Physics can predict wealth inequality

March 28, 2017
The wealth of regions and countries all over the globe vs. their annual consumption of fuel. More economic activity means more fuel consumption, not less. Credit: Bejan and Errera

The 2016 election year highlighted the growing problem of wealth inequality and finding ways to help the people who are falling behind. This human urge of compassion isn't new, but the big question that remains to be addressed is why inequality is so difficult to erase.

This inspired Adrian Bejan, the J.A. Jones Distinguished Professor of Mechanical Engineering at Duke University, who in 1996 discovered the Constructal Law, to provide an answer.

Bejan's Constructal Law addresses the fundamental principle of physics that underlies the evolution of flow systems as they change in design over time to increase flow access. It reveals that "branching tree-shaped" flow patterns govern the structure of the entire universe—most clearly evident within rivers, neural networks, lightning bolts, electrical circuitry and trees.

"The Constructal Law extends the power of physics over all of the phenomena of evolutionary design and organization, from geophysics to biology, technology, and social organization," Bejan said.

Now, with a new paper in the Journal of Applied Physics, Bejan and Marcelo Errera, a professor of environmental engineering at the Federal University of Paraná in Brazil, make another fundamental contribution to physics. "It's a tribute to the power of physics," Bejan said. "Economics and are physics."

They demonstrate this via two architectures: river basins and the of freight. Bejan explains that the "emerging physical flow architecture is hierarchical on Earth's surface and found in everything that flows inside human bodies, the movement of humans and their belongings, and the engines that drive the movement."

So why has inequality been notoriously difficult to erase?

Fuel generates power, power drives the movement, and movement dissipates the power. The whole Earth contains engines that dissipate their power -- winds, ocean currents, animals, and human and machine species. Movement and wealth are distributed unequally on Earth, naturally. Credit: Bejan and Errera

"From physics, it's actually easy," Bejan said. "You may have noticed that annual wealth, a.k.a. gross domestic product (GDP), is essentially proportional to the useful energy or 'work and movement' generated by a group or territory, so you can think of wealth as movement. Also recognize movement (wealth) as inequality that is hierarchical."

This finding is "pivotal for physics, because it shows that the economics concept of wealth has a physical basis, which is measurable as work, fuel consumed, or movement effected by fuel, food, and work," he elaborated. "This unites economics and physics. The equivalence between wealth and movement is correct in the broadest sense: outliers exist and undoubtedly the equivalence is evolutionary because wealth and fuel use are increasing over time."

Inequality is a negative term, and perhaps isn't the best word to describe the distribution of wealth.

"Nonuniform distribution of flow or movement is the correct physics term, which happens to be synonymous with the nonuniform distribution of wealth among the population," Bejan said. "But the nonuniformity of flow is really a descriptor of the hierarchical character of the tree flow architecture—which is natural and occurs on its own every day."

One of the central concepts involved in Bejan and Errera's work is hierarchy, which occur when many small items and a few large ones flow together versus flowing in competition with each other. "They flow in harmony, with the many small sustaining the few large, and the large facilitating the movement of the small," Bejan said.

Picture a river basin with its many small tributaries flowing together to a few large rivers—the Mississippi, Missouri and Ohio. "They flow together because this oneness of architecture, the whole of it, is what carries rainwater from the plains to the mouths of the big rivers," Bejan said.

Before becoming an engineer, Bejan was a basketball star in Romania, and from the "live flow system" of the basketball court he learned that "the ball flows through non-rigid channels that are hierarchical and constantly morphing," he said.

See also "Through the Wormhole with Morgan Freeman: Did God Create Evolution? Constructal Theory":

Every flow architecture on Earth follows the same order, which is a natural tendency to want to flow more easily. "Social organization is more complicated, but it's all ,"Bejan said.

What did they discover in terms of wealth inequality? Bejan and Errera show that nonuniform distribution of movement (wealth) becomes more accentuated as an economy becomes more developed—its architecture becomes more complex for the purpose of covering smaller and smaller interstices of the overall territory. "Relatively modest complexity is required for the nonuniformity in the distribution of movement (wealth) to be evident," Bejan said.

As wealth in the world becomes increasingly unbalanced, Bejan's hope is that his work proposes the possibility of empowering people more uniformly to reduce the glaring disparity of wealth often on display within cities or rural areas.

"It puts the onus on citizens, schools, businesses, and government to speed the process of creating designs to better serve society—more effectively and with much greater confidence," Bejan said.

Next, Bejan plans to explore ways to mitigate wealth inequality's manifestation.

