The ratings system tells you what kind of content is in a film so that you can better decide who to take to see that particular film. Unfortunately it doesn't give you a rating on how involved Michael Bay is in ruining it.
Before the ratings system existed, there was the Production Code. At the time, film was ruled by the Supreme Court as not an art form and thus not covered by the First Amendment. After a few scandals took place, people (most likely old ladies) started ranting that Hollywood and its movies were immoral while they furiously chewed on their tapioca pudding. This led to the creation of the Motion Pictures Producers and Distributors Association (later known as the Motion Picture Association of America) with a guy named Will H. Hays as their leader, who was eager to prove that he too had a crab up his ass.
Not shown: crab up ass.
Hays, with the help of his sidekick The Catholic Priest, wrote the Production Code, and Hollywood studios began following it starting in 1930. They preferred to use it as a way of keeping The Man from censoring them. It basically told moviemakers they couldn't put immoral things in their pictures. The bad guys couldn't win, there would be no lewd sexual conduct, no drugs, no interracialness...pretty much anything that your resident nun at the time would be offended by was not allowed. If the MPPDA/MPPA liked how a movie came out, they gave it a Seal of Approval. If they didn't, they'd go as far as changing scripts and whole scenes, which made people like writers and directors want to burn things.
1950s and 60s
Filmmakers struggled to prove that going to the movies wasn't a complete waste of time. Makers of foreign films and arthouse films managed to find loopholes that allowed them to show whatever they wanted, including boobs, so the Code was worth to them what cat poop was to a raging alcoholic. Television was also heavy competition, since it was more convenient for people to plop their fat asses on their couches and watch moving pictures comfortably at home.
Then Shit Got Real...
Eventually Hollywood, wanting to be the cool kid again, got tired of all that shit and started ignoring the code completely. Producers found out that, despite not following the rules, money was still pouring in from the heavens. The MPAA threw a hissy fit by enforcing the code even more, which made moviemakers love and obey them again...nah, just kidding, it just made them angrier.
It didn't help the MPAA when the Supreme Court overturned its previous ruling and stated that films were to be provided First Amendment protection. So now that the government was no longer on their ass, Hollywood continued to ignore the code and swim in its giant pool of green jello. Yes, the green jello it bought with the money it made with all that debauchery.
After lots of reluctant negotiations and given Seals of Approval, the MPAA started working on a ratings system, finally proving that the Production Code was both stupid and pointless.
Take that you uptight motherfuckers!
Hollywood went from this
in a span of a few years. Not to say that Hollywood movies from before weren't violent or risque, but they sure as hell were bloodier and sexier now.
The MPAA ratings system significantly decreased the restrictions on Hollywood movies. It started out as G (all ages), M (Parental discretion advised), R (restricted to the under-16 crowd), and X (exclusively adult, people under 17 not admitted).
From M to PG
People kept getting confused as to whether M or R was more hardcore, so M was replaced with GP. G meant "all ages", while P meant that "parents are still cautioned to possible inappropriate material". The public kept confusing GP with things like General Public and Giant Penis, so it was finally changed to the PG rating we all know and love.
The PG-13 rating came about in 1984 because the MPAA was just sick and tired of trying to decide whether to rate a movie PG or R. A PG movie might have been a wee bit too violent for a kid, while another movie would have been given an R rating because some sort of sexual foreplay might have been hinted at. Steven Spielberg (yeah, that guy) decided they needed middle ground and suggested to the president of the MPAA that they use PG-13 or -14. He and the rest of the MPAA agreed.
X and NC-17
X was an unofficial rating that was not trademarked by the MPAA. For one, it was used to fend off complaints from whiney church-goers, as well as lawsuits. Producers who chose not to get a rating just pasted an "X" on their movies, or pretty much any other letters that weren't used by the MPAA (e.g.: F for "Fucking Awesome"). People working in the porn industry even kicked it up a notch by adding two extra Xs to sell more pornographic material. Seems like it worked, seeing as how the "secret" stash of the Cracked staff has always been quite large.
Eventually the X rating became synonymous with porn. Lots of media resources refused to advertise X-rated and unrated films, and it became difficult for many movies that weren't allowed the R rating to sell commercially. As a result, the NC-17 rating was used starting in 1990. Used as an attempt to commercially sell adult-only films that were not porn, it created the opposite effect thanks to a little movie called Showgirls.
Thanks a lot, Paul Verhoeven.
Though the NC-17 rating has lost a lot of its stigma thanks to films that don't suck, many film companies are still reluctant to give films this rating. They usually release them as cut rated-R films or the fancy-shmancy uncut and unrated ones. Lately the MPAA has been thinking about retiring NC-17 and replacing it with a similar one called "Hard R", which warns if a film is too explicit in all areas (rather than just sex and nudity) for even a rated R movie. Now we don't know about you, but to us, Hard R screams upcoming rapper.
Just call us Cracked Records.