Money Lab: Detroit, bankruptcy, and the arts

A recent article in the New York Times about the Detroit bankruptcy and the Detroit Institute of Arts brings me back to a theme I wrote about in an earlier posting about food vs. flowers. As part of Money Lab, I am trying to examine how we value art, and this current crisis put that question into stark relief.

About 10 years ago I took some trips to Detroit in order to visit someone I was dating. Anyone who has been in Detroit knows that the contrast between the city center and the suburbs is a stark one. The city is abandoned and impoverished, and there are stunning border areas where one can follow a street past boarded up buildings and then suddenly find oneself surrounded by fancy houses with beautiful lawns, literally yards apart.

There were, however, two bright spots I remember in the inner city. One was an old Beaux Arts building, which houses the still thriving Detroit Institute of Arts. The other was the new Detroit Tigers’ baseball stadium, Comerica Park.

Both were built with city money of course, one at the end of the 19th century, one in at the end of the 20th. However, it is the art museum that has continued to be dependent on public money. After many years, with the help of the tax dollars of the surrounding counties, it is now relatively solvent. However, Detroit’s bankruptcy places the museum in another sort of alarming jeopardy; the pensioners, the ones who are so unfairly in jeopardy themselves because of the bankruptcy, see an asset. The art inside is worth $2 billion. And they want it sold.

That is a bit of a blanket statement, which ignores certain nuances. The pensioners are not the city’s only debtors. Nor are they a uniform block, I am sure plenty of pensioners might regard the virtual destruction of the museum to be a tragic event. But the question, in law, is clear: will Detroit be obligated to see off the art in the museum in order to help fund the pensions?

Putting aside that legal question, which no one has yet answered, I will pose two more: what is the more economically advantageous thing to do? And does either decision have more moral weight?

Economically, it would be a clear blow, I think. Getting rid of the museum’s collection would mean that one of the few remaining bright spots in the city has been doused. The museum would have to shut down, simply because of the logistics of museum funding.  Much of the art was given with the explicit caveat that it must not be sold, and selling it would have huge repercussions on private funding, partly because it would end any chance of future art donations.  Furthermore, the blowback from the Association of Art Museum Directors would be huge: their sanctions against the National Academy Museum were extremely painful, and the NAM's offenses amounted to just two paintings. And finally, and this is the nail in the coffin really, the museum is currently being funded by tax dollars from surrounding counties, which would end immediately.  They would complain (legitimately) that their tax dollars had been spent to sustain the museum, not to get Detroit out of debt. The downtown cultural district, or what remains of it, would be effectively demolished, and the peripheral effect on surrounding businesses and restaurants will be stark. There will be even less of a reason to go into the city itself, leaving it even more of a black hole around which more enticing suburbs circle, hoping not to get sucked in.

As a comparison, the baseball stadium cost $115 million in public funding. Because that public money was essentially given to a private owner, rather than holding the stadium as a city asset, the stadium is safe. The reason behind that expenditure was the purported economic benefits of the stadium. In actuality, studies show that the money cities spend on stadiums tends to be a loss, while the smaller expenditures on museums spur enough economic growth to be a gain. But since museums are non-profit while sports activities are definitely for profit, museums often are seen as leeches. If it is economically worthwhile, why doesn’t it make money? (as a side note, it seems that even the $500 million pledged to a new hockey stadium is safe)

Of course, there may be some relief provided for pensioners, and it is hard to deny the needs of the retired population, those who have worked hard in civil service or as teachers or policeman all their lives, only to see their promised benefits stripped away. How much relief will it afford? That, I think, is debatable. How will the money be used, through what filters will it be put, how widely does it need to be distributed….will it mean a substantive increase in pension, or in essence a one time payment of another couple of hundred dollars? And what economic penalties will they pay for the further decay of the city in which they live? I suspect the benefits may be more negligible, and the loss more acute, than people initially guess.

But let us say, for the sake of argument, the benefit is a significant one. In a case such as that, what moral right is there for us to demand the preservation of a museum’s art collection? That is a murkier question. Money was spent by taxpayers so that people would have a chance to look at pretty pictures. Selling the collection doesn’t mean destroying the pictures, it means removing access to them. Some would go to private collectors. Some might be bought by other museums. What it will definitely do is remove that opportunity in Detroit. To a pensioner who doesn’t care for art, the opportunity to eat a little better is clearly the preferred alternative. And even for those who do care for art…

Well, here is a scenario. I pose it to you. Guaranteed income for the rest of your life. In return, I ask one thing. I will destroy one painting by Vincent Van Gogh. It won’t be Starry Night. But it will be Van Gogh, and it will be beautiful.

What choice do you make?