More Economics

   An important question is what happens under various distributions of choice.

   The graph shows a normalized series of curves of gross product per capita.  The values increase to the right.   The upper line represents the maximum number of high choice people in the economy.   It represents a modified  choice level.  Under current distributions that would be a point of $75 000/year divided into the available wage pool.  The vertical axis, ordinate, represents the percentage of people who have achieved this level representing maximum happiness.  If people earn less than this they would be valued at less than 100%, in proportion to their choice, if people earn more they are discounted as blocking others form entering the high choice pool.  A person earning $150 000/ yr would be at 50%, someone earning $750 000/yr at 10%.  Then all persons modified choice level would be added and the sujm divided by the number of people.
   What happens on the curves is that to begin at the4 bottom with an inefficient distribution the economy barely exists, either people do not have enough money to make purchases or there are not enough customers to encourage business openings.   Consider an isolated community of 100 000 people.  Let us say at first That the gross product per capita is $100 for a total economy of $10 000 000.   We will now assume that at this economic level that $25 000/yr achieves maximum happiness.  At ht level, only 400 people would have income if all the money went to high choice people.  That customer base would generate some business openings but not too many.   If the income was distributed at $2 000 per earner, there would be 5 000 customers which would encourage many more business openings , but the4y would all offer low-end products.  If one person earned the full $10 000 000, there would be very few businesses since they would all have only one customer to service.  All of these models presuppose that everyone else in the community would earn no money, a few success in a sea of poverty.
   As one moves up the curve, businesses open as customers become available.  For the very low end, such as per capita of $100/ yr, the curve has a bulge as the money accumulates into a few hands.  When evenly distributed, the $100 does not encourage much business activity nad certainly would cause very little business diversity, generating little choice.   As the money accumulates into a relatively few hands, business opportunities begin to increase.    Above a certain point, the increase of money per capita is offset by the fewer customers available and the number of businesses and choice will decrease.  At these low levels the economy is not very interesting.  It is also not very realistic, if a few people had all the income, they would inevitably hire people to at least do menial tasks and the wage distribution would flatten, moving down towards the bulge.
   As the gross product increases, a stage is reached where the curve would be vertical above the bulge before a final series of stages are reached in which the curve always bends forward, this is the more interesting part of the graphs.
   As the gross product curves move to the right an activation level develops in the economy.  In order to have a Thai restaurant, there needs to be enough customers to service, enough people need to have enough choice.   As the customer base grows, more than one Thai restaurant opens, this increases choice through greater options, but at some point the increase in choice diminishes.  There can be a big increase in choice going from one to two restaurants, there is virtually guaranteed to be an increase in choice from one to ten restaurants, but going from twenty to twenty-one, in general produces little increase in choice.  That is the origin of the bench shaped features of the curves.  At first, moving up along a curve produces a slow increase in choice until there accumulates a core base of customers, at which point the choice rises rapidly, until a point is reached where moving further up the curve produces little effective change in total choice.
     Third world countries are notorious for having most people earn very low wages and a small elite who are very rich, this guarantees low economic growth.  They are down at the inefficient curves at the left of the graph.

    The above graph shows an additional feature of the curves, there are upper and lower truncation lines on the graph.  If the distribution of modified choice level falls below a key value, the given gross product curve cannot be sustained.  It will move to the left in reduced gross product.  If the modified choice rises above a given point, the curve moves to the right to increasing gross product. I think the truncation lines bracket the bench feature.  The argument is that something had to be happening with the extra available choice when the curve rises above the bench, it is not effectively increasing diversity and choice and, therefore, it must be increasing the flow of money in the businesses, increasing there efficiency and raising the gross product.  A similar argument applies to the the lower end of the bench, reducing gross product.
   The upper truncation line takes a peculiar dip before rising.  That is an artifact of the value at the origin being zero and then being expanded into a vertical measure from zero to one hundred.  The source graph might look something like the following.  The max choice line varies with the wage that produces maximum happiness.  It will increase with available income because there are more choices which demand more money.

    There is also a question of stability in an economy, an under stabilized economy is chaotic, in an extreme case it represents civil insurrection.  An over stabilized economy prevents and slows business adaptation.  The following graph represents that.

   The point of the graph is that if there is no economy it does not matter if there is chaos or overbearing government.  As the gross product increases, the range of control narrows to maintain the gross product.  If the control falls outside the allowable range, the gross product will move to the left and be reduced.  The curve to the over control may not be symmetrical to the under control.
   Japan, for instance, has an over controlled economy, businesses needing the permission of other businesses to open.  Stability is a choice if people want it, but it does slow economic activity.

   The following is from EmptyTomb, Inc, www.emptytomb.org.
  Table 32,33, U.S. Bureau of Labor Statistics, Consumer Expenditure Survey, 2005 Cash Contributions for Charitable Giving by Income Brackets.

Income              Percent contribution
Level                  after taxes.

5 000-                 2.6
9 999

10 000-               2.5
14 999

15 000-               2.3
19 999

20 000-               2.2
29 999

30 000-               1.9
39 999

40 000-                1.7
49 999

50 000-                1.6
69 999

70 000-                1.5
79 999

80 000-                1.5
99 999

100 000-              1.5
119 999

120 000-              1.7
149 999

150 000-               1.8
Up

  What is notable in these numbers is that there is continuous reduction in per cent giving up to
$120 000.  If I am right and charitable giving is a function of the ability to change choice and, consequently, of the rate of change of choice,   This means that people experience the greatest change in choice with the initiation of income.  At $120 000, there is a significant number of people who have saturated on choice, who believe they have enough money that they can afford to be generous, but they do not have the same confidence of people at the lowest wages.
   The numbers level at their minimum of 1.5 at around $75 000, which is in accord with that being the point at which choice flattens and becomes increasingly expensive.

  The graph represents the toe of the Curve of Choice.  Previously, I said there was a toe, as a, that would seem to be wrong, it seems to enter the origin as b
    Its effect on minimum wage is that if the net transfer point, the average of people paying for the service of minimum wage, T, is above the minimum wage point L, there will be a net increase in choice.  If the minimum wage point is above T, as U, it will lower choice.  This represents a significant limit on the setting of the minimum wage.  The other  condition is stability.  If wages are over concntrated by the minimum wage, the economy loses the ability to adapt.