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A Not-So-Average Day in Economics and Business: July 23, 1923, The “Hollywoodland” sign was built

It’s those 50-foot iconic letters that everyone can see on top of Mount Lee in the Santa Monica Mountains in California that has been the subject for many singers like Madonna, Post Malone and many others. It’s the first sign that Miley Cyrus sees after she hops off the plane in LAX. It’s a symbol of wealth, glitter, money and fame.

The Hollywoodland was built on July 23, 1923 with the intent to advertise an upscale real estate development in the area. Shortly afterwards it became the icon for show business in the US.

But unbeknownst to most, the Hollywood sign was originally called “Hollywoodland” and was intended to be a sign to advertise the real estate development that was beginning to take shape in the area. Shortly thereafter, the sign became the iconic symbol of Tinseltown. Eventually, the “land” part was dropped and it was left to be the “Hollywood” that we now know.

Hollywood can mean so many things to different people: some view it as the epitome of glitz, glamor and success while others view it as the place where morals can be loose and ethics can come into question. Politics aside though, Hollywood is a fairly efficient economic and capitalistic system. Let me explain.

The law of supply and demand is very much at work in Hollywood…think about the seemingly expanding Marvel universe, the never-ending Star Wars and the countless Fast and Furious franchise that won’t seem to slow down. These movies or shows are continuously produced because people seem to want them. On the flip side, those that seem to not pick up steam after the pilot episodes are shown are brought to a grounding halt. The money is in the demand and the movies follow the money.

Avengers: Endgame is the highest grossing movie of all time and the ever-expanding Marvel universe is a good example of demand driving supply in this highly capitalistic business

Maximizing profit is also a huge part of Hollywood, and cutting costs is an important part of this equation. In recent decades, Hollywood has shifted its special effects and animation tasks overseas to countries where the cost is lower. Movies still get produced at the same, expected high quality but at a much lower cost.

Top Three Highest Grossing Actors of All-Time are all Marvel heroes. No surprise there.

What about the Hollywood job market? These guys also are subject to the workings of a free market. An actor's pay is commensurate to his/her perceived market value. So the top three highest grossing actors will attract more audiences and, therefore, be able to command higher pay. On the other hand, those with lower market values tend to relegate themselves to less visible (albeit, important) roles such as extras, assistants, etc. Wages are dictated by the whims of the market.

Advertising is also a big ingredient of the secret sauce in selling movies and brand loyalty is an important component of this as well. Think of the Marvel and Star Wars franchise, where characters are often recycled and new characters folded into the storyline. Book adaptations are also very effective means to advertise since the brand awareness is already there.

Hollywood functions like a well-oiled industry with various working parts that all work in tandem. While some do not necessarily approve of the whole industry itself (moral and ethical issues), the numbers are staggering. The industry earned $11.32 billion before the pandemic and more than 2 million direct jobs. And outside of its orbit, certain industries rely on Hollywood to thrive from catering services, accountants, personal trainers, plastic surgeons…the list goes on and on.

Hollywood is not only the iconic symbol of glitz, glamor, and greed but may very well be a depiction of a capitalistic organization. It’s here to stay, grow, and adapt to the many changes, especially streaming (more on this at a later post). After all, there is no business like show business.

Parting shot…here is a small list of movies that are economics/business related. DISCLAIMER ALERT: Please check the appropriate ratings and please, when in doubt, ask your parents! (The links to rent each movie are hyperlinked to the photos of each movie)

Moneyball is based on a true story of the

Oakland A’s and how they used statistics to

analyze strengths and weaknesses to rebuild

a flailing baseball franchise. Using undervalued

players with specific skill sets, they were able to

rise from the bottom of the pot to the top.


Too Big to Fail Is a documentary

that centers on the 2008 financial

crisis and how it came about.

Coming from different viewpoint

from different key players from various government agencies and financial institutions, the movie tackles the diverse incentives and the concerted effort to prevent total economic meltdown.

Rated R for language; 14+

The Informant! Matt Damon is

the Informant!, a light-hearted

movie about a whistleblower who

works undercover to expose

a price-fixing conspiracy. A lighter

take on discussing cartels and

collusion in the business world.

Rated R for Language; 15+


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