The Method Of Least Squares: The GDP-Debt Relation for the Trillionaires Club of Nations

V. Laxmanan, Sc. D.
In this article I have applied Legendres Method of Least Squares (published in 1805) to deduce the relation between the GDP and the Debt for 13 countries which together constitute the Trillionaire Club of Nations (based on their GDP values for 2012). Also, discussed is an alternative approach, based on Einsteins idea of a work function (published in 1905). The discussion of the relative merits of these two approaches seemed worthy enough to call attention. The same article appears under a different title, where attention is called to the astronomical size of the US National Debt. The analysis reveals that the current, astoundingly large, US national debt ($16.829 trillion on April 30, 2013), relative to its GDP, is, statistically speaking, fully consistent with the debt and GDP values of other members of this Trillionaires Club of nations.

Utica, Michigan vlaxmanan@hotmail.com

5/3/2013

In this article I have applied Legendres Method of Least Squares (published in 1805) to deduce the relation between the GDP and the Debt for 13 countries which together constitute the Trillionaire Club of Nations (based on their GDP values for 2012). Also, discussed is an alternative approach, based on Einsteins idea of a work function (published in 1905). The discussion of the relative merits of these two approaches seemed worthy enough to call attention under a separate attention grabbing title that I have used here. The same article appears under a different title, where attention is called to the astronomical size of the US National Debt. See : http://www.scribd.com/doc/139114239/Is-US-National-DebtOut-of-Control-The-Trillionaires-Club-of-Nations

For Legendres original paper, see

http://www.york.ac.uk/depts/maths/histstat/legendre.pdf

See recent discussion by Prof. Robert Miller about this method and the close encounter with the asteroid earlier in 2013, http://mpe2013.org/2013/02/20/asteroids/
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The Trillionaires Club of Nations Is US National Debt Out of Control?

1. Summary
A Trillionaires Club, which includes 13 countries, is conceived here based on the GDP values for 2012 (compiled by the Economic Intelligence Unit, see The Economist, global debt clock). The countries that make this first Trillionaires Club for 2013 are, in order of decreasing GDP, USA, China, Japan, Germany, France, UK, Brazil, Italy, Russia, India, Canada, Mexico, and Australia. An analysis of the GDP-Debt data for this Trillionaires Club reveals that the current, astoundingly large, US national debt ($16.829 trillion on April 30, 2013), relative to its GDP, is, statistically speaking, entirely consistent with the debt and GDP values of other members of this Trillionaires Club of nations.

**************************************************** Table 1: The Trillionaires Club of Nations

Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 Average

Country
USA China Japan Germany France UK Brazil Italy Russia India Canada Mexico Australia

Debt/GDP [%] 100 (y/x)

69.8 15.5 215.8 82.1 87.1 87.7 54.3 120.3 8.2 49.0 87.2 35.6 36.9

GDP, x $ trillions
15.202 7.729 5.887 3.406 2.636 2.383 2.298 2.084 1.805 1.794 1.712 1.076 1.068 3.775

Debt, y $, trillions
10.611 1.198 12.704 2.796 2.296 2.090 1.248 2.507 0.148 0.879 1.493 0.383 0.394 2.981

Data source: The global debt clock, The Economist (click here)
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Table of Contents
No. 1. 2. 3. 4. 5. 6. 7. Topic Summary Introduction Brief Comments on Methodology Analysis of the Trillionaire Club GDP-Debt Einsteins work function outside physics Conclusions Reference List Page No. 2 3 4 7 19 25 29

2. Introduction
How do we tell if the US national debt, which now stands at $16.829 T, as of April 30, 2013, is out of control and unsustainable, as some believe? Is there a scientific basis for such a conclusion? Enter now the Trillionaire Club of nations. Every year, Forbes publishes its annual billionaires list (click here) during the month of March, see Refs. [1-9]. The 2013 list includes a total of 1426 billionaires, worldwide, distributed over 64 countries; see also the list by Hurun [10,11]. The aggregate net worth of all the worlds billionaires is $5,431,810,000,000, or $5.432 trillion. The US heads the list with 442 billionaires with a combined net worth of $1,872.5 billion ($1.872 trillion) and an average net worth of $4.236 billion. There are no trillionaires, yet. The worlds richest man, Carlos Slim Helu, the Mexican telecom tycoon, is worth $73 billion, or less than one-tenth of one trillion. I have analyzed the billionaires net worth data and published several articles on this topic recently; see Refs. [12-14]; see detailed bibliography in Ref. [15]. Thus, following up on this, I have now put together a list of countries whose net worth, as measured by the GDP, exceeds $1 T (trillion), see Table 1.

