O ring theory in economics

 q_H² + q_L² ≥ 2q_Hq_L

Michael Kremer

OK, it is a Markov 2 tuple. Got me thinking.


Consider a process that produces one (or more) products. The more part is going to be partition, consider one product.   That product is a unit variance. It is the thing with the least random noise. Against that are two types of  skilled action to produce one of these.

You know where I am going.  The factory is a color operator, keeping spin maximally separated and carrying a finite color error.  A Markov 3 tuple system.  There is finite bandwidth, it needs be filled without over running the error bounds, which is two products crashing.  This is the standard S/L model, also a production function. But this is just a node, one distinct energy level, and the economy is a superposition of nodes, but not that many.

In econometrics we would search for finite and almost bound delivery systems, unto themselves. Then we can compare energy levels fairly, wealth, with a simple composition of a few low N forms, mostly unstable even. But it becomes a probability distribution as a result, a histogram, much better than a sigma bounding. That is, you find the factorings of different sectors that are or are not out of scale.