The Warhol economy

<p>Romesh Vaitilingam interviews Elizabeth Currid for Vox</p>
<p>June 2009</p>
<p>Transcription of an VoxEU audio interview [http://www.voxeu.org/index.php?q=node/3730]</p>
<p><strong>Romesh Vaitilingam</strong>: Welcome to &quot;Vox Talks,&quot; a series of audio interviews with leading economists from around the world. My name is Romesh Vaitilingam, and today I'm talking to Elizabeth Currid, from the University of Southern California.</p>
<p>We're meeting on a beautiful summer's day, June 2009, in London. And we're going to talk about a book about another city. It's called <em>The Warhol Economy: How Fashion, Art, and Music Drive New York City</em>.</p>
<p>Elizabeth, why don't you start off by telling us what you mean by this idea of the Warhol economy?</p>
<p><strong>Elizabeth Currid</strong>: Well I think Andy Warhol was someone who got it way back when. He understood three very important principles to how art markets work, and how the cultural economy works.</p>
<p>He recognized that no industry, whether it's fashion, art, or music, exists in a vacuum. That in fact they are constantly engaging one another. They have very synergistic trading of labor pools, trading of ideas, trading of materials, combining to create new products.</p>
<p>He also didn't think commodification was a bad thing. It wasn't selling out. It was the definition of success if someone would buy your painting. And he wouldn't have seen in the way that modern graffiti artists think that a graffiti artist who works for Nike is selling out. He would have embraced that. He realized it was making money and having a job.</p>
<p>And finally, and perhaps most importantly, he understood that the social milieu of art was just as important as the work grind between nine and five.</p>
<p>And perhaps that more than anything explains why you see disproportionate concentrations of art in cities like New York and London. That in fact they can't just work from Kansas, they have to be a part of a larger scene that actually has meaningful outcomes.</p>
<p><strong>Romesh</strong>: So your book is really all about the creative economy, the cultural economy. And in some way trying to say, this is much more important than we realized. This is as important sometimes as Wall Street in New York City.</p>
<p><strong>Elizabeth</strong>: Well that's what the numbers show too. I mean, one of the things I really noticed when I looked at the census was that... Look, there's no question that pre recession Wall Street generated massive amounts of money. Much more than art does. But in terms of just jobs, in terms of proportion of the work force, that art is a serious contender in New York's economy.</p>
<p><strong>Romesh</strong>: So this is something all about what economists like to call agglomeration economy?</p>
<p><strong>Elizabeth</strong>: Yes.</p>
<p><strong>Romesh</strong>: This idea of clusters?</p>
<p><strong>Elizabeth</strong>: Absolutely. In fact, what's very interesting, and the point I was making earlier, was that the fact that their social lives are so important to their economic lives is why you see the agglomeration.</p>
<p>Look, it's counterintuitive that starving artists spend massive amounts of money on tiny studios to be in congested areas, if there's not some other reason that outweighs all of the obvious irrational reasons to live in New York as an artist.</p>
<p>And that reason is, and what was told to me over and over again when I talked to people who worked in the creative economy, was that they needed to be there. They needed to be able to run into art dealers, to meet people who might offer them a job.</p>
<p>And much of this happens in a very serendipitous way, as opposed to any sort of machinations. And you could fly in on a Friday night, and leave on a Sunday and go back to Minnesota. That in fact you have to be there always in that social agglomeration.</p>
<p><strong>Romesh</strong>: So is this something that's happened over time in New York City? It's just got bigger and bigger? Or does it come in waves? I mean, my era of growing up was the punk era, here in the UK, but I knew all about what was going on over in New York. That seemed a big time. But did it go down a bit, come back. How does that work?</p>
<p><strong>Elizabeth</strong>: Yeah, that's a very good question. I think you could probably argue it both ways. I think New York has really had the competitive advantage over other U.S. cities as the art center, as London has, and Paris. You know, there's a couple major players in the art scenes.</p>
<p>But within New York, I do think you're right, that it ebbs and flows. And certainly the movements change. I would argue that oddly art works in a sort of bifurcated economy.</p>
<p>On the one hand you're right. The downtrodden late 70s, early 80s, where there were heroin needles on the floor. But also you had the East Village art movement at that time. Because rents were so cheap that all the artists were living in the same neighborhoods, and producing stuff, and having art shows.</p>
<p>And it was all very exciting. And that was an important moment that reverberates twenty years to now.</p>
<p>The flip side is that the boom that we saw in the 2000s allowed many artists to make a living off of their job. So it wasn't just that they were starving artists in a community. They were showing their work in Chelsea and major investors were coming in and buying their work. So I think that the dynamics change even if New York's position as a star market for art remains constant.</p>