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There are only 13 countries in this Trillionaires Club, based on the GDP for 2012, which was obtained the data compiled by the Economics Intelligence Unit, see website of The Economist, see the global debt clock (click here). The US heads this list with an annual 2012 GDP of $15.202 trillion and a total public debt of $10.611. The current US public debt, to the penny (as of April 30, 2013), is $16,828,845,495,183.90 or $16.829 trillion, see Ref. [16]. The US national debt crossed the $1 T mark for the first time in 1981, after President Reagan took office (on Sep 30, 1981 it is $997.855 billion and on Sep 30, 1982 it was 1,142.034 billion). It had more than quadrupled by Sep 30, 1992 when it was $4.064 trillion (the senior George Bush was President). It had more than doubled by Sep 30, 2005 when it was $8.507 trillion (George W Bush was President) and had doubled again by Sep 30, 2012 when it was $16.066 trillion (Obamas first term). The US Bureau of Public Debt gives a figure of $14.790 trillion for Sep 30, 2011 was, which is higher the figure given by the EIU and The Economist for 2012. Is the US national debt out of control, as many like to think, especially in these troubled times, following the near total collapse of the economy due to the financial crisis of 2008? We are now in a position to answer this question, a bit more dispassionately, using a more scientific approach, instead of merely partisan political arguments, by analyzing the Debt-GDP data for our Trillionaires Group.

3. Brief Comments on Methodology

The methodology that we will use to analyze the GDP-Debt observations, albeit for a single year (2012), is a very simple and transparent one. Since we are interested in understanding the implications of the US national debt levels, the highest in the planet, we will first prepare a x-y scatter plot and then analyze the trends observed, in a step-by-step manner. Anyone with a high school education, with the ability to read an x-y graph and/or the willingness to learn how to derive the numerical values of the constants h and c in the equation for a straight line, y = hx + c, will be able to make sense of this article
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and then understand the implications of the Reinhart-Rogoff (RR) findings and more importantly the call for austerity, with or without RR. The following steps have been taken in the analysis. Since we are interested in understanding the US debt in relation to other countries of the Trillionaire Club, we will use classical linear regression analysis to study the trends. Accordingly, we will: 1. First exclude Japan (very high debt) and China (very low debt) from the analysis to see how the US debt compares with the other 10 countries. 2. Include Japan and China to see if the conclusions are changed significantly. 3. Exclude all three, US, Japan, and China, to explore the GDP-Debt relation observed with the smaller countries (with GDP less than $5 trillion with Germany having the highest GDP in this subgroup). This is illustrated in Figure A and separated from the rest of the discussion. The above is covered in the next section, 4. Finally, an entirely new methodology is proposed, based on the idea of a work function conceived by Einstein in 1905 to explain the experimental observations on photoelectricity, notably by Phillip Lenard and other contemporary physicists of the late 19th and early 20th century. Interestingly, Lenard received his Nobel Prize in 1905, the same year that Einstein provided a theoretical explanation for certain puzzling observations. The same idea of a work function is also shown to emerge naturally when we analyze the batting statistics of an exceptional baseball player like the legendary Babe Ruth. This is the topic of 5. The main conclusions are then summarized in 6.

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3.50 3.00

Debt, y [$, Trillions]

2.50 2.00 1.50 1.00 0.50 0.00 0.00

(xm , ym )
y = 1.119x - 0.845 = 1.119 (x 0.755) r2 = 0.6746 Type I Behavior

1.00

2.00

3.00

4.00

5.00

GDP, x [$, Trillions]

Figure A: The GDP-Debt diagram for the 10 smaller countries of the Trillionaire Club of nations with a GDP of less than $5 trillion. Germany has the highest GDP and also the highest debt in this group. The generally upward and rising trend in GDP and the Debt can be described mathematically by the best-fit line, determined using (linear) least squares regression, described by Legendre in a paper published in 1805. (The German mathematician Gauss, a contemporary, claimed priority after Legendre published his paper, as discussed by Prof. Miller in his recent note on asteroids and their orbits, see Page 1.) The best-fit line always passes through the point (xm , ym) where xm and ym are the mean, or average values of x and y in the data set. In our example here, (x m , ym) = (2.026, 1,423) and is highlighted by the solid blue dot. Imagine a free pivoting of the best-fit line about this mean point. The vertical deviations of the individual points from the best-fit line (y yb) will change and hence the square of these deviations (or errors as Legendre puts it) will change. The method of least squares adjusts the slope h to minimize the sum of all these errors. The formula for the slope, along with a worked example, is given in the references cited. Now let us see how the presence of the three large countries affects this analysis.
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4. Analysis of the Trillionaires Club GDP-Debt Data

Consider the x-y scatter plot in Figure 1 which is nothing more than a graphical representation of the data that has been tabulated here. Not surprisingly, the data for the Trillionaires group, taken together, reveals a nice upward trend with the Debt y increasing as the GDP x increases. This is consistent with the linear law relating the debt and the GDP as discussed in three recent articles on this topic, see Refs. [17-19]. We observe exactly the same linear relation if we consider the multi-year data for a single country in the Trillionaires group. The Debt-GDP diagrams for several countries in our list, for USA, Canada, China, Germany, Japan, Brazil, and Australia have already been presented in Refs. [17,19].
16.00 14.00

Debt, y [$, Trillions]

12.00 10.00

Japan 012

USA

8.00
6.00 4.00 2.00 0.00 0.00

China
4.00 8.00 12.00 16.00 20.00

GDP, x [$, Trillions]

