalism is great at making things that people want, but if they don't know what they want or what to pay for something, institutions will develop to take advantage of them.

Isn't this the essence of capitalism? Create excitement and sell something for as much as you can, viz. the Apple IPhone. That is what auctions do these days. I can have an item in my gallery for less than it may sell for in auction. Who cares? The buyer doesn't because he hasn't done his research and if he finds out that he paid too much, what can he do about it? (Ignorance in this case is bliss.) And then he can always claim that his is bigger...., I mean better.

In essence, there is no bad capitalism. If someone pays too much for something, they may take a loss when they go to sell the item. Then again, if there is enough hype when they go to sell, they may even make a profit. Is there a problem with this modus operandi? Of course there is, but reality says that there is a sucker born every day and that isn't the fault of either hype or capitalism.

An interesting article in the online Wall Street Journal by Daniel Grant entitled, "The Secrets of the Auction Houses" refers to the Nobel Laureate (2001) economist George Akerlof as calling the art business "bad capitalism". What he points out is that the urge to buy, the bread and butter of the arts and antiques business, supercedes the rationale of supply and demand, the basis for capitalism. The sobriquet, bad capitalism", is his name for this phenomenon where people pay more than what an item is worth.

And what a phenomenon it is! As I have noted many times, my admiration for Damian Hirst increases with every artwork he sells. His art befuddles me, but he is a master marketer. So too is Sothebys, as witnessed by numerous sales from the JFK detritus on down to the most recent Ariane Dandois sale which, to put it mildly, needed all the hype it could get as the goods were garnering very little dealer support. (Ms. Dandois' reputation as a great antiquaire was rather like the stage set for her sale at Sothebys. It was a beautiful sale.)

I have had a number of businessmen clients who have felt that the auction houses are a sure fire way of knowing that you are paying a fair price simply because you have an underbidder. Similarly, dealers have been roasted for buying things in salerooms and taking them to a show and asking double or treble for the item. Dealers can be so dumb, that is true, but they can be said to be quite knowlegeable from time to time. Truth be told, save for in ultra-hyped sales, I would say that ninety-five percent of all items sold over estimate were sold to dealers. That is what I would call the knowledge affect and it bears no relationship to the sure fire investment theory of having an underbidder.

I look at all this, and I could write on this subject for some time, sort of like I look at the stock market. Why didn't anybody tell me about Microsoft 25 years ago? Who should I lambaste for this failing? Similarly, when I look at the $50,000 my grandfather put into trust for me and my siblings in 1924 and see the princely sum today of $273,000, I have to say that the world just doesn't seem to know that "bad capitalism" isn't just in the art business. 

 

Alistair Clarke of Sotheby's deserves huge kudos for getting the Ariane Dandois sale with such success. Not one dealer that I talked to, not a single person, wanted one thing in the sale. It was, in the words of many, over polished, over re-gilt and underwhelming. And yet, the display was splendid. It just shows the sow's ear can have a silver lining.

The New York Times used to have a classified ads section at the back of the sports section when I was young. The ads were for army or government surplus and the stuff they had for sale was interesting, to say the least. My brother had the idea of ordering a parachute and a six foot weather balloon in order, I think, to make a hot air balloon, i.e. he would fill the balloon with helium while it was inside the parachute making, in essence, a hot air balloon. He was then either going to convince me to jump off the roof of our house holding onto the parachute which I guess he figured would afford me a soft landing. If he could not convince me of this plan, he was going to attach my mother's miniature poodle and see if it would float away. I was susceptible to his ideas, he always seemed to know where the spare Halloween chocolate was hidden after all, as they were compelling, but I foiled it when the package of the parachute and balloon arrived after he had gone away to school. I chose to inflate the balloon, it was huge and filled with talcum powder to prevent the rubber of the balloon from sticking to itself. I found my mother's Electrolux vacuum cleaner in the living room and switched the hose from suck to blow. Of course, the balloon exploded on me spreading talcum throughout the living room including the stucco ceiling. I wasn't too popular with either my brother or my mother but my father figured it was cheaper than putting me in a body cast although he might have wished to get rid of the poodle.

I wanted to tell this story because I still remember the care I put into blowing up the balloon. It was obviously an older balloon, it was surplus to some agency after all, and the rubber was not as stretchy as it might have been. I started by turning on the vacuum and letting the balloon inflate to about two feet. Thereafter, I tested it intermittently to see how close I was getting to blowing the balloon to smithereens. The fact is that it happened despite my great, albeit non-scientific, care. I liken the blowing up of the balloon to the current art market. It keeps on inflating, but sooner or later, the balloon is going to explode. If the capitalist system has a flaw, it is that it seldom checks itself when profits looks to be a slam dunk. I can assure you that when the balloon pops, it is really scary. It is also messy. I learned how to use all the attachments fo the Electrolux vacuum before my mother deemed the living room to be clean.

The auction houses have proven that it is expensive to sell expensive things. From real estate to PR to handling, personnel et al, the expenses are huge. Dealers have always known that it is expensive and yet they are often painted as being greedy, particularly by the auction houses. There is irony in this, but on a commission basis of close to forty percent, the auction houses, with no investment in the product, are looking less altruistic than ever.

