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A-Scalping We van Gogh

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One of the most reviled characters in urban America is the scalper. He’s the guy who buys tickets to an event, not for his own use, but to sell to others on the street.

He is indeed reviled — until a person realizes that he’s the only source of a coveted ticket. Then he’s a lifesaver. After the event, the buyer goes back to sneering at the lowly fellow.

The depth of animosity toward the scalper is evident in that label. Come to think of it, why hasn’t the politically correct crowd objected on grounds that it smears Native Americans?

Of course, scalpers do nothing objectively wrong. On the contrary, they contribute to society (while serving their self-interest) and deserve our admiration.

Scalping has become a renewed controversy in Washington, D.C., owing to a visiting exhibit of more than 70 paintings by Vincent van Gogh at the National Gallery of Art. We usually think of scalpers in connection with sporting events or rock concerts. But a highbrow art exhibit?

Advance tickets for the exhibit were snapped up at once. The National Gallery, however, gave away about 2,000 tickets each day, good for that day only. Naturally, people lined up early. Some folks arrived as early as midnight, even though tickets were not given out until 10 o’clock. Scalpers arrived early too, then sold their tickets on the street for a reported $75 to $100, though I was quoted $10, then two for $15.

Initially, the National Gallery gave each person in line up to six tickets, but it lowered the maximum to four. The Washington Post reported that this and other policy changes were made “to discourage scalpers selling the free tickets, and to get more genuine art lovers in to see the show.” Now there’s a questionable assumption — someone who buys a van Gogh ticket is less of an art lover than someone who waits in lines several hours. (The person who waits for four tickets apparently plans to give three to people who didn’t wait in line. Wouldn’t that make the recipients less-genuine art lovers?)

The fallacy underlying the prejudice against scalpers and their customers is the belief that the tickets are free. Of course, they are not. They cost hours waiting in line. The real cost of a ticket for any person is the value of the highest-ranking alternative use of those hours. This is what economists call “opportunity cost.” We all know the saying “time is money.” But what is money? Money is time. Money, or wealth, is the result of production, and all production takes time. In terms of human action, then, money is time in frozen form. If you were to lose a sum of money, you’d have to devote time to replacing the lost wealth rather than use that time for something else. Of course, money is also whatever you can buy with it. Both time and money ultimately are means to satisfaction from consumption.

Since we aren’t immortal and can pretty much do but one thing at a given moment, time, like wealth, is scarce. Its relative scarcity varies among people, but, alas, scarcity per se is a fact of life. If we spend an hour doing one thing, we can’t spend it doing another. It is gone forever.

When we understand time and opportunity cost, we can see scalpers in a whole new light.

By giving the tickets away, the National Gallery favored people with lots of time to wait (low opportunity costs) against those with little spare time (high opportunity costs). In the spirit of free enterprise, the scalpers gave the second group a shot at otherwise unobtainable tickets. Their profit was the money minus the value of the time they invested waiting for tickets and any other expenses. To criticize scalpers is to say that people who can’t afford to wait in line are less worthy of enjoying van Gogh than those who can’t afford to pay cash. I’d like to see someone defend that proposition.

“Seventy-five dollars for a free ticket is foolish,” said one woman, obviously unschooled in economics, who waited three hours futilely. But a busy van Gogh lover who wants to see the paintings more than anything else he can spend $75 on must think that unnecessarily waiting for three hours in the cold — possibly in vain — is foolish. One pays in time, the other in cash. What’s really foolish is trying to decide who is the more serious art aficionado. The reflexive prejudice against those who pay cash is a vestige of the ancient attitude that money and trade are ignoble. Such vestiges abound in our supposedly modern world.

“If you’re going to pay that, you’d at least want it to go to the National Gallery,” the woman added. But the Gallery chose not to sell the tickets. If it had sold them, fewer people would have lined up — the higher the price, the shorter the lines. On the other hand, imagine how long the lines would be if the Gallery had given away a $20 bill with each ticket!

Anything that people value commands a price. Of this we can be absolutely certain. That is what we mean by “value.” A value is anything people act to achieve; that is, anything they willingly give up something else to obtain . (This is a key idea in both Austrian economics and Objectivism.) What they give up is called the price. If the asking price isn’t in terms of money, you can be sure it’ll be in terms of time. That’s a law of nature that cannot be repealed.

Of course, the owner of a gallery or other facility may attach a condition prohibiting the transfer of tickets. No one who dislikes the rules is forced to take the tickets. I saw no such notice on the National Gallery tickets for van Gogh. (Maybe it was in fine print.)

But even had there been a notice, government ownership complicates things. The gallery is financed through the theft of taxation. Thus it, like everything government does, is a method of transferring wealth. We can say with certainty that government should not own galleries, but if it does, what is the status of an anti-scalping rule?

My quick response is that the rule is illegitimate. When government thwarts scalpers — which is just a pejorative for “entrepreneurs” — it capriciously favors one group of peaceful citizens over another. In theory, government should be neutral among lawful people. Those who pay for tickets in cash should not be treated as second-class citizens. True, the van Gogh scalpers profit from government transfers, but they do not cause the transfers. What they do is enable some taxpayers to get tickets who otherwise would have been excluded.

Finally, one cannot help but suspect that the animosity against scalpers is fueled by sheer snobbery. Who are the typical scalpers? A goodly number are street people. The elites may love “the poor,” but they have scant affection for low-income individuals trying to hustle their way out of that condition. The professional and amateur compassionados who support all manner of paternalistic handouts oppose anything that frees up people to improve themselves. The crushing of scalping comes from the same impulse as occupational licensing and minimum wages.

Oh, fie on those with the audacity to try to make it on their own!

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.