Let´s apply the “Piketty 5% rule” to the City of Detroit. More specifically, their art wealth:
DETROIT — A city-commissioned report on Detroit’s fine-art collection released Wednesday pegs its entire value between $2.8 billion and $4.6 billion, a sharp increase over a previous estimate that could create a headache for the city in bankruptcy court.Some creditors pushing the city to sell or lease its world-class art collection argue that the city previously lowballed the artwork by valuing only a slice of the collection at the Detroit Institute of Arts.
With the comprehensive estimate by Artvest Partners many times the earlier estimate of up to $867 million, the battle over Detroit art could play a big role in a trial on the city’s debt-cutting plan to be held next month.
On Wednesday, Detroit’s emergency manager who represents the city in its municipal bankruptcy case said the report wouldn’t change his support to keep the city-owned collection intact and transfer ownership to a nonprofit separate from the city. His office also noted that selling off the entire collection immediately would only yield a fraction of the overall valuation, according to the report.
“The report makes it abundantly clear that selling art to settle debt will not generate the kind of revenue the City’s creditors claim it will,” Bill Nowling, spokesman for Detroit Emergency Manager Kevyn Orr, said in a statement Wednesday.
Abundantly clear? Only to people who have already made up their minds. Imagine how much billionaires in places like New York and LA would pay for that collection. Imagine how much the Getty Foundation would pay. And 5% of $3.7 billion is $185 million a year, the annual income that (according to Piketty) could be generated by the midpoint of the Detroit art wealth estimate. What else could be done in Detroit for $185 million/year, forever?
When individuals have expensive art collections they are viewed as being “rich.” When the City of Detroit has a lot of this sort of wealth most pundits let the city get away with pleading poverty. The paintings suddenly don´t “count.”
Is anyone surprised by this? Is wealth inequality really about wealth inequality? Or is it about power and envy?
PS. Should Detroit be contemplating giving away $3.7 billion in wealth?
PPS. Detroit could sell a handful of the most valuable paintings for $1 billion and keep the museum mostly intact.
PPPS. TravisV sent me a good Paul Krugman post on interest rates. Of course this is also the market monetarist view.