HOLLYWOOD’S CASTE SYSTEM

For Media CEOs, it’s not about competition, it’s about control

Happy Monday Peaceniks. We need to have a talk about Capitalism.

Adam Smith’s original theory of Capitalism was deeply moral, violently anti-monopoly, and structurally designed to protect the working class. Smith’s belief was that healthy competition in a free market would incentivize individual people and businesses to provide the best services at an optimal price, to be the most competitive, and attract the most customers. A shoemaker can’t charge exorbitant prices or make shitty shoes, because their competitor will undercut them or make better footwear. To succeed, a cobbler must make great kicks at a fair price and pay workers a competitive wage, so they don’t quit and design sneakers next door.

Crucially, Smith’s work warned harshly against companies that became so large they would be monopolies and about collections of magnates colluding to corner markets.

“Market discipline comes from customers, not from corporate guilds. When a small group of men from the same trade get together, the conversation ultimately ends in a conspiracy against the public.”

- Adam Smith, The Wealth of Nations, 1776

For real Capitalism to work, Smith explicitly dictated that the wealthiest members of society should pay a higher, disproportionate share of taxes, as a core, foundational component of a healthy capitalist economy.

“It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.”

- Adam Smith, 1776

Capitalism, in its truest form, as conceived by its architect, is a free market based on fair competition, where those who are most successful pay a “disproportionate” amount of their income back into the system, offering new competitors necessary resources to foster the rise of new competitors, and to prevent one company (a monopoly) or small group of colluding companies (an oligarchy) from squelching competition and taking advantage of consumers aka the public.

Smith’s original concept bears zero resemblance to the version of “Capitalism” practiced in America in 2026.

In 1976, fifty years ago, the top tax rate in the US was 70%. Over a certain amount of income, the biggest “winners” of American Capitalism had to put 7 out of every 10 dollars they earned, back into the system, enabling Americans who made less to be educated, eat well, stay healthy, and build new competition for “the winners.” This ensured that competition itself continued and the best products and services, at the best prices, were available to everyone.

This is precisely how the American Middle Class was created. Just as Smith envisioned. It wasn’t perfect, but it was far fairer than feudalism. It was also much more of a free market than we have today.

Today, the top tax rate in the US is 37% – nearly half of what it was fifty years ago. By comparison, Finland, ranked the happiest country in the world for nine straight years, has a top tax rate of 58%. That is how they provide universal healthcare and universal childcare to every single Finn – enabling people to invest into their families, their careers, and into new businesses. Additionally, in Finland, all corporations pay a flat tax rate of 20% – no loopholes, no exceptions. While America has a stated top corporate tax rate of 21%, a humongous share of US companies pays $0 in taxes. 88 of the most valuable companies in America, including Tesla, Disney, Liberty Media, Yum Brands, Roku, Live Nation, and Wynn Resorts, pay zero taxes. In its entire 24-year history, SpaceX, run by the world’s richest man, has never paid taxes.

Consequently, over the last fifty years, America’s income and wealth have been consolidated among very few people, at the expense of most Americans. The top 10% of Americans (34 million people) now control more than two thirds of America’s total wealth. Today, the 308 million Americans in the bottom 90% hold just 32.8% of wealth of in the United States.

Since 1976, the incomes of the top 1% of Americans have grown 322%, while the wages of 90% of Americans have grown just 27%. Fifty years ago, the average US minimum wage worker earned 1.2% of the average income of the top 1%. Today, the average minimum wage employee earns 0.86% of an average one-percenter.

The last increase to the federal minimum wage was in 2009. Why? Because in 2010, immediately after the last minimum wage increase, regulators in the US uncapped the limit that corporations can spend on elections, and the CEOs of those companies have lobbied stridently against raising the minimum wage. As the population has grown (+57% since 1976) American regulators have allowed our wealthiest people and companies to pay far less (or absolutely nothing) in taxes, so less cash gets funneled back into society, stifling the ability for those in the 90% to compete fairly, thus winnowing America’s Middle Class.

As a direct result of the collaboration of a small cohort of “capitalist winners,” in the last half century, American Capitalism has transformed (read as metastasized) into “American Casteism.”

You may ask yourself, “so, what does this have to do with Hollywood?” The answer: Literally Everything.

Hollywood’s Entertainment Industrial Complex personifies the American ”Capitalist” Caste System more than any other industry.

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