It's been a while since we played "The Grand Game." That's where KPC readers are referred to a remarkably idiotic piece of writing, and invited to go medieval on its ass. Here is this week's fresh meat:
What is Fair Pay for Executives? An Information Theoretic Analysis of Wage Distributions
Venkat Venkatasubramanian, Entropy, December 2009, Pages 766-781
Abstract: The high pay packages of U.S. CEOs have raised serious concerns about what would constitute a fair pay. Since the present economic models do not adequately address this fundamental question, we propose a new theory based on statistical mechanics and information theory. We use the principle of maximum entropy to show that the maximally fair pay distribution is lognormal under ideal conditions. This prediction is in agreement with observed data for the bottom 90%–95% of the working population. The theory estimates that the top 35 U.S. CEOs were overpaid by about 129 times their ideal salaries in 2008. We also provide an insight of entropy as a measure of fairness, which is maximized at equilibrium, in an economic system.
Me, I just enjoy saying "Venkatasubramanian." But: Wait! There's more. Here's an article about Venkat Venkata's work, here. An excerpt:
As a professor of chemical engineering at Purdue University, Indiana, Venkatasubramanian seems an unlikely candidate to dictate CEO salaries. It turns out that the maths behind thermodynamics, the study of heat and energy, can also be applied to economics.
(Nod to Kevin L, who is according to maximum entropy is underpaid by 130%)