The dealer response to the rise in commission has not been without criticism of the auction houses, but dealers have to buy goods and the auction houses are one of the market places for their product. That may be changing as I have had three house calls in as many weeks. The auction houses, however, are far less concerned at losing the odd bit of English furniture given the cost of handling such items. They know that top lots will come to them as they have branded themselves as sellers of the most expensive luxuries in the world.

There is, of course, a danger in such a reputation. Money can scare people as much as thrill them and there are plenty of people who do not wish to be seen spending large sums of money. The market for the expensive luxuries is also a limited market and although it may not be affected by the ups and downs of markets, there is quality of being on a knife edge in both finding and satisfying the whims of a super rich clientele. The commission rise to twenty-five percent is going to get the bottom feeders paying for this strategy, but that also may backfire as dealers will certainly be paying less for things.

The brave new world is one where money rules, not that it hasn't always been that way, but it is more brazen than ever. Frankly, it is more honest this way. The contemporary art market reflects the power of money better than any other market. From the outside, it looks like a shell game as collectors pay more for product that is hard to understand. The auction houses want to get in on this action, even have to a limited extent, but they must fear reprisals should the market collapse. It is a very interesting moment in time and as time goes on, the auction houses look more and more like dealers. That's rich.

A friend thinks that I am beating the wrong horse as regards the auction house commission increase. He feels that the auction houses are such a brand name that they take any opportunity they can to fatten their bottom line. This logic is unassailable, but I continue to believe that the motivation for the commission increase is fear. Simply put, there is not enough product of the really big kind that earns the kind of money that the auction houses need to pay their fixed costs. Every year, this is certainly true in English furniture, the sales are a little less spectacular.

The early, heady days of the internet had small scale auction houses either aligning with or being bought out by large scale concerns of which Sotheby's was the most aggressive protagonist. It was a strategy designed to corral product, particularly in provincial America. One New York expert shipped out of town to run such a company complained that his best stuff was taken from him to feed the high end sales in New York. In other words, no matter what anyone says, the auction houses earn their money from product. If they don't have it, they have to ameliorate their costs somehow.

However, the most telling part about the commission increase is that the auction houses do not seem to fear further anti-trust action. Or maybe, they fear it, but they need the raise desperately. They lost once and this most recent commission increase happened for the two large sale rooms within months. Hmmmm. Lastly and certainly not de minimus, is the role of the auction house as a representative of both the buyer and seller. Any seasoned buyer knows that the sale rooms, as represented by the fine print legalese in every catalogue, represent only the seller. Isn't that what dealers have been vilified for since time began?

The recent increase in the auction house commission by the two top sale rooms from twenty to twenty-five percent on the first $20,000 of a sale demonstrates, in my opinion, the knife edge that the large firms tread between profit and loss. It is clear that the competition for goods between the two sale rooms has forced them to reduce their seller commissions drastically. That is good news for the sellers, but for the auction buyer, it is made the goods more expensive than ever.

I have written all of this before but it bears repeating because the difficulty the auction houses face is not unlike what dealers have been facing in the last ten years. Basically, it is the fixed costs, the bricks and mortar, that is the dealers bane. Real estate has become extremely expensive to rent or lease and it has forced a great many dealers to go private. The auction house expenses are exponentially larger and the risk that much greater.

The brand names that the two auction houses have created may, in the end, be more difficult to sustain than ever. The mirror image that the two primary sale rooms represent in their products and in their marketing will, sooner or later, force one of the competitors to give up ground. Sotheby's was the first to crack when they declared that they would sell nothing for less than $5,000, but Christie's initial response of raising commission rates shows that they too, are feeling the pain.

Naturally, there is a beneficiary of this distress, in fact there are more than one. Small scale auction houses can use the internet to advertise their sales and gain a world wide audience. Since it has been primarily the professionals who back up the prices in the auction world and since it is the professionals that scour the world for product, it hardly matters where that product turns up. Dealers are also benefitting from this malaise. Consumers who want the goods have to find the goods and if sales are infrequent and expensive, dealers start to look like an attractive alternative.

The expression, plus ca change, plus c'est la meme chose, probably fits the situation too well. The robust market of the 80's and 90's has been displaced by a market of scarcity. The auction houses need to find the next big thing. That thing appears to be contemporary art, but that just might be betting on the wrong horse. That is a very full market and the dealers in that world protect their own with gusto. It may also be too late as that market looks like a bubble that could burst--then again, as the optimist said, it may only be half full.

The questions around the auction house increase of commission to twenty-five percent on the first twenty thousand dollars of a purchase have an indefinite quality. The why is probably the easiest of all the questions to answer and it directly relates to the lack of product available for the auction houses to sell. The cut throat competition between the two major sale rooms to land quality consignments has forced them to minimize the sellers commission, in many cases to almost nothing at all. The upshot is to get money off the back end what you are losing on the front end. That makes perfect sense.