<p><strong>Romesh</strong>: So tell me about the research tools and the research approaches that you use when you come to thinking about this issue. I mean, you quote an economist that I'm familiar with, Paul Romer, &quot;Increasing Returns.&quot; Ed Glaeser on cities. Tell me about the other approaches that you bring to bear on your research on this issue.</p>
<p><strong>Elizabeth</strong>: Well I definitely looked at it two ways. The first question you always have to answer before you start a research project is: so what? Why spend any time at all on this research question? And so that's where the numbers come in.</p>
<p>You say, well art is important. Look at it. Look at how much it powers New York's economy. Look at how many jobs it offers. It's meaningful in a very tangible way.</p>
<p>The other research tool I used was just talking to people. I mean, the thing we can't forget is that they know the answer that we're desperately trying to find. So the economists are so important in this sort of theoretical way, in a sort of what did other people do before me.</p>
<p>The numbers are important because they justify why you ought to do it. But if you talked to 100 artists, and they're all saying the same thing, well there's your answer. And so that was the tool that I thought was most important in the work that I did.</p>
<p><strong>Romesh</strong>: And tell me about the policy implications that you can take from this. I mean, are there lessons beyond New York City? Your focus very much is on New York City, and what the city might do. Perhaps start off there with what you take from New York City. But I'd be interested in what you have to say about other parts of the world, other cities.</p>
<p><strong>Elizabeth</strong>: The thing about New York is that it is unique. It is an incredibly tiny, concentrated place. What economists would call the inelastic geography, right? So if everyone wants to live there, that means that not everyone can.</p>
<p>So you get all these sort of strange things that happen there that don't happen in Vegas, for example, which has a lot of land, and anyone can, in some way, get on the fringe. But I think that even what I argue works in New York, which is the density of street life, the ability for the different art worlds to run up against one another, whether it's fashion or art or music, that that can happen in meaningful ways in other places.</p>
<p>So if you were to advise on economic development for Los Angeles, for example, what you would really want to say is, OK, we know that density works. We know that the serendipity of these people being able to interact with each other, that their social milieu counts, if we're going to pump money into the art community, what we need to do is figure out is ways to have art districts that aren't window dressing.</p>
<p>I don't mean art parades. I mean literally, if you're going to subsidize art, it's housing. Subsidize it in the same place, and subsidize fashion designers too.</p>
<p>I think the thing that the New York lesson is, that the mechanics that make New York successful are transferable. You can see that if it is density and heterogeneity and artists and an informal interaction that matters, that's the kind of policy approach you should be taking. It's not just pumping money into museums or art parades or tourism dollars.</p>
<p><strong>Romesh</strong>: Well, I was going to say, how much do you feel that the government or city governments should be making some active investments or subsidies? I mean, these are words that tend to scare economists as you know.</p>
<p>[laughter]</p>
<p><strong>Romesh</strong>: How much of it should be the usual thing, provide good infrastructure, good health care, good education, and maybe pull back on the regulations on the night time economy, which seems to be an important part of the drivers of New York's success in fashion and art and music.</p>
<p><strong>Elizabeth</strong>: Well, you know, I am of two minds of this. Of course, the economists are the first to say let the market happen. When my book was reviewed by James Scurlock that was what he said.</p>
<p>He said, 'Look, don't tell me Chelsea doesn't work. Chelsea works brilliantly.' And he's right. But the flip side is that New York now benefits from earlier times when the market worked was more in the favor of artists.</p>
<p>So, you know, the art market of today, in many ways is a function of the fact that there was an art community in the late 70's and 80's. So, right now what you see in New York and time will tell, is the fact that artists are priced out. You don't get any new labor pools if they simply can't afford to live there. This is actually where I do think intervention is quite useful.</p>
<p>One thing, and I don't think we have enough time to deal with this, but there is this path dependency that can't be ignored. I mean, is New York one of the greatest art markets and art economies in the world because it has been and so it reinforces itself? How much can, you know, is it possible for Kansas City to take that away from New York?</p>
<p>I think it's unlikely, but I don't think that's the question Kansas City should ask. I think the question should be how does Kansas City make the artists it has reach their potential and optimize their resources and their output and the community itself? That way they can take a little bit of New York and bring it there.</p>
<p><strong>Romesh</strong>: What about other countries that might be thinking we want to create a New York, we want to create a London; in another big area, software. Policy makers all over the world are saying we want our own Silicon Valley. I mean, I know you know.</p>
