Your argument is kind of self-annihilating:
You say competition is tough... implying that there are a multitude of capable actors. i.e. Supply is high. This, in turn, would imply that capable actors are (or should be) a dime a dozen. However, Hollywood acts as though the A-List is all there is... which, if doing so, constricts supply to a significantly smaller population, therefore creating an artificially high demand for which they, subsequently, have to pay through the nose for... which WE now have to pay through the nose for. And for what? For a non-sensical, elitist, Movie Star ecosystem (an industry which alone brings in millions, if not billions).
If there are as many struggling good actors as you say there are (and I hope there are), I for one would LOVE to see them. I'm sick of the same 8 actors... Ben Stiller, Brad Pitt, Angelina Jolie, Julia Roberts, Owen Wilson, Vince Vaughn, Steve Carell, Johnny Depp... At least one of these seem to be in 90% of films these days. Some fresh blood would be nice... and easier on the checkbook.
-Clive
Juat to play devils advocate, nearly all the names on your list are relative newcomers to the "A-List". Excepting Pitt, Roberts, and MAYBE Depp, none of those people were big in the '90's. They did mostly smaller budget, less successful films. Up till the mid-90's Pitt was in only handful of OK movies, and really didn't get HUGE 'till after Fight Club or Interview with a Vampire.
What has Julie Roberts been in lately? Not seen her around in a year or two, in anything big at least. Depp was doing TV through the middle of the last decade, and only got MEGA famous in the late 90's.
Sure, those people are big ATM, but they weren't 10 years ago and they won't be in 10 years either. Yes, Hollywood relies to heavily on a big name to sell a crappy product, but they DO rotate those big names somewhat frequently.
Also, while paying someone, say, $20million for a movie is pretty nuts, there's a few things to consider. One, some movies NEED to give you a reason to go see it; doesn't mean they're BAD movies but more that they are a hard sell. Two, that's a fairly small portion of the budget. Let's say we can make a movie for $100m and we pay Tom Cruise $25m to be in it. We could pay some smaller, but equally talented unkown actor a mere $1m to do the same job.
So $100m cost vs. $81m cost. $81m is still a LOT of money to invest in something (and lets face it, movies are simply an investment). Spending a "little" more on Cruise isn't a bad insurance policy for your investment, especially if you (a studio) are doing 10 major movies this year, representing a billion dollars all together.
So, while I'm not trying to defend the studios business methods or choices, I can certainly see why they make them.