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Figure 1a: Graphical representation of the Debt-GDP data for the Trillionaires Club (2012) of nations. A nice upward trend is seen here with three countries, USA, China, and Japan being the exceptional cases. As further examples, the Debt-GDP diagrams for Italy and India, for the period 2002-2012 are presented in Figures 2 and 3 here. Italy had a Debt/GDP ratio ranging from a low of 100.3% in 2004 to a high of 120.3% in 2012. The Debt/GDP ratio for India, on the other hand, varied from 59.3% in 2002 reaching a maximum of 61.5% in 2003 and then decreased to a low of 49% in 2012. Nonetheless both these countries reveal the same linear law, y = hx +c relating the Debt y and the GDP x. The only difference lies in the numerical values of the constants h and c.
3.00

Italy
2.50

Germany France UK

Debt, y [$, Trillions]

2.00

1.50

Canada Brazil

1.00

India
0.50

Mexico Australia
0.50 1.00 1.50

Russia
2.00 2.50 3.00 3.50 4.00

0.00 0.00

GDP, x [$, Trillions]

Figure 1b: Graphical representation of the Debt-GDP data for the 10 countries with GDP less than $5 Trillion, using an expanded scale. The upward trend is more clearly evident here. The top three countries, USA, China, and Japan are the
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exceptional cases. Russia, India, and Canada, with nearly the same GDP, line up on a vertical line with debt levels increasing from Russia (lowest debt of the Trillionaire Club) to Canada. Italy follows what has been called the Type I behavior (h > 0, c < 0, see further discussion in Refs. [17,19]) with a positive slope h and a negative intercept c. This means the Debt/GDP ratio y/x = h + (c/x) = 1.221 (0.234/x) will keep on increasing as the GDP x increases. The limiting value of the Debt/GDP ratio is equal to the slope h = 1.221 or 122.1%. Italy is close to this limit now with a Debt/GDP ratio of 120.3% in 2012. A crisis may be looming unless something fundamentally changes (usually this means a change in the intercept c, we will discuss this point shortly in 4).
3.50 3.00

Italy (2002-2012)

Debt, y [$, Trillions]

2.50 2.00 1.50 1.00 0.50 0.00 0.00 -0.50

y = 1.221x - 0.234 r2 = 0.9113 Type I Behavior

0.50 1.00 1.50 2.00 2.50 3.00

GDP, x [$, Trillions]

Figure 2: The Debt-GDP diagram for Italy (2002-2012). The best-fit line through the data is determined using the method of least squares, Refs. [20-22], and has the equation y = 1.221x 0.234, with r2 = 0.9113. The Debt/GDP ratio y/x = 1.221 (0.234/x) increases as we move up this Type I line to larger GDP values.
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The limiting value of the Debt/GDP ratio equals the slope h = 1.221 or 122.1%. Italy is very close to this limit in 2012, with a Debt/GDP ratio of 120.3%. Further increases in the GDP are only possible if Italy is able to change the slope h and/or change the intercept c, i.e., the economic work function, as discussed in detail in Ref. [19] using the analogy of batting performance in baseball [23,24]. If we analyze the players game-by-game batting logs, we find the batting stats following the law y = x + c where x is the number of At Bats (AB) and y the number of Hits (H) and the constant c has values of 0, -1, -2 etc. indicating the number of missed hits.

1200

1000

Debt, y [$, Billions]

India (2002-2012)

800

600

400

200

y = 0.449x + 113.8 r2 = 0.9829 Type II Behavior

0 500 1000 1500 2000 2500

GDP, x [$, Billions]

Figure 3: The Debt-GDP diagram for India (2002-2012). The best-fit line through the data is determined using the method of least squares, Refs. [20-22], and has the equation y = 0.449x + 113.8, with r2 = 0.9829. The Debt/GDP ratio y/x = 0.449 + (113.8/x) decreases as we move up this Type II line to larger GDP values. The limiting value of the Debt/GDP ratio equals the slope h = 0.449 or 44.9%. Again, like Italy, India is also very close to this in 2012, with a Debt/GDP ratio of
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49%. Further increases in the GDP are only possible if India is able to change the slope h and/or change the intercept c, i.e., the economic work function. Against this background, let us now reconsider the single year data for the Trillionaires Club of nations. Since Japan (high debt relative to its GDP) and China (low debt relative to its GDP) are both exceptions, let us exclude these two countries from the linear regression analysis. This yields a Type I best-fit line with the equation y = 0.709x 0.0272 with r2 = 0.9588, see Figure 4. Now, we find that the US data point falls practically on this best-fit line. Indeed, the US debt is slightly lower than predicted by the best-fit equation ($10.751 trillion versus the actual value of $10.611 trillion).
16.00 14.00

Debt, y [$, Billions]

12.00 10.00 8.00 6.00 4.00 2.00 0.00 0.00

Without China and Japan (In 2012)

(xm , ym )

y = 0.709x 0.0272 = 0.709 (x 10.751) r2 = 0.9588 Type I Behavior

8.00 12.00 16.00 20.00

4.00

GDP, x [$, Trillions]

Figure 4: The Debt-GDP diagram for the Trillionaires Club (2012) of nations with the best-fit line determined by excluding the (x, y) pairs for Japan and China which are clearly outliers. The US data can be seen to fall practically on this best-fit line. In other words, the current US national debt, relative to its GDP, is

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statistically speaking, entirely consistent with the Debt and GDP levels of the remaining members of the Trillionaires Club of nations.

