Sold!

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Such events remind one that the art market in general, including the auction business, is not a profession. It is a trade, a worldwide industry whose gross turnover may be as high as $50 billion a year. Like other trades, it contains a large moral spectrum between dedicated, wholly honest people and flat-out crooks. It has never earned the right to be considered either self-policing or self-correcting. It needs regulation, but consumer affairs -- overburdened with the million complaints about small and large business violations that arise in New York, which it was created to deal with -- may not be equal to this task.

So is there a case for setting up an independent regulator -- an art- industry Securities and Exchange Commission? Not before hell freezes over, say the auction houses (although Christie's may be wavering a little on the point, since it has no guarantee and loan system to defend). Probably not, say many dealers. But others think the idea is worth serious thought, though none believe it likely to happen while Washington still clings to the conservative catchword of deregulation. Besides, says Eugene Thaw, the doyen of U.S. private dealers, Sotheby's in particular may have enough political clout in New York to defeat a further tightening of the rules.

Julian Agnew, the London dealer, believes that "outside regulators could create as many problems as they solve -- they may not know the market well enough. Ideally, self-regulation is better. But if a dominant firm stretches the unwritten norms of the past, ((self-regulation)) may not be enough."

What drives the art market, some people say, is the desire to invest. Of course, it is more than that; genuine love of art, and even a curious yearning for transcendence, fuel it as well. But does art-investment success have an upper limit? Is there a limit to demand? Economists Bruno Frey and Angel , Serna, in an excellent inquiry in the October issue of Art & Antiques, examine the case of Yo Picasso. Humana Inc. president Wendell Cherry, who bought it in 1981 for $5.83 million and sold it in 1989 for $47.85 million, got a "real net rate of return" (after commissions, insurance costs, inflation and so forth) of 19.6% a year. Handsome, but what about the new owner? If he sells it five years from now, the price must be $81 million before deductions for him merely to break even. And five years from then? Who gets left standing in this game of musical chairs?

This may be why so much of the auction action has shifted to contemporary art. It is a field that can still produce huge unsettling leaps of price that shake a market to its core, as publisher S.I. Newhouse's gesture of paying $17.7 million for Jasper Johns' False Start in New York a year ago proved. (It made sense, of a kind, for Newhouse to buy the Johns: he owns quite a few others, whose book value has accordingly multiplied.)