Poor Cuba!

Today the USA announced that it would drop its ban on travel to Cuba and relax the trade restrictions that have prevented Cubans from exchanging good cigars for electronics and cars from the USA for the past half century.  I fear this will serve to drain Cuba’s remaining resources into the capitalist reservoir in short order.  Why?  Simple statistical economics (Stat Ec for short):

To the extent that all wealth is shared equally in an ideal socialist economy, there is only one possible distribution of wealth, and so the economic entropy of such a system (i.e. the logarithm of the number of possible random redistributions) is zero.  More importantly, the entropy is unchanged when more wealth is added.  Cuba may not be an ideal socialist economy, but it’s a lot closer than the USA, where every conceivable redistribution of wealth is a priori equally likely, giving an enormous economic entropy and a very large entropy increase with every injection of new wealth.  The USA is certainly not an ideal capitalist economy, but the deviation from randomness only occurs at the high end of the personal wealth spectrum: the wealth of the infamous 1% is far higher than predicted by a simple Boltzmann distribution (exponential decay of probability with increasing wealth), but for everyone else we might as well be utterly indiscriminating in all our financial transactions.  Look it up!

So what happens when a “hot” wealth reservoir (one with almost no increase of entropy per unit added wealth) is put in economic contact with a “cold” one (with a large increase of entropy for every addition of wealth)?  Wealth flows spontaneously from Cuba to the USA through the agency of completely random exchanges.  Again, look it up!  Any textbook on Statistical Mechanics will give you the details; or you can read mine: http://jick.net/~jess/hr/skept/Therm/

Which brings me to another observation that will surely be misunderstood by most readers: there will always be more people with low wealth than with high wealth, and this fact has nothing to do with anyone’s intentions.  It is an unavoidable consequence of completely random transactions involving exchanges of wealth.  Yes, like you, I believe my transactions are far from random; but then where does that Boltzmann distribution come from?  We try to bias our transactions in our favour, but we fail.  Randomness cannot be defeated.

Therefore if we could tomorrow gather up all the wealth in the world and distribute it evenly among all people (the limiting case of our desire to “flatten the distribution”), within several years the distribution would be back to the Boltzmann form — probably with even more “excess” wealth at the top end, because we would probably have relaxed many of the safeguards we have now, in the mistaken belief that uniform wealth would ensure fair trade.

The best we can hope for is to ensure equality of opportunity.  Equality of success is impossible, and not even desirable!  In our recent quest for the latter, we have compromised our traditional commitment to the former.  While “liberals” pursue the fantasy of a flat distribution of wealth, “conservatives” have been inventing ways to cheat in the game of wealth accumulation.  Crooks don’t want equality of opportunity; they want to have all the opportunity, and they want you to have none.

I am not a liberal.  I am not a conservative.  No, I do not have to choose a side.  Don’t be a fool.

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