Blog from April 2012

There are 7 blog entries from April 2012

Wall Street vs. Hollywood?
April 12th, 2012 | View Post
A few weeks ago my father and I were discussing the influence that American corporations have on politics. It's a pretty important topic these days given the rather bleak state of the economy and the seemingly endless corruption being uncovered. Between the Tea Party, the Occupy Movement, and everyone in between, nobody really seems happy with the way the government is conducting its business. And in my opinion, rightfully so.

But as we continued chatting, we discussed the fact that for whatever reason, voters instinctively tie Wall Street CEOs to the Republican Party and Hollywood celebrities to the Democratic Party. It's one of those things that most of the voting populous just seems to accept. Obviously there are notable exceptions to this rule, but I think most people would assume that if you work on Wall Street, you're voting Republican, and if you work in Hollywood, for a Democrat.

While there are undoubtedly some social issues that could be addressed, the biggest problem in 2012 is hands down the economy. Liberal friends of mine often bring up the huge disparity of wealth that exists within Wall Street corporations, how that gap is widening, and how it is being used to control Washington. The data seems to corroborate this and I definitely believe it's a problem we should be [intelligently] discussing as a nation. But my father was quick to add to our discussion that this same disproportion of wealth is rampant throughout Hollywood as well. The difference is that nobody really seems to notice, much less care. Curiously, we even go so far as to celebrate this disparity with the affectionate term "celebrity".

This raises a pretty interesting philosophical question. If two groups are ultimately responsible for the same fiscal gluttony, why is one celebrated and the other castigated?

Since the crux of our discussion was riding on the back of conjectures and assumptions, I thought it would be interesting to actually do some research on the matter. That is, how do the top dogs of Wall Street and Hollywood actually stack up against one another? Is there a difference between them and if so, what is that difference? After a bit of online research, I constructed this table of the top twenty Wall Street and Hollywood salaries of 2010 (it was difficult to find consistent data for 2011). The results are pretty interesting.

Wall Street Hollywood
CEO Company Employees Millions Celebrity Title Millions
Philippe P. Dauman Viacom 10,900 $84.5 James Cameron Writer, Director, Producer $257.0
Ray R. Irani Occidental Petroleum 11,000 $76.1 Johnny Depp Actor $100.0
Lawrence J. Ellison Oracle 111,297 $70.1 Steven Spielberg Director, Producer $80.0
Michael D. White DirecTV 25,700 $32.9 Christopher Nolan Writer, Director, Producer $71.5
John F. Lundgren Stanley Black & Decker 36,700 $32.6 Leonardo DiCaprio Actor $62.0
Brian L. Roberts Comcast 126,000 $28.2 Tim Burton Director $53.0
Robert A. Iger Walt Disney 156,000 $28.0 Adam Sandler Actor, Producer, Writer $50.0
Alan Mulally Ford Motor Co. 164,000 $26.5 Todd Phillips Writer, Director, Producer $34.0
Samuel J. Palmisano IBM 426,751 $25.2 Taylor Lautner Actor $33.5
David N. Farr Emerson Electric 133,200 $22.9 Robert Downey Jr. Actor $31.5
Howard Schultz Starbucks 149,000 $21.7 Will Smith Actor, Producer $29.0
William C. Weldon Johnson and Johnson 114,000 $21.6 Joe Roth Producer $28.5
Louis C. Camilleri Phillip Morris International 78,300 $20.6 Kristen Stewart Actress $28.5
Randall L. Stephenson AT&T 256,420 $20.2 Jerry Bruckheimer Producer $27.5
Miles D. White Abbot Laboratories 90,000 $20.0 Robert Pattinson Actor $27.5
George W. Buckley 3M 80,000 $19.7 Jason Blum Producer, Writer, Director, Producer $26.5
Louis Chenevert United Technologies 199,900 $19.5 Tyler Perry Writer, Director, Producer $25.0
Robert P. Kelly Bank of New York Mellon 48,700 $19.4 Jennifer Aniston Actress $24.5
Muhtar Kent Coca-Cola 139,600 $19.2 Jon Favreau Director, Producer $24.0
Robert J. Stevens Lockheed Martin 126,000 $19.1 Nicolas Cage Actor $23.5
Total: 2,483,468 $628.0 Total: $1,037.0
Average: 124,173 $31.4 Average: $51.9
Source: Source:

I was actually pretty shocked by the side-by-side comparison. Certainly we're all aware of the amount of money that celebrities make, but I was a little surprised to discover that the Hollywood list was significantly better than the Wall Street list. Even more surprising is that the Wall Street figures include base salaries, bonuses, yearly stock grants and options, and even estimated company perks. The Hollywood figures only include estimated earnings from movies and specifically exclude special appearances, television works, and perks.

A side-by-side graph of the top 20 Hollywood vs. Wall Street salaries in 2010
(ordered from highest salary to lowest)
(Download High-Res)

Of course there are plenty of other factors that can be considered too.

For example, Wall Street corporations are frequently condemned for allowing huge disparities of wealth between their employees. In other words, while the CEO might be making tens of millions of dollars annually, those working just as hard at the bottom may be struggling just to feed their families. I would not disagree that this is a major concern of our long-term economy. However, having been an extra on a movie set before, I know for a fact that I was only paid minimum wage for my work and suspect this is pretty consistent across the board. Moreover, and having lived in Hollywood, I'm positive that your average "actor" is flat broke. Therefore it would seem to suggest that the same income gaps probably exist in Hollywood as they do on Wall Street. So why is one fundamentally better than the other?

Another common point of critique is that corporate leaders are consistently sending American jobs overseas. This is definitely a political point of contention and another serious issue we should be trying to intelligently address. But again, I'm not so sure Hollywood operates on a much different principle. Many of the 2010 and 2011 blockbusters I researched were filmed in exotic overseas locations. In those particular cases, the national and local economies of foreign nations were the beneficiaries, not the United States. I would also suspect that foreign film crews are predominantly used in overseas shoots as well (albeit have no specific evidence to support this claim). But again, couldn't Hollywood just fly entire film crews and cast members (even the extras) abroad? Naturally the answer is yes, but much like Wall Street's argument, their margins would significantly suffer. But why is this an acceptable practice in one realm and not the other?

We might also consider the topic of actual employment numbers (included in the table for reference). While I unfortunately was unable to locate data on specific movies, various online searches suggested a modern summer blockbuster might require between a few hundred and a few thousand cast and crew members. But for sake of argument, let's assume a big Hollywood blockbuster is going to require 10,000 people and that the top billed actor is willing to settle for just $20 million (these figures should be greatly skewed in favor of Hollywood). Sam Palmisano, the CEO of IBM, gets paid $25.2 million annually - a tremendous sum of money no doubt. But we might also consider that he essentially presides over more than 426,000 employees (not to mention shareholders)! The per-employee financial difference here is so great that it can actually be measured in orders of magnitude, and that's making very generous assumptions in the case of Hollywood. So again, I am in no way attempting to justify Wall Street, but this same Hollywood disparity is phenomenal, especially if we consider a "per employment" sort of scenario.

We could even delve into the topic of corporate subsidies if we wanted to, but once more, Hollywood gets tremendous incentives and tax breaks to do what they do. Not only that, but they have the convenience of regulating their own industry whereas Wall Street at least has to contend with the SEC and a few other governmental bodies.

The bottom line is that I love Leonardo DiCaprio as much as the next guy, but I sincerely doubt he is going to give up the earnings of his next $50 million movie deal so that his set gaffers can get paid better. No more than the average CEO is going to give up his $50 million dollar salary so that the company electricians can get paid better.

The fact is that both Wall Street and Hollywood have a lengthy list of economic pros and cons. In some cases those pros and cons overlap, and in other cases they're unique to the industry. The point is that neither is better than the other when it comes to addressing the dramatic income gaps that appear to be widening in the United States. And yet for some reason it seems that the country remains deeply divided on which side is "good" and which side is "bad", which side is celebrated and which side is condemned.

As with most of my writings, my point here is not to make a case in favor of one side or the other. Rather, my contention is simply that as a nation, we are so incredibly susceptible to marketing and hyperbole-driven agendas that we've become deaf and blind to the realities of our own frustrations. We completely ignore the fact that both sides are willing participants of nearly identical agendas. I believe our greatest societal flaw is that we try to rationalize why one side is somehow better than the other one, completely ignoring the possibility that perhaps there are some pretty singular agendas floating between the two of them.

Personally, I commend anybody who is able to play the system for what it is and come out millions of dollars ahead of everyone else; I only wish I were clever enough to do the same. But having succumbed to a life far from that reality, I just wish my fellow countrymen and women would consider the fact, even if for just a moment, that perhaps their political team of choice isn't really all they've convinced themselves it is. I think that would truly be worth something we could all benefit from.