How Much Inequality is Fair? Mathematical Principles of a Moral, Optimal, and Stable Capitalist Society
Professor Venkat Venkatasubramanian
November 9, 2017 · 12-1PM
Columbia University, Fayerweather Hall, Room 411
The Committee on Global Thought (CGT) Lunchtime Seminars are a forum for Columbia University faculty and visiting scholars to discuss current research characterizing and assessing issues of global importance. Open to Columbia affiliates only. No registration is required. Light lunch will be available.
About the speaker
Venkat Venkatasubramanian is the Samuel Ruben-Peter G. Viele Professor of Engineering and Co-Director of Center for the Management of Systemic Risk at Columbia University, has three primary research interests: risk analysis and management in complex engineered systems, cyberinfrastructure and “big data” analytics for molecular products design and discovery, and complex adaptive teleological systems. These challenges are addressed using a combination of artificial intelligence, informatics, statistics, and mathematical programming techniques and is carried out in his Complex Resilient Intelligent Systems (CRIS) laboratory at Columbia.
He has a Ph.D. in chemical engineering from Cornell University, a master of science in theoretical and mathematical physics from Vanderbilt University, and a bachelor of technology in chemical engineering from the University of Madras in Chennai, India.
His latest book, How Much Inequality Is Fair? Mathematical Principles of a Moral, Optimal, and Stable Capitalist Society came out August 2017.
Many in the United States feel that the nation’s current level of economic inequality is unfair and that capitalism is not working for 90% of the population. Yet some inequality is inevitable. The question is: What level of inequality is fair? Mainstream economics has offered little guidance on fairness and the ideal distribution of income. Political philosophy, meanwhile, has much to say about fairness yet relies on qualitative theories that cannot be verified by empirical data. To address inequality, we need to know what the goal is—and for this, we need a quantitative, testable theory of fairness for free-market capitalism.
How Much Inequality Is Fair? synthesizes concepts from economics, political philosophy, game theory, information theory, statistical mechanics, and systems engineering into a mathematical framework for a fair free-market society. The key to this framework is the insight that maximizing fairness means maximizing entropy, which makes it possible to determine the fairest possible level of pay inequality. The framework therefore provides a moral justification for capitalism in mathematical terms. Venkat Venkatasubramanian also compares his theory’s predictions to actual inequality data from various 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.