Di Sun Serafini
The US entertainment industry, like many other industries, went from being valued in the millions of dollars to valued in the billions over the course of approximately 34 years. In 1966, for example, Paramount was sold to Gulf + Western for $ 125 million, the equivalent of $ 6.485 billion today. At that time, the salary of a US public school teacher was $ 53.123 a year (or $ XNUMX today).
In 2019, Paramount's parent company Viacom was acquired by CBS for $ 11,8 billion. The transaction, all in equity, was structured as an acquisition of Viacom by CBS. The deal valued Viacom $ 11,8 billion. In the same year, a teacher's salary in the US averaged $ 65.000 (up to a maximum of $ 87.000). So, while teacher salaries have increased by about 22,5%, Paramount's value has increased by a whopping 1.080% in 53 years.
The inflated valuation of the other Hollywood studios was even more surprising. In 1966 Warner Bros. was sold for $ 32 million. Three years later, Steve Ross bought it for 400 million (about $ 3 billion in 2021). In 2018, AT&T paid $ 85 billion for Warner Bros., a 2.733% increase in 39 years.
In 1981, 20th Century Fox was sold to Marvin Davis for $ 720 million. Four years later, Davis sold it to Rupert Murdoch in two tranches: one for $ 250 million and the second for $ 325 million. The total sum is equivalent to $ 1,4 billion today. In 2019, Walt Disney bought 20th Century Fox for $ 71,3 billion - a 4.928% increase in 34 years.
In 1966, the average price per square foot of a New York City apartment was $ 25, or $ 205 today. In 2019, the average cost per square foot was $ 1.660. While a teacher's salary increased by 22.5%, the cost of a home in New York City increased by 709%, meaning you pay about $ 1,6 million for a 93-square-foot apartment.
It all started 50 years ago in 1972, when shareholders began to be dissatisfied with dividends and instead preferred growth in the value of stocks. But there are other explanations, such as those expressed in the 2013 book Capital in the 21st Century by French economist Thomas Picketty, which was also the subject of a Netflix documentary.
One of the most significant causes was the removal of regulation. In the case of television, for example, when Hollywood company ratings were aligned with average salaries, television was considered a well-regulated public service. With deregulation, the activities of television companies have turned into financial opportunities, which, combined with the reduction of taxes and the proliferation of tax havens, has led to the flow of idle capital to the stock market. Furthermore, untaxed profits could be considered unnecessary money, therefore not problematic if placed in risky, but high-yielding financial products, which, in turn, encourage speculative transactions that stimulate rapid increases in the value of shares on the stock exchange.
And this brings us to an interesting consideration of how the "capitalists" support conservative politicians since their narrative influences the workers' vote by leveraging populist sentiments (crime, socialism, immigration, Second Amendment, trade unions) in order to reach the objectives of the wealthier classes such as deregulation and tax reduction. This process allows a few to accumulate even more wealth, with great risks for society, as history has repeatedly shown.
As explained in Picketty's book, wealth tends to accumulate faster with the equity return on capital than with labor, so the rich prefer to invest on Wall Street (financial economy) and not Main Street (real economy).
The uphill road of the American Dems