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How Much Inequality Is Fair?
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How Much Inequality is Fair? synthesizes ideas from economics, political theory, game theory, information theory, statistical mechanics, and systems engineering into a mathematical framework of a fair free market society. The key to this framework is the insight that maximizing fairness means maximizing entropy, which allows one to determine the fairest possible level of inequality in pay. This framework provides a moral justification for capitalism in mathematical terms. After outlining this framework, Venkat Venkatasubramanian compares his theory's predictions to the actual inequality data of different countries--showing, for instance, that Scandinavia has near-ideal fairness, while the United States is markedly unfair--and discusses the theory's implications for tax policy, social programs, and executive compensation.
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