Zero Marginal Product of Labor

Kling talks about it and it has come up on the webosphere for some time.  It is the idea that employment at the bottom rung of the ladder is impossible because they cannot find something profitable to do.

If the firm and the household have high accuracy in attempting an agreement on labor, then both parties calculate the central government tax and entitlements channel, the roundabout payment system.  Neither party has that much precision to devote to reverse engineering that channel, so they bound the entitlement/tax channel into something called the tax cost of employment, a looser bound around the calculation but a much simpler calculation.  Once we all agree on that bounded function, then we can just include one quant of entitlement in the wage agreement. When the entitlement quant is unstable or inefficient, the bounded function grows, we increase the quant due to forecasting error from the past.

The effect of the entitlement quant is to band the employment agreement within the bounds, so straight away the agreement collapses if the entitlement quant is not met. What we  have is a large group of unemployable that do not meet the entitlement quant.

How much unemployment is due to the entitlement quant?  the way to measure that is to get information on the underground labor market.  Remember, we still hunt for wage deals, even when government prevents employment we do it by other means.

Rewriting the general relativity in terms of a Shannon-Hartley channel

I won't do it, but the approach would be to take the time dilation factor, Td in
http://en.wikipedia.org/wiki/Gravitational_time_dilation and convert that euler equation into a Gibbs separation that becomes the SNR value in the Shannon channel rate formula in
http://en.wikipedia.org/wiki/Shannon%E2%80%93Hartley_theorem

But what is the interpretation?  The channel rate is the realized quant rate relative to the rate a standard vacuum can equalize entropy, ending up with timeless ratio.

I thought we were copying them?

Resolving the black-hole information paradox by treating time on an equal footing with space
http://lanl.arxiv.org/abs/0905.0538
From 2009!

And yes, the Euro situation looks an awful lot like a black hole with an event horizon arriving soon. And yield curves look an awful lot like Black Body radiation.

What entanglement do we have with solar radiation that connects us to the Matrix? Go talk to economists who study sun spot correlations!

The point is, time does not exist, the only existence is the transaction rate of one series of events relative to another. So new the relativity says that two observers see the same 'speed' of light, but with different quantization error.

Am I wrong about velocity?

 I claim that stable transaction rates at the retail level are globally stable. So what happened between 1995 and 2000 where velocity continued to rise?   If the economy takes five years to reach a stable quant, then there is no QM theory. And from 2005 to 2008, why wasn't M1 velocity stable?  Note that the two periods of non-constant velocity ended in recessions.

Looking at the 1995-2000 deviation, a closer look shows the velocity was stable to an uncertainty level up to about 1996, then it rises above 70.  Transaction rates are not perfect spectral lines, but close.  The economy will let spectral production lines vary, up to the point they interfere with adjacent spectral lines.  I don't mind a two year adjustment period to reach stability going up, I would be much more bothered if we failed to crash to a certain historical velocity.  How is it that we crashed exactly to 80-85 after July 2008?  We had stability from 2000 to 2005, look where we ended up in 2010, almost the same velocity, a reversion to a known constant afters a rapid fall.

Another research notice.  In this scale system the stable velocities are 65, 82, 100. Looks like a gain of about 15% at each jump.  Look back at the previous post about city growth, what did the authors claim? A 15% gain from specialization.  The author also notes that any independent channel in a city will show the same growth as any other channel, to within a 15% error.  Then look here, retail sales level dropped by 15%. Looks like a constant of uncertainty which equals the gains from specialization.

Channel theory applied to economies is new, as we use it we will get more accurate definition of transaction rates, sizes, gains from specialization and the rest.   I am not worried, this theory will win the day.

Velocity, quantization, gains from specialization and Levine chains

A popular graph

This graph seem to show we are about back to pre-crisis growth.  Uncle Milt calls this snap back.  Really, we are biologically fixed for a certain growth, when we don't have that growth, we take the one time charge off, then we re-establish a biological fixed production chain.   Underneath the covers, money velocity is back to 2001 levels.  Lower velocity implies a shorter Levine chain, implying more quantization noise, and lower growth but safer inventory levels.

Gains from specialization

The Levine channel seems to have been stable about 1985 - 1990 when the gain from specialization was about 1.1 (CPI/PPI) and 1995 with gains of 1.2 .   But note that the gains fare still dropping from 1.2, and the next stopping point is 1.1.

Somewhere around 2000, the velocity approached 85 while it was 70 during the 1985 - 1995 period.

The two stable Levine chains have the gains of 1.1 and 1.2, and velocities of 70 and 85.  In other words, the snap back looks good, but we will revert to the velocity of the 1990 period.  We are still too inflated, more deflation on the way.  We really have to spend time with the shorter chain to snug up inventories.