Arthur Andersen at the movies

The summer movie season has been notable for its relatively few R-rated movies and for the relative abundance of movies that are suitable for families. In addition to the large number of animated and computer-generated movies intended directly for children (Lilo and Stich, Stuart Little 2), mainstream hits like Spider-man and Men in Black II were relatively innocent, and even the scary Signs upheld "family values."

The fact is, economic pressure is forcing Hollywood to make fewer R-rated movies and more fare that can draw in audiences of all ages. And yet, filmmakers are manipulating the rating system to keep the raunch factor high.

Free-market theorists ever since Adam Smith have argued that a wide-open, unregulated economy, governed by competition and the law of supply and demand, will produce greater morality. Although one might think that the unrestrained pursuit of self-interest, on the part of sinful human beings, would result in selfishness, greed, and dishonesty, actually-so goes the argument-anti-social and destructive behavior can't survive in the economic marketplace, which instead rewards honesty, self-discipline, and moral integrity.

Hollywood's current economic situation would seem to support this. The movie industry has had a good summer and thus a good year, raking in record ticket sales. And yet, movie studios are worried about finances.

This is because the huge profits have come from a very few blockbuster hits (Spider-man, Harry Potter, Lord of the Rings), while other releases, just as expensive to make, have been bombs. And movies have become so expensive to make and to promote that even films that bring in big crowds often have trouble breaking even.

In this economic climate, studios dare not limit their potential audience. Rather, they must draw as many viewers as possible, from all age groups. Since teenagers go to movies more frequently than any other age group, making a movie that they, theoretically, would not be allowed to go to, makes no economic sense.

And, as Christian movie watchdog Ted Baehr has argued to filmmakers for years, a family going to the movies together will buy four or five or more tickets at a time. Mr. Baehr has shown that G and PG movies have always been the most profitable, as opposed to R movies, and apparently studios are getting the message.

This year, according to an article in Variety, the entertainment industry's trade magazine, only one-third of new releases had an R rating. Not long ago, over two-thirds of movies were rated R.

Part of the reason for the decline of R-rated movies is that theaters-stung by public criticism about the marketing of adult fare to underage children-are doing a much better job of enforcing the ratings. Before, underage teenagers could easily get into R-movies, and often made up their biggest audiences. But now, a studio that wants teenagers to flock to their movie must score at least a PG-13 rating.

Here, though, is how the movie industry is manipulating the system to stay crude in the face of the new economic realities. Movies that would have received an R last year for specific portrayals of sex, violence, or bad language are now awarded a PG-13 for the very same content.

Variety points out, for example, that the latest Austin Powers movie has far more toilet jokes, sexual innuendo, and body-fluid gags than similar gross-out comedies There's Something About Mary and American Pie. And yet, those two were rated R, while Austin Powers is PG-13.

Instead of assessing movie content by objective criteria, in other words, movie ratings operate on a sliding scale. Midnight Cowboy was rated X in the 1970s; today, its video is rated R. In a culture that assumes morality is relative, the changes in the rating system, as the culture grows ever coarser, should not be surprising.

But the ratings are supposed to be determined by an independent agency. The Motion Picture Association of America created the Classification and Rating Administration, but it is not supposed to be in the pocket of Hollywood studios.

When Variety asked a studio chief about the slippage in ratings standards, as the article puts it, "he sat back and grinned: 'Puzzling, isn't it?'" ("QuickTakes," Aug. 24). It isn't puzzling. It's a clear case of collusion. The ratings board is clearly under the control of the studios it is supposed to regulate. The board is changing its standards to maximize the studios' profits.

This is the show-biz equivalent of the Arthur Andersen accounting scandal. Those paid to be overseers instead violate their own rules to do the bidding of their corporate masters and to make them appear better than they are.

The corporate executives cooking the books and the Hollywood moguls cooking the ratings are defying both the laws of morality and the laws of economics.