The ramifications of this action are far more complex to analyze. The simplest answer is that people will bid less. Does that matter to the auction houses? No, because they are still getting their money. Does it matter to the consignor? Of course it does. Who are the consignors after all and where do they come from? The glib answer has always been death, debt and divorce but this is an oversimplification. There are usually attorneys attached to these three "D's" and if I were an attorney, I would look long and hard at a local auction house that might spur greater interest and higher bidding than to automatically choose one of the big two. It serves the interests of the clients and with the internet, a small scale auction house has the reach of London and New York venues.

It is clear that the auction houses are loaded down with fixed costs and this has made their situation less tenable than ever. The internet has come back to haunt them which was clearly demonstrated by a sale in Long Island this summer over eBay where the prices were high and the auction distinctly as successful as one held on the Upper East Side. The apple cart that used to determine the pecking order has been upended for the auction houses just as it was for the dealers in the 1980's and 90's when pickers stopped bringing their goods for sale into their shops and went straight to the top sale rooms. Now, market efficiency has determined that the goods don't need to be moved anywhere at all. All you need is a sale in your back yard over one of the many internet auction services.

This is a crisis for the large sale rooms who pay big rents and a few big salaries. There is no straightforward answer to the many questions, either. Sotheby's is going to get rid of the dross and not sell anything worth less than $5,000 and Christie's raised their commission. Who is right? As far as I can see, one of the sale rooms should get smart and hire Damian Hirst.

Dealer opinion on the latest increase of commission by the auction houses has predictably inspired outrage. What it says to me is that the auction houses are in crisis. As an English furniture dealer, I see a diminishment of product that yields four sales per year between Sotheby's and Christie's in New York while the huge expense of staff, handling, space requirements, etc. argue against the continuation of an English furniture department altogether. This is true in other areas besides English furniture.

Sotheby's answer to the crisis was to discontinue the sale of any item they thought worth less than $5,000, an action that has to be troubling to many of the diverse departments. Christie's answer was to raise their buyer's premium to twenty-five percent on the first $20,000 on any item. Christie's, I believe, is delighted that Sotheby's has gone up market as it clearly backs them into a corner as half the battle is getting people to come to the auction house. More product on offer at greater price ranges, more people will come. Sotheby's has taken advantage of Christie's auction and raised their premium similarly. Were they not making enough money before and if they weren't, don't they think that bidders will be deterred just a little bit? It smells of trouble to me.

The English who live in the ex-urb of Slough
Don't have a cough but an audible cow.
The ways of our language are so very strange,
Subject to rules yet subject to change.
I am told as a rule, I must say to-may-to,
To rhyme with that tuber, the utile potato.
But why should that be, as one is a root,
The other we know is an edible fruit.
They vary not only in the way that they grow,
They're different in taste, different in show.
The fruit has a drawl, it just feels like to-mah-to,
The root feels much quicker, best said in staccato.
The truth of what's right is hard to divine,
It's felt in the gut and not in the mind.
Tomato, potato, they aren't closely related,
So what is the need to have them collated?
If you are like me and the English of Slough
You'll choose the long "a" and say that's enough.

A marvelous quote from the obituary of P.B.MacCready, the designer of the ultra light airplane Gossamer Albatross that a good bicyclist was able to fly across the English channel in 1979 under his own power. "I'm more interested in a world that works than what sells."

My sentiments exactly.

It is always a mistake to talk politics if you are as apolitical as I am. Politics has become a blood sport in this country and I dare say that neither side wishes to take prisoners, they just want to win. Perhaps the dynamic is a good thing, but I find it boring and non-constructive. It rules out common sense.

Common sense is what you think everyone HAS to have to get by. It is the grammar of constructive life. I am always amazed how people will not buy English antique furniture in America despite the fact that there is a great deal of it here. What you are buying is an object and that object is just as likely to turn up in New York as London. The common sense of this is undeniable.

The U.S. constitution was written by honorable men trying to establish rules for a republic of honorable people. I am not so certain that today's politics have anything to do with honor which is not good for this republic. I would love for the partisans to stop harping on about dogma and to start focusing on the character of their teams.

Does creativity dim with aging? Mathematicians freely admit that they do not have the same creative insight past the age of thirty that they do in their youth. Artists seldom get better although Rembrandt certainly kept on being great. I think craftsmen improve with age in a thousand different ways, many of them not at all obvious to the casual observer. Watch an old stone wall maker and watch a young one. There is a difference and the older man is not at a disadvantage for his age.

The most comforting aspect of the decorative arts is the devotion to function and beauty. Flights of fancy that are impractical weed themselves out. Indeed, the pieces are clearly objective and although you can be subjective about, for example, the quality of carving on a piece (it requires connoisseurship to make this kind of judgment) anyone can determine functionality.

Creativity is ultimately difficult to define. The demands that we have on ourselves to make a living require us to plow a field and if we know what is good for us, we tend to plow the field that yields a predictable profit. What greater stifling is there to the creative mind than that? The dynamic, a distinctly human one, is of mediocrity.