Of course, this may also be an artifact of the methodology that has been used to determine the slope h of the best-fit line. Let me explain. As we know, the best-fit line always passes through the point (xm, ym) where xm and ym are the mean or average values of the x and y values in the data set. Hence, ym = hxm + c, where h is the slope of the best line and c the intercept made on the y-axis. Adding or subtracting points from the data set will change the mean values. For example we get the following results for the mean point if we exclude China and Japan and then also exclude USA. All 13 members: (xm, ym) = $3.775 T, $2.981 T Without China and Japan: (xm, ym) = $3.224 T, $2.259 T Without US, China and Japan: (xm, ym) = $2.026 T, $1.423 T How do we fix the values of h and c? Imagine a best-fit line which is allowed to pivot around the average point. The vertical deviations (y yb) of each point from the best-fit line will change as the line pivots. Here y is the actual observed value and yb the theoretical value on the best-fit line. The mathematical formula for the best-fit line adjusts by the slope h to render a minimum the sum of the squares of the vertical deviations from this line (see Refs. [20-22]). The US data thus does have an undue influence on the slope of the best-fit line since the position of the mean is affected by the US data. The solid blue dot in Figure 4 is the mean point without China and Japan. Since China and Japan lie on opposite sides of the best-fit line deduced at this stage, perhaps, they counteract each other and do not affect the slope h significantly. This can only be ascertained by re-determining h and c by including ALL the members of the Trillionaires Club in the regression analysis. This is illustrated, after re-computing, in Figure 5.

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Indeed, it is of interest to note that in his famous 1805 paper, when he introduces this method, Legendre states the least squares methods recommends itself not only because it is a simple and elegant method (mathematically speaking) but also because it will reduce the influence of extreme values in the data set. Hence, in order to assess the influence of the US data, let us now exclude it and again and re-determine the best-fit line considering only the remaining ten countries in the Trillionaires group. This is illustrated in Figure 6. The US data now falls significantly below the recomputed best-fit line. With the re-positioning of the average point (xm , ym), the slope h has also increased and the best-fit line has pivoted away from the US and Chinese data points towards the Japanese data point. Correspondingly, the intercept c now has a small negative value. Once again, this means that, statistically speaking, relative to its GDP, the US national debt is entirely consistent with the Debt and GDP levels of the remaining members of the Trillionaires Club of nations. In fact, compared to the $5T Club, the US national debt is significantly lower than the predicted values ($10.611 T in 2012, according to the Economic Intelligence Unit, compared to the best-fit line prediction of $16.173 T).

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16.00 14.00

All 13 countries (in 2012)

Debt, y [$, Billions]

12.00 10.00 8.00 6.00 4.00

(xm , ym )
y = 0.716x + 0.278 r2 = 0.5047 Type II Behavior

2.00
0.00 0.00

4.00

8.00

12.00

16.00

20.00

GDP, x [$, Trillions]

Figure 5: The Debt-GDP diagram for the Trillionaires Club (2012) of nations with the best-fit line determined by INCLUDING ALL 13 members. The US data now falls slightly below the best-fit line. With the re-positioning of the average point (xm , ym), the slope h has increased slightly, which means the best-fit line has pivoted to accommodate the Japanese data point much more than the Chinese data point. Correspondingly, the intercept c now has a small positive value instead of a negative value. Again, this means that, statistically speaking, relative to its GDP, the US national debt is entirely consistent with the Debt and GDP levels of the remaining members of the Trillionaires Club of nations.

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16.00 14.00

Debt, y [$, Billions]

12.00 10.00 8.00 6.00 4.00 2.00 0.00 0.00

Under $5 T Club 10 countries (in 2012) y = 1.1119x 0.845 r2 = 0.675 Type I Behavior
4.00 8.00 12.00 16.00 20.00

GDP, x [$, Trillions]

Figure 6: The Debt-GDP diagram with focus on the $5T Club (under $5T). The best-fit line indicated here was determined by considering only the 10 members with a GDP of less than $5 trillion. China, Japan, and USA are excluded. This comparison of the US national debt data with the debt and GDP data for the 10 members with GDP of under $5 T also reveals another remarkable feature of this GDP-Debt relation. Notice that the (x, y) pairs for China and the USA seem to fall roughly along a parallel to the new best-fit line in Figure 6. The slope and intercept of the US-China line is: Slope h = (y2 y1)/(x2 x1) = (10.611 1.698)/(15.202 7.729) = 1.2596 Intercept c = (y1 - hx1) = (y2 hx2) = - 8.538 The slope h = 1.26 for the US-China line is very nearly the same as the slope h = 1.11 for the best-fit line through the data for the smaller economies (< $5T) of the Trillionaires Club. How does one assess this?

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16.00 14.00

Debt, y [$, Billions]

Japan

12.00 10.00 8.00 6.00 4.00 2.00 0.00 0 2 4 6

y = 1.1119x 0.845 r2 = 0.675 Type I Behavior

USA

China
8 10 12 14 16 18

GDP, x [$, Trillions]

Figure 7: The Debt-GDP diagram with a series of parallels to the best-fit line (solid line) determined by considering only the 10 members with a GDP of less than $5 trillion. China and USA fall on a line that is roughly parallel. Indeed, one can envision a PERFECT set of parallels to the best-fit line through each of the (x, y) pairs for China, Japan, and the US, as illustrated in Figure 7. The parallel through the US data point has the equation y = 1.119x 6.406 where the intercept c is obtained from c = y hx with h = 1.119, the slope of the best-fit line and (x, y) = (15.202, 10.611) being the (GDP, Debt) values for US. Likewise, the parallel through the Japanese point has the equation y = 1.119x + 6.114. The parallel through China is not shown in Figure 7 but look at how close the Chinese (x, y) pair is to the parallel through the US data point. This means the US-China line is indeed roughly parallel to the best fit line. Japan is the odd Uncle in the Trillionaire Club. This statistical outlier can now be rationalized by introducing the idea of a family of parallels with the general equation y = hx + c with c having a different value for each member of

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the Trillionaire Club and h being the best-fit slope deduced for the large majority (mostly the smaller GDP members).
4.00

Debt, y [$, Billions]

3.00

y = 2.079x 1.826 Mexico-Italy Type I Behavior

2.00

1.00

y = 2.055x 2.808 India-UK Type I Behavior

0.50 1.00 1.50 2.00 2.50 3.00 3.50

0.00 0.00

GDP, x [$, Trillions]

Figure 8a: The Debt-GDP diagram with a series of parallels. The slope h is fixed by considering the (x, y) pairs for India and UK. The (x, y) pairs for Mexico and Italy are yield the same slope h. This new slope is considerably steeper than the slope h = 1.11 for the best-fit line through all the 10 data points. Or, one can abandon statistical arguments, such as the least squares regression analysis, completely, and use just any two (x, y) pairs to determine the equation for a system of parallels through the data set. Indeed, if one examines Figure 1b carefully, where the data for the 10 countries with GDP under $5T was plotted, it is easy to envision a series of parallels connecting various (x, y) pairs. This is now illustrated in Figure 8. It is also worth reviewing Legendres introductory remarks in his 1805 paper (click here). To quote, Of all the principles that can proposed, there is none more general, more exact, and more easy of application, that of which we have
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made use in the preceding researches, and which consists of rendering the sum of squares of the errors a minimum. By this means, there is established among the errors a sort of equilibrium which, preventing the extremes from exerting undue influence, is very well suited to reveal the state of the system which most nearly approaches the truth. This is a remarkable statement which offers the philosophical justification for the use of the method of least squares (and statistical methods, in general). However, the key point is of all principles. In other words, there are other methods of solving the same problem of finding the truth about the state of the system while guarding against the extremes from exerting undue influence. This alternative view is illustrated now in Figure 8. It is also remarkable that Legendre mentions finding the truth about the state of the system whereas the popular perception now is that statistics is often associated with lies and cheating to confuse or to bolster weak arguments (see quote attributed to British Prime Minister Benjamin Disraeli, and others, There are three types of lies: lies, damned lies, and statistics (click here). The difficulties with the method of least squares are also obvious. Although widely used and easy to apply, as noted by Legendre, it also suffers from the defect of being subject to data manipulation. One often excludes outliers, as has been done here. Can we really do that? How does the outlier change the story? Is this to be done selectively? Where does the truth really lie? Since we are dealing with a special grouping countries, the 13 members of the Trillionaire Club, perhaps, the right way to analyze this GDP-Debt data is to INCLUDE ALL members, as done in Figure 5. This also leads to the conclusion that the US national debt, after allowing for the higher GDP level, is indeed consistent with the debt and GDP levels for the other members of this Trillionaire Club. (This was the main purpose of this article, as made clear in the title.) However, the alternative view being proposed here, that of imposing a series of parallels on to the data set (provided there is some justification for the
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choice of the (x, y) pairs used to fix the slope h), also recommends itself for reasons that will become obvious when we discuss the idea of a work function in the next section. Indeed, after careful examination, we find that India and UK (h = 2.055), and Mexico and Italy (h = 2.079), fall on almost PERFECT parallels. These two parallels are included in Figure 8. One can likewise show that Russia and Brazil fall on a line that is roughly parallel to these two lines (h = 2.23). What is the significance of these parallels?

5. Einsteins Work Function Outside Physics

The Trillionaire Club, like the Forbes billionaires Club, is an elite club of nations and represents some of the most advanced, emerging and vibrant economies on the planet. Although Japan is burdened with debt (crippling debt as some would say and certainly well above the Reinhart-Rogoff threshold of 90% Debt/GDP ratio), the Japanese GDP has NOT stopped growing. It increased from $3.942 T in 2002 to $5.897T in 2012 (GDP growth measured by x/x = 0.4966, or 49.66%) with the debt growing from $5.765 T to $12.709T in 2012. Likewise, the other members of this Trillionaires Club represent fast growing and emerging economies and are also the home to the worlds richest individuals according to the Forbes lists mentioned in the introduction. Thus, we will now compare the Debt-GDP data for this Trillionaire group with the batting stats for an elite baseball player: the legendary Babe Ruth. For those (especially non-Americans) who may be not be familiar with the sport of baseball, there is another example, the photoelectricity experiments, that we can invoke to understand the significance of these parallels. We will discuss this immediately after the baseball example.

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y=x
6

Number of Hits, y

(4, 4)
4

(6, 5)

(3, 3)
3

y = x -1

(2, 2)
2

(1, 1)
1 0 0 1

)
2 3 4 5 6 7

Number of At Bats, x
Figure 9: The movement of Babe Ruths game-by-game batting data (hits for the 1923 season) along parallels is illustrated here. Babe Ruth achieved the highest (single season) batting average of 0.394 = 205/520 in this season with 41 homers and 205 hits. A great player like Babe Ruth appears on the plate, as they say, faces the pitcher, receives the pitch, swings his bat, with immaculate timing and precision, and tremendous power, and hits the ball. Sometimes he hits it so powerfully that the ball is hurled way way out of the field. That is called a home run, and is a feat worth celebrating in baseball, just like a batsman hitting a boundary (worth 4 runs) or a sixer (worth 6 runs) in the game of cricket (strictly, boundary means 4s and 6s), very popular in the rest of the world. The entire stadium rises and roars to celebrate a home run, especially a home run from a legend like Babe Ruth. It is like the eagles that Tiger Woods used to make in his heyday, invariably, on every par 5 hole, especially when he wanted to wipe out a lead and make a charge up the leaderboard.

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If we study the game-by-game batting logs for Babe Ruth, for any season (see more detailed discussion of his 1923 season, Refs. [23,24]), we will find (x, y) scores like (0, 0), (1, 1), (2, 2), (3, 3), (4, 4) where the first number x is the number of At Bats (AB) and the second number y is the number of Hits (H). Babe Ruth would thus have a PERFECT batting average BA = H/AB = 1/1 = 2/2 = 3/3 = 4/4 = 1.000 in these games. Thus, y = mx where m = y/x = BA = 1.000, the PERFECT value, see Figure 9. In other games, Ruth had scores of (1, 0), (2, 1), (3, 2), (4, 3) and even (6, 5). For these games y = hx + c = x 1 where again h = 1 and c = -1 is related to the number of missing hits. And, in some other games, Ruth had scores of (2, 0), (3, 1), (4, 2), (5, 3) and so on. For these games, y = hx + c = x 2 and h = 1 and c = - 2 where c is again related to the missing hits. In other words, for a legendary player like Babe Ruth, the game-by-game batting stats can be viewed as a series of parallels all having a slope h = 1, Figure 9, and the intercept c = 0, -1, -2, etc. being related to the number of missing hits. In other words, the nonzero c is Babe Ruths work function which is related to the difficulty of producing hits in baseball. Likewise, we can analyze the home run (HR) stats. The HRs are even more difficult to produce than hits and so h < 1 for the HR stats. If we start aggregating the game-by-game stats into monthly data, and then the data for a whole season, we see the data falling nicely on an upward sloping straight line with the general equation y = hx +c where the batting BA = y/x = h + (c/x) will either increase or decrease as the number of At Bats x increases. The limiting value of the BA equals h, the slope of the line. For Ruth, c < 0 and so his BA kept increasing as AB increased. This is also the reason for the legendary status of Babe Ruth. The more he batted the better he seemed to get. In short, the slope h in the linear law tells us about the rate of increase of some observable y when another observable x increases. In baseball it is hits (or home runs) and At Bats. When we deal with the economies, such as the Trillionaire Club here, it is Debt and GDP. The nonzero c can be thought of as a generalized work function. Why the term work function?
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This idea of a work function was first conceived by Einstein and all the English translations of his famous 1905 paper use the term work function to describe the nonzero intercept c in his photoelectric law. Very briefly, in this 1905 paper, Einstein used a simplified version of Planks blackbody radiation law (enunciated just a few years ago in in December 1900) to describe the quantum nature of radiation in the form of light. After associating concepts such as energy, entropy, and temperature with light radiation, Einstein first showed that light can be thought of as a stream of particles (now called photons) each having an energy equal to the elementary energy quantum , conceived by Planck in December 1900; see reference list, Refs. [25-46]. When light shines on the surface of a metals, photons with energy bombard its surface. The photons strike electrons which are present inside the metal surface. Energy is exchanged between the photon and the electron which is then knocked out of the metal and can be collected and made to flow in an external circuit. Modern photocells work on this principle. The maximum energy K of the electron will be less than because some energy must be given up to do the work needed to overcome the forces that bind the electron to the metal. Einstein simplified this entire complex phenomenon by writing the following simple law, called the photoelectric law: K = W where W is the work function, a characteristic of the metal upon which light is shining; see also Millikans introduction of Einsteins equation in Ref. [36]. Since = hf, according to Planck, where h is a universal constant (now called the Planck constant) and f is the frequency of the radiation (here visible light), this means K = hf W = h(f f0) where f0 is the cut-off frequency below which no electrons are produced and W = hf0 is thus the minimum photon energy needed to produce an electron. So, if we study this photoelectricity phenomenon by shining light of different colors (or frequencies) on the surface of different metals, the K-f graph will be a series of parallels, with the intercept c = - W having different values depending on the nature of the metal surface (see figure 5, Ref. [38]). Ah, isnt this just like the missing hits in baseball that we just discussed?

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The missing hits, or Babe Ruths work function, the nonzero c, tells us something about the difficulty of producing hits or home runs. Einsteins work function tells us something about the difficulty of producing free electrons from inside a metal. Indeed, the American physicist and Nobel laureate, Robert Millikan, did exactly the experiments just described with two metals (lithium, of the famous lithium-ion batteries all around us, and sodium, present in common salt) and showed the K-f graph is a straight line and also that the slope was roughly constant and had the same value for both metals. As discussed by Millikan, in the introduction to his 1916 paper, Ref. [37], Einsteins hypothesis of light quanta, reckless though it seemed (Millikans choice of words), provided a ready explanation for (Lenards observations that) the energy of the electron (ejected out of a metal by ultraviolet light, or X-rays), depends only on the frequency and not its intensity. My statistical analysis of Millikans raw data (which can be found in his 1916 papers on photoelectricity, see Refs. [35-37] and Millikans Nobel lecture for the citations, click here) yields the following regression equations for lithium and sodium; see also articles on Air Tran in the bibliography, Ref. [15] and Ref. [47], on the rate of creation of billionaires in a population. It should be noted that Millikan does NOT use regression analysis. He simply considers a number of (x, y) pairs on the graph to determine the slope h, the Planck constant, and then reports the average value of h. The regression equations for sodium and lithium given below can be shown to be consistent with the value of h deduced by Millikan. The kinetic energy K = qV0 where q is the absolute magnitude of the electrical charge on a single electron and V0 is called the stopping potential. By measuring this stopping potential accurately, Millikan was able to determine the maximum value of K for the electrons produced in his experiments. For lithium: V0 = 0.4126f 3.593 in 1st paper of 1916 (two data points) For lithium, V0 = 0.4223f 3.922 in 2nd paper of 1916 (five data points) For sodium, V0 = 0.4069f 4.288, in 2nd paper of 1916 (six data points)

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Millikan reports the values of V0 instead of K. Thus, the numerical value of the slope of the V0-f graph equals h/q and the Planck constant h could be determined since q was known (measured in other independent experiments, called the oil drop experiments). Notice that there are slight differences in the numerical values of the slopes. The difference in the slopes of h = 1.25 and h = 1.11 observed here with the GDP-Debt data is therefore to be viewed in the same light. We are indeed observing a movement along parallels in the GDP-Debt diagrams just like we observe in the batting stats of a player like Ruth, or in K-f graphs in the experiments of Millikan!
20.00

Unified View of the Trillionaire Club

Debt, y [$, Trillions]

15.00

Japan
10.00

USA

5.00

China
0.00 0.00 4.00 8.00 12.00 16.00 20.00

GDP, x [$, Trillions]

Figure 10: The GDP-Debt diagram for the Trillionaires Club, from the perspective of the three largest economies. The US-China line is assumed to define the slope h and Japan is assumed to fall on a parallel to this line with a higher (more positive) value of the nonzero intercept c. All the other countries can then be seen to line up along parallels with slightly different work functions.
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Indeed, the 10 countries with GDP of less than $5T can now be seen to have virtually the same work function. What constitutes this work function? That is for professional economists to discuss and formulate policies much like scientists and engineers design various engines and other devices, based on well established laws. And, this now brings us to the end of our story. The US national debt, of great concern to many (essentially the fiscal conservatives), is seen to be fully consistent with the debt levels observed for other countries of the Trillionaire Club once we properly account for the differences in the GDP levels. Japan is the only odd man out here and so is China, in a way. The differences arise from what has been suggested here as the work function. Babe Ruths stats reveal a negative intercept (c < 0, Type I behavior) whereas his Yankee team mate Lou Gehrigs stats reveal a positive intercept (c > 0, Type II). The numerical value of c thus depends on the skill of the baseball player. The Type I and Type II behaviors observed here with the GDP-Debt data are exactly analogous. The economic work function, the value of the nonzero intercept, determines the position of the country on the Debt-GDP diagrams; see also the viewpoint illustrated in Figure 10.

In conclusion:
1) It appears that we must take a hard look at the present worldwide concerns about the debt and the persistent calls for austerity and the reduction of the national debt by fiscally conservative politicians. A recent study shows that such extreme austerity measures have indeed been socially injurious, especially the cuts to health care, see Ref. [51] 2) As also discussed in the companion articles on the GDP-Debt relations, Refs. [17-19], both GDP and Debt having been rising (during the period 2002-2012) in all leading economies studied, over the entire range of Debt/GDP ratios from as low as 7% (Russia in 2008) or 8% (Kazakhstan in 2008) to as high as 215.5% (Japan in 2012). The linear law means that there is no threshold and no stifling in the growth as posited by Reinhart-Rogoff. Everything is country specific and depends on the work function of a country which determines where it is found in a
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system of parallels that can be envisioned to describe this problem on the GDP-Debt diagram. 3) The earlier conclusion, viz., no threshold Debt/GDP ratio that stifles GDP growth, is confirmed again here with the analysis of the US debt and GDP relative to other members of the Trillionaires Club. The seemingly astronomical US national debt, fast approaching the $17T level, is seen to be entirely consistent with the GDP and debt levels of the economies of the Trillionaires Club of nations. 4) The idea of an economic work function discussed here (by invoking the analogies to baseball batting stats and the photoelectric work function of Einstein) in relation to the Debt-GDP problem merits the attention of all economists. Further research will no doubt shed light on what policies can be formulated and/or encouraged to beneficially alter the work function. As noted in the discussion both the Debt/GDP ratio for both Italy and India seems to be approaching the limiting value of h, the slope of the Debt-GDP graph and further increases in the GDP (and accompanying Debt) is only possible by changing the work function and/or the slope h of the graph. 5) The slope h in the GDP-Debt diagrams can be fixed with just two of the most reliable observations. This is also what we can learn from Millikans determination of the universal constant called the Planck constant h from his experiments with lithium and sodium to confirm Einsteins law. Millikan chooses a few (x, y) pairs from his graphs for sodium and lithium (V0-f graphs) and finds the slopes. He does NOT exhaustively determine all the 10 slopes for sodium (with 5 points on the graph) and 15 slopes for lithium (with 6 points on the graph). Although it is not explicitly stated, it appears that Millikan is using his most reliable measurements of the slope, based on his knowledge of how accurately V0 and f were determined in the individual experiments. The same applies to many other observations. Lies, damned lies, and statistics perceptions can be overcome and there is no need for the on the one hand and on the other hand gestures practiced by economists, with a third hand also introduced often to triangulate every complex issue of great societal concern.
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6) The Reinhart-Rogoff errors debate got me interested and I have offered the discussion here as a concerned non-economist. Perhaps, the most important finding here is: Even if all of our (x, y) observations fall on a PERFECT straight line, the most general law is y = hx + c and hence the ratio y/x = h + (c/x) is not a constant and can either increase or decrease as x increases as we move up or down the line. The failure to recognize this linear law is usually at the root of many bewildering observations and needless controversies, made all the more worse by the general misperception of statistics, which, in Legendres noble goal, was meant to find the truth.

My internet posts on this topic

Posting as Vj Laxmanan (Change) at http://www.britannica.com/EBchecked/topic/334981/AdrienMarie-Legendre

Vj Laxmanan Massachusetts Institute of Technology (MIT) I have always referred to the method of least squares as Legendre's method. I just modified the article on the US national debt and how it compares with other countries and reposted it with a new title, see http://www.scribd.com/doc/139348541/The-Method-of-Least-Squares-The-GDPDebt-Relation-for-the-Trillionaires-Club-of-Nations Also, based on what I was able to read up on today, it appears that Gauss was able to provide well documented proof of his development of the least squares method before 1805. I have not seen a detailed discussion of this "proof". Perhaps, it should be added here. Reply Like Follow Post 2 seconds ago (around 10.00 PM on May 3, 2013)

Vj Laxmanan Massachusetts Institute of Technology (MIT) I have provided a detailed discussion of Legendre's method of least squares, as it applies to an important contemporary problem - the relation between the GDP and the Debt of several leading economies. The following article was just uploaded http://www.scribd.com/doc/139114239/Is-US-National-Debt-Out-of-Control-The-TrillionairesClub-of-Nations I have also shown here that, perhaps, an alternative method, based on the Page | 27

idea of a work function (first conceived by Einstein to explain photoelectricity) could be used in conjunction with Legendre's method. What is the work function? It is just the name given to the nonzero intercept c in the equation for the best-fit line. If you want to understand it, you can study the game-by-game batting stats of a baseball player -- like the legendary Babe Ruth. That too is discussed in the above article.

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Reference List

1. The Worlds Billionaires, The Richest People on the Planet 2013, by Luisa Kroll and Kerry A Dolan, March 4, 2013, http://www.forbes.com/billionaires/ 2. Inside the worlds billionaires: Facts and Figures, by Luisa Kroll, http://www.forbes.com/sites/luisakroll/2013/03/04/inside-the-2013billionaires-list-facts-and-figures/ 3. Mapping the wealth of the worlds billionaires, by Luisa Kroll, March 9, 2013, http://www.forbes.com/sites/luisakroll/2013/03/09/mapping-thewealth-of-the-worlds-billionaires/ 4. Mapping the wealth of the worlds richest, by Ricardo Geromel, March 22, 2013; http://www.forbes.com/sites/ricardogeromel/2013/03/22/forbesbillionaires-map/ Forbes Map of Billionaires in the Americas, by Ricardo Geromel, March 22, 2013,
http://www.forbes.com/sites/ricardogeromel/2013/03/29