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Hollywood's perception of value versus real value

Perspective

America emulates movieland's way of measuring the worth of things, which teaches us to place the perception of value over value itself.

October 21, 2012|By Neal Gabler
(Christopher Serra / For…)

Believe it not, there was actually a time not so long ago when civilians outside the entertainment industry didn't have a clue what movie happened to top the box office on any given weekend. Now just about everybody in America knows the top grosser by Sunday night, and they can expound like industry veterans on what film has "underperformed" or which might have "legs."

By the same token, there was once a time when no civilian could tell you who was the highest-paid actor or actress or which ones had the greatest personal wealth. (For the record, Tom Cruise, according to Forbes, is worth $270 million.) Now we not only know salaries, we often know what percentage of the gross some actors and directors receive.

The point isn't that we are more knowledgeable than previous generations or that Hollywood has become more transparent. The point is that we have become obsessed with measurable worth. Movie grosses, TV ratings, salaries, lists of the most powerful are all ways that a society sets a valuation on things — the perception of value as opposed to value itself. Another way to think of it is that valuation is to value what popularity is to being the best.

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In Hollywood, valuation matters, which is why we get so much of it. Although there are a few deviants like Martin Scorsese and Paul Thomas Anderson, whose films are more esteemed by critics than by audiences and who nevertheless survive and are even lauded, entertainment subsists on grosses and ratings. That is what pays the bills, but it is also what chiefly feeds the status. And in a way, Hollywood, by inundating us with all these rankings and by reinforcing this tendency in the culture, has done such a good job of promoting valuation at the expense of value that we now live in a valuation society where valuation subordinates nearly everything else.

One might even say that America has been remade in Hollywood's image, not so much because it emulates movie glamour or behavior or language but because it emulates Hollywood's way of measuring the worth of things and teaches us to place the perception of value over value itself. Hollywood success is the new American paradigm.

How much has Hollywood become the paradigm? Well, if few industries are more success-conscious than the entertainment industry, where success is a combination of financial reward, social status and power, then few institutions would seem less success-conscious than higher education.

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And yet, last January the dean of admissions at prestigious Claremont McKenna College was discovered to have reported inflated SAT scores for the incoming class. SAT scores are one of the components that U.S. News and World Report factors into its famous ranking of American colleges, though the official denied he was trying to affect the college's placing in the listings.

To have admitted that the actual value of his school was less important than the valuation of the school on a website's listin effect, would be saying that the tail wagged the dog.

The same thing is true in the art world, where valuation has become a proxy for value and reports on the amount of money an artwork fetches at auction seem to supersede the coverage of art exhibitions in some publications. Indeed, the British artist Damien Hirst has made this celebration of money at the expense of worth into one of the themes of his art. As New Yorker art critic Peter Schjeldahl put it, "Hirst honestly vivifies a situation in which the power of money celebrates itself by shedding all pretext of supporting illiquid values." Exactly.

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The most consequential example of America's infatuation with valuation isn't even Hollywood. It is the financial industry. Of course valuation would be important when one is dealing with finance, but only if there was some logical connection between valuation and value. Instead, many economists have remarked on the growing divergence of a company's underlying value, its "fundamentals" in financial parlance, as measured by various metrics, and its valuation, as measured by the price of its stock. To wit, the recent Facebook IPO priced Facebook far beyond what most analysts thought it was actually worth because the company had a Hollywood-like perception of worth.

There was a time when value and valuation were congruent because one of the points of the stock market was to measure a company's actual worth or at the very least its potential. At least since the Great Depression, financial institutions staked their reputations on making sure there was that congruence. Now companies often exist to inflate their stock price, which makes the company itself a kind of MacGuffin — an excuse for stock. What the companies actually produce is not goods but stock certificates. In short, they are valuation machines.

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