"While explaining why is difficult to get rid of, I discovered the next question: how can we make the distribution of wealth less unequal? It's a complex design that involves the evolution of the rule of law. In other words: government and other organizations stepping in, which historically has happened," Bejan said.

Explore further: Why celestial bodies come in different sizes

More information: "The physics basis of inequality in wealth and movement," Journal of Applied Physics, DOI: 10.1063/1.4977962

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26 comments

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RichManJoe
not rated yet Mar 28, 2017
I would like to know if they are using wealth in the old sense, meaning well being, or in the current sense, meaning money. They also claim inequality is a negative term. If so, then what is a wealth distribution in the sense they are using it - if you look at the top tail, (the 0.1%), it appears good, if you look at the bottom, where the bulk of the people exist, it can be pretty bad.

How is this related to the Pareto's rule?
julianpenrod
1.5 / 5 (4) Mar 28, 2017
An eminent example of a "scientific" flim-flam. Perceived "authority", doggerel, aiming only at a portion of the population too dim to realize they're being scammed. Similar to, for example, the claim at things like weather and "terrorism" operate by "power laws". The "Constructal Law', for example, is garbage. Where is the universal application of branching in the forming of solar systems, the condensing of liquid in the atmosphere? Systems that flow branch not because there is a natural tendency to, but because other interaction shape their movement. Water on a flat surface will spread outward in a widening circle, it's the shape of the surface that will divert the flow! And note that branching has nothing to do with the talk about "power dissipating". In fact, energy dissipates, not power. Much if not most inequality comes from things like back room deals and stock manipulation.
MR166
5 / 5 (1) Mar 28, 2017
" Much if not most inequality comes from things like back room deals and stock manipulation."

OK I was with you up until that point. Inequality stems from the value to society that your work provides and one's ability to make sound financial investments. Just as an example, say that I start a landscaping company. I buy all of the equipment and hire a helper. Is it inherently unfair that I earn more per hour worked than the helper?
Benni
1 / 5 (3) Mar 28, 2017
I expect any day now to see my name & salary posted here. Then I expect RNP to scream about how it's so unfair & that I should share at least half of it with illegal immigrants, or maybe George will be the one to complain? Or both?
gkam
2.3 / 5 (6) Mar 28, 2017
No, benni, we do not think of you.

At all.
RichManJoe
5 / 5 (4) Mar 28, 2017
@MR166 - Ideally, what you say would be true, however refer to the Russian Laundromat. I also believe the great majority of people who earn exceptional amounts of money do not provide the value for the money they receive. Compare salaries of U. S. CEO's vs. Japanese CEO's.
julianpenrod
not rated yet Mar 28, 2017
Again, a common demonstration of disreputable "reasoning". I did not say all financial inequality comes from conniving the system. And I was describing the amount of inequality not in terms of how many cases there are, but the eminent size of the inequality. The size of the inequality between the earnings of the economic 1 percent and the rest is easily many times the inequality represented by employees earning, say, only half what their employers earn. Indeed, it can almost be said that all the inequality is in the difference between what the power mongers earn and what the economic 99 percent earn. And the difference there is things like declaring profits to be losses to save on taxes; arranging fat government contracts for do nothing work; removing regulations on businesses; imposing regulations on competitors' companies; manipulating stock prices.
RichManJoe
not rated yet Mar 28, 2017
Personal wealth is not linear wrt money. In fact, at lower levels of income, it is highly non-linear.
aksdad
3 / 5 (4) Mar 29, 2017
The 2016 election year highlighted the growing problem of wealth inequality and finding ways to help the people who are falling behind

In what country? Gabon? Wealth inequality was neither an issue nor was it relevant in the U.S. election.

the big question that remains to be addressed is why inequality is so difficult to erase.

Only for socialists and communists who stubbornly refuse to learn from the failures of every communist government in the last 100 years. Why does wealth inequality matter? Hint: it doesn't. Mark Zuckerburg's being a gazillionaire in no way reduces my wealth, quality of life nor does it limit my ability to be as wealthy as I want to be.

Soaialism is dedicated to the ideal of ensuring wealth equality and succeeds...by making everyone equally poor (except the politically-connected ruling class). See USSR, Cuba, North Korea, Venezuela, China and India (until they enacted limited free market reforms). Learn the lesson already!
Eikka
4.7 / 5 (3) Mar 29, 2017
Why does wealth inequality matter? Hint: it doesn't. Mark Zuckerburg's being a gazillionaire in no way reduces my wealth, quality of life nor does it limit my ability to be as wealthy as I want to be.


Actually, it does. It depends on the way in which their fortunes are created.

In the US, as the government issues ever-increasing amounts of bonds, which the FED buys, which creates new money, which is hoovered up by the rich: inflation happens. Money collecting up top reduces the worth of your money, your purchasing power, and your wealth, and transfers it to the rich by a process of dilution.

It's like pouring water into wine, and then pretending you have more wine so there's no problem for the other guy to take half. The rich make their fortunes not by producing new real wealth, but by producing new money, and/or by extracting existing money out of you.

The very mechanisms that create the inequality are draining wealth away from those who most need it.
Eikka
5 / 5 (2) Mar 29, 2017
Also notice that "money" includes things that are like money - i.e. worthless in themselves but nevertheless exchangeable for real wealth.

Such items include things like Intellectual Property: copyrights. The real worth of a _copy_ of a song/movie/picture/videogame...etc. is exactly zero as it is not something that is scarce or costly to produce, yet they sell for real money because there exists a legal fiction that says the owner of the copyright can set a dollar value to it and everyone has to respect that.

It's basically a license to print false money.

Multiple people pay unaware of each other, arbitrary amounts of money, the total sum of which is in no relation to the expense of work going into the original copy, and it's non-negotiable. In fact you can't even opt out of paying, since royalty payments are forced, and advertisers make you pay the cost of entertainment you don't even consume through the prices of their products.

And it all goes to the rich
antialias_physorg
5 / 5 (4) Mar 29, 2017
Why does wealth inequality matter? Hint: it doesn't.

It does when it becomes stratified (little social mobility). That's why all the monarchies all over the world eventually collapse. You got an aristocracy that hoarded the wealth and the rest ofthe people were just relegated to be the working poor.
Looking at the US (where social mobility is second lowest amongst developed countries - only beaten out by the UK), I would say it's starting to sink in on people that the 'American dream' is pipe dream.

There are mixtures of socialism and capitalism that can work. It needn't be a preordained 'everyone gets the same', but there has to be some cap at some point or you get the '99%' problem.
What would be so wrong with capping the maxium wage at 100 (or even 20) times the minimum wage?
RichManJoe
5 / 5 (3) Mar 29, 2017
Wealth inequality does matter - just try buying a house in Silicon Valley. After the financial debacle of '07, many of the houses have been bought up by investors, many with briefcases filled with money. This has increased housing prices by reducing supply. Rental money flows to the investors and not to building a families wealth. The same is going to buying up small farms.
Eikka
3 / 5 (1) Mar 29, 2017
What would be so wrong with capping the maxium wage at 100 (or even 20) times the minimum wage?


The fact that it's completely arbitrary and completely irrelevant, and also dangerous.

On the principle of it, the wealth of any individual should never be arbitrarily decided by public vote, because once you can vote yourself or your group money by redistribution, you break democracy. That is the root cause of corruption in modern social democracies.

When the state is only allowed strictly egalitarian laws, there's no corruption because nobody in particular benefits from a seat of power. When the state can make decisions like take money from some and give it to others arbitrarily, obviously those with more political power will give the money to themselves somehow.

For example, have you considered that progressive taxation is a subsidy on labor for the rich? Competition over jobs drives wages down by the difference in tax, so the benefit goes to the employer.
RichManJoe
5 / 5 (3) Mar 29, 2017
@Eikka "On the principle of it, the wealth of any individual should never be arbitrarily decided by public vote, because once you can vote yourself or your group money by redistribution, you break democracy. That is the root cause of corruption in modern social democracies."

I don't believe you break democracy, but I believe you may break capitalism. Democracy does not require capitalism - there are well functioning democratic governments which work more on a socialist model. And it is obvious that capitalism does not require democracy, as we have an oligarchy, and China has a single party system. In either case, neither lives up to the capitalism described by Adam Smith, mainly because the corporations want favoritism and protection.

Dingbone
Mar 29, 2017
This comment has been removed by a moderator.
Eikka
2 / 5 (2) Mar 30, 2017
I don't believe you break democracy, but I believe you may break capitalism.


When people vote themselves money - or more generally, wealth - votes or political power becomes like money. The question doesn't depend on the system of economy, whether capitalism or otherwise.
there are well functioning democratic governments which work more on a socialist model.

If you're wiling to look past a few human rights issues, and blatant corruption, nepotism and elitism...

The best examples for applied socialism are actually in the nordic states, which ironically implement more economic freedom than the US. The regulatory environment is very efficient, tax codes are simpler, more transparent, there's no gender/racial quotas or other attempts at forcing "social justice" or political correctness etc. etc.

But as a counterbalance they are dragging along with unsustainable social security systems because the people simply voted themselves more money.
Eikka
3 / 5 (1) Mar 30, 2017
Also ironically, the nordics use their power of the state to enforce a more free market. Take for example cellphones: in the US you buy your phone from the network provider, who locks you in. They set the prices and availability, so that e.g. Apple could make the iPhone exclusive to AT&T on launch and both could set monopoly prices on a highly desired item.

In the nordics, such deals were actually banned for a long time, and still only available on limited terms for time, price etc.

As a result, you can buy top of the line smartphones relatively cheap in a local supermarket and simply put your SIM card in. As network providers are not in control over what phones you can buy at what prices, they had to compete with their service, and so you can get a basic plan with unlimited internet access (albeit slow) for $6-7 a month.

RichManJoe
5 / 5 (5) Mar 30, 2017
@Eikka - thanks, but the nordic states are the happiest and one could say the wealthiest, in the true sense of wealth. So what is work, money, and all that other stuff for if it is not for wealth and happiness.

You have an interesting concept of democracy.

Eikka
4 / 5 (2) Mar 31, 2017
@Eikka - thanks, but the nordic states are the happiest and one could say the wealthiest, in the true sense of wealth. So what is work, money, and all that other stuff for if it is not for wealth and happiness


No doubt. For now at least.

You have an interesting concept of democracy.


I define democracy as a system of government by the people, for the people. When the system becomes about group special interests, democracy has broken down. It no longer balances the interest of all the people in an egalitarian way.

Notice for example that in Marxism this breakdown of democracy is seen in the "dictatorship of the proletariat". The society starts to exclude some of its members from political and economic power, even from civil rights, and becomes about one group against another group, which sets the stage for further corruption, eventually oligarchy.

In a democracy you can vote for any thing, but not all things make sense.
Eikka
3 / 5 (1) Mar 31, 2017
The issue with the nordic states is that much too great a proportion of their workers are directly or indirectly employed by the state - about 1 in 4 if I recall correctly.

So a huge portion of the voters are dependent on the state public spending, hence, they vote accordingly and prefer options which increase public spending, which requires more taxes, which kills private business, small and large - except for those who are close buddies with the state (the political elite) and get subsidies. This is what it means when people vote themselves more money.

Denmark for example is running at 55 - 58% government spending to the GDP. That means more than half the money is in the public sector, and if the government so much as tries to reduce taxes and spending it automatically causes massive layoffs and unemployment, which immediately means increasing social costs for the state and more spending.

All the "welfare state" social democracies are stuck above 50% and increasing.
Eikka
3 / 5 (1) Mar 31, 2017
At some point, these states simply have to restructure and cut off the fat, or else they run out of private businesses to tax and collapse out of sheer nepotistic bureaucratic inefficiency like the Soviet Union did.

That doesn't mean you can't have a welfare state with good safety nets - it means such safety nets have to be constructed carefully, and the role of the state limited otherwise to essential infrastructure only, instead of wealth redistribution and "social justice" by leveling the outcomes.

Because the problem with the latter is that social justice depends on who you ask, ie. who happens to sit in power at the moment. The so called positive liberty comes with a tremendous responsibility and the absolute demand of intellectual honesty and impartiality, which most people don't have - especially not those who would wish to rule others. Otherwise you end up in fascism of some sort.

Zzzzzzzz
5 / 5 (3) Mar 31, 2017
All that is interesting,. but isn't direct comment on the article. I find the premise of the article counter-intuitive - that human and social behaviors/patterns follow the same structure as physical world systems. RichManJoe, I doubt this work was considering wealth to be equal to happiness. The article stimulates thought (at least in my brain) that I would not have experienced without reading this article.
Eikka
not rated yet Apr 02, 2017
I find the premise of the article counter-intuitive - that human and social behaviors/patterns follow the same structure as physical world systems.


Why? What's so special about people?
gkam
1 / 5 (4) Apr 02, 2017
Emotion.

Irrationality.

In the teen years the Heisenberg Uncertainty is 90%.
SURFIN85
not rated yet May 12, 2017
This is intuitively obvious.

You don't feel like you are improving in life unless you get a bigger car, a bigger TV, bigger meals with more exotic ingredients

And its heirarchically-driven- no one else will assume you are improving without being able to witness all these external markers.

And the bums? Screw em.

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