<p>Very few of them are actually going to achieve that. But in terms of, you know, can other places, other parts of the world create their New York or their London or their Paris?</p>
<p><strong>Elizabeth</strong>: This is an excellent point. I am really glad you brought up software, because I don't think that there's that much of a difference actually in how technology and creative economies like fashion and art work. In the sense that, if you look at Silicon Valley, what made it different? The fact that they did have this kind of informal social milieu.</p>
<p>There was so much cross fertilization going across different skill sets that they felt like they could innovate. That's the same sort of stuff going on in the art and fashion worlds of London and New York.</p>
<p>I think the thing that other communities have to be careful about, and other cities, is to not try to be another Silicon Valley or another New York. That is actually the wrong goal. The goal is how do you maximize what you have? If you don't have a single fashion designer, you are barking up the wrong tree. Honestly, it is chasing good money after bad to try to create things that don't exist.</p>
<p>I mean, what you need to do, and this is a very practical thing, is do your homework and see what strengths you have and how you might be able to use them. There is no point in creating a technology hub or a fashion hub in a place where you don't have the labor pool or the resources to do it.</p>
<p><strong>Romesh</strong>: Just going to, I want to dig a little bit more into the drivers of the success of some of the creative economies you are talking about. How much does it come down to particular individuals?</p>
<p>You call your book<em> The Warhol Economy</em>, so you're saying how important Andy Warhol was in his time. How much is the success of cities in creating a thriving creative economy dependent on particular individuals? Does a character like Michael Bloomberg, the current Mayor of New York have a big impact, do you think?</p>
<p><strong>Elizabeth</strong>: It's so, it's very easy post facto to trace a story and it sounds quite convincing. I think it is probably more of a zeitgeist and a critical mass than one or two key people.</p>
<p>I mean, I think Andy Warhol was very emblematic of a time, and he's emblematic of how art works. I think probably New York would have still existed without Andy Warhol. There would have been some other person that maybe we would have said captured the moment of the late 70s and 80s.</p>
<p>If you look at New York now, there definitely are star dealers. And, also London, I mean, the Sacci effect, the Gagosian, these people definitely have a signature role. But, like any economy and any agglomeration, you actually need the critical mass of people doing the same thing to produce anything meaningful.</p>
<p><strong>Romesh</strong>: And the role of some key policy maker like Bloomberg with his waterfalls in New York for example?</p>
<p><strong>Elizabeth</strong>: Right. Now, this is interesting. I do think policy is a bit different because it is a small number of individuals making macro decisions with a macro effect. In that respect, actually, having very smart policy makers can be extraordinarily beneficial.</p>
<p>Bloomberg is an interesting character because he really cares about art. And, he has been very clear about that, and he has invested in the arts. Not just public funds, but his own private money. I think that does send a strong signal that New York is very receptive to art.</p>
<p>But I also do believe that what places like New York have to do is pay attention to the influx of labor pools, because it is that that transforms everything. So if Bloomberg, we'll see what happens in the real estate market but let's just say the recession didn't happen.</p>
<p>What Bloomberg would have to look at is they can't even live in Williamsburg anymore. There's no critical community, because they're all just barely scraping by getting studios in far flung parts of Queens. How do we change this such that they can somehow gain entry again and create the density that is so important?</p>
<p><strong>Romesh</strong>: Final question, Elizabeth. What about this, the recession, the crisis the financial crisis which has hit New York more than anywhere in the world? What do you see as the likely impact on the creative economy of New York City? I mean, what can we learn from past periods of economic downturn?</p>
<p><strong>Elizabeth</strong>: Well, I think in the short run, it's going to be quite painful for artists who were able to sell art work. I mean, it's really going to do a spring cleaning and demonstrate who are the artists that are going to really stand the test of time, right? That said, I think for the mass of artists, the new labor pool, it is a blessing in disguise.</p>
<p>If New York becomes a less expensive place to live, and you know, it isn't so cost prohibitive, you're going to see artists able to actually live there again. I think we got to a point where they couldn't and we literally were not going to have any new labor pools.</p>
<p>I mean, fifteen years from now, if no recession had hit New York, it would be an ultra commodified area, where we were still living off baskiat. We need new baskiat. This might actually be the chance for that to happen, even if in the short run some artists are going to be like, 'I can't sell my work.'</p>
<p><strong>Romesh</strong>: Elizabeth Currid, thank you very much.</p>
<p><strong>Elizabeth</strong>: Thank you!</p>