The Grand Illusion
A recent Associated Press news story highlighted a fact that we all know – CEO pay has been going up again ever since a brief two year decline following the initial 2007 economic meltdown, and is now at its highest level ever. In 2012, according to data from Equilar, an executive pay research firm, the “average” CEO made $9.7 million, up 6.5% in 2012 from 2011. By comparison, the pay for all U.S. workers rose an average of 1.3% per year over the last three years.
Even more interesting is the fact that the two highest paid CEOs were from the entertainment and media industry, with the highest compensated CEO raking in just over $60 million [not including deferred stock compensation]. In fact, five out of the top ten were in entertainment and media. Another interesting fact is that the area with the highest average CEO pay is health care, while the lowest is that of public utility CEOs, not that they’re exactly impoverished with an average pay packet of $7.5 million.
There are a number of conclusions one might draw from this, but the one that stands out, at least to me, is that the highest paid executives come from the field that provides the least tangible value to its consumers. We need food, water, shelter, power, heat, and medical care. We don’t physically need packaged entertainment. While everyone complains about the costs of health care – and in most cases those costs are far too high – especially when one considers the pricing model of the pharmaceutical industry, where U.S. consumers foot the bill, and the rest of the world gets lower-cost prescription drugs – health care does provide a tangible benefit and has improved our lives. I’m not sure we can say that about the U.S. entertainment industry.
But entertainment – and today’s media is in fact entertainment, including almost all so-called news – obviously fills a psychological need – and one for which people are willing to pay – and one that is extraordinarily profitable – just like the illegal drug industry. Come to think of it, there’s a certain similarity. Both have products that make their consumers feel good, and both have negative long-term effects… and the content of both is essentially unregulated… and both are highly profitable for those at the top.
And like it or not, how we as a culture spend our money and reward those who provide goods and services says more about us than we’d like to admit.
I’m not sure I entirely agree about people not needing entertainment.
I think entertainment – whether it’s video games, television, comics, fiction, and so forth – is very important for mental health. And I think with a lot of people feeling squeezed due to near-worldwide financial issues, a constant stream of misery via the “news”, political incompetence and so forth, it’s important that entertainment takes people’s minds away from problems.
After all, a healthier mind often means a healthier body, and it can alleviate physical problems, too. Someone who is happier in their life will be less likely to over-drink, smoke, become violent and so forth.
I do think you have some points, though. We are more willing to pay – and pay highly – for items that are largely non-essential.
“essentially unregulated” – shouldn’t the media be as nearly unregulated as possible? Or what’s the First Amendment about if not that?
For that matter, isn’t paying for any product, service, or salary that doesn’t result in illegal goods or services, itself a form of free speech? That is to say, what business is it of government how much CEOs get paid, or even how big political donations are, as long as absolute transparency is required?
If the media is largely frivolous and unedifying, that would change if enough of us chose to change what we watch and listen to.
Given the daytime talk shows that show such enthusiasm for parading the most freakish people they can find, I’m of course not optimistic about the interest in improving the quality by being selective. But it’s difficult to imagine any way to regulate in favor of any particular quality where the effects of the regulation (let alone trusting future regulators and their political bosses not to abuse that power) wouldn’t be worse than the effects of the present trash.
I wasn’t making a suggestion, just a comparative observation.
Thanks – I didn’t _think_ you were going down that road.
That does leave the sum of individual choices of what to consume and what feedback to provide, as the means of change most likely to be effective without undue side-effects.
Other than getting hit in the wallet (or getting hungry if it’s really bad), or a whole bunch of good old fashioned revival meetings (and even if many of the sermons and principles are good, any power structure can and will be abused), what do you think would motivate enough people to change their behavior in those and other matters enough to alter priorities for the better, even assuming they agreed what constituted “better”?
Right now, I’m skeptical that we’ll see much change.