The tricky argument of all that money for the wealthy

Posted: February 20, 2014 by jennroig in Commentary, English
Tags: , , , , , ,

BeingRichA few days ago The NY Times published an opinion piece by Gregory Mankiw, professor of economics at Harvard, with the title Yes, the Wealthy Can Be Deserving.

Tricky reading. It has left me thinking on its arguments all these days. It is very well written, the formal sequence of arguments is impeccable and still somehow left me feeling bad. But I hate refusing or supporting an argument out “feelings”, as long as I respect intellectual debate, reasoning, cold facts and data. Mankiw’s argument was supported by data and facts, and there was a lot of convincing reasoning indeed. So I needed a bit more time to realize that I was feeling bad because to every argument, there is also a moral side. That’s why all the fuzz around values, by the way.

Everybody is entitled to their own opinion, and the first amendment is what makes this country great and the actual cradle of democracy. So is Mr Makiw, and so I am.

Basically the whole piece says that based on the assumption that it’s ok for us that Robert Downey Jr made 50 million for his performance in The Avengers then it’s fair that CEOs can make all those millions out of their very stressful and so relevant role which is crucial for the luck of so many employees. According the professor, we understand Robert Downey Jr’s high wages because they are quite transparent and we know where the money comes from: “One reason seems to be that they understand how he earned it. ‘The Avengers’ was a blockbuster with worldwide box-office receipts of more than $1.5 billion.”

He follows on to say that “Of that amount, only about 3 percent went to pay Mr. Downey. In other words, if you bought a matinee movie ticket for, say, $8, about 25 cents went to pay for Mr. Downey’s acting. If you have seen the movie, you might be tempted to say: ‘He gave a great performance. I’m happy to pay him a quarter for it.'”

Well, let’s agree to disagree. I’m not happy about paying $8 for watching The Avengers, mostly because if you are actually going to the movies for that film you will end up paying $15 for the 3D experience. The Avengers is no great movie, artistically speaking, the reason you go is to be entertained with huge amount of special effects and some humorous remarks made by Downey, sure, but Johansson in that tight suit can also be a nice hook. When it comes to performance, Downey did much better in Richard Attenborough’s Chaplin, and to be honest no one paid $8 to watch that movie because it was released in 1992; tickets’ prices have skyrocketed since then. Finally, part of the reason Mr Downey and his fellow celebrities are getting paid millions is because we are paying inflated prices for a chair in the movie theater.

Another suspicious point, left out by prof. Mankiw, is who’s paying for celebrities’ salaries. Do you know Chris Rock? He makes a great point in a previous standup: there’s a difference between someone rich and someone wealthy. LeBron James-also mentioned in the piece as a star athlete with a 6-figures income- is rich; the guy that signs his check is wealthy. That applies to The Avengers’ cast. Out of $1.5 billion, Robert made $50 millions, Scarlett made only $20 million, thirty less than the male counterpart probably for no good reason because she also rocked the scene, and every other -including great Loki- “made far less“. Even counting the director’s salary, all the artistic and technical crews’ wages, advertisement campaigns and the theaters’ fees which is not a big cut, there will be plenty of cash not accounted for. Moreover, the film is like still making money out of DVD sales and online downloads, the legal ones at least. Where does all that money go? To the wealthy ones.

The Avengers Cast

The Avengers Cast

However, beyond the rationale that the film industry and the NBA calendar of competitions are outrageous examples of why we should be fine with certain people making tons of money, there is no excuse to use that argument to back up CEOs and other C-Suite people that are making gazillions.

Ask around, search around, every decent human, even some billionaires, agree that there’s something sick with a system that allows such convergence of wealth in only a few. No one will claim that everybody should have the same and there shouldn’t be people that just make it better out of hard work, skills or brains. No one likes commies anyway. But I personally feel deceived and disrespected by anyone who claims the message that Mr Mankiw tried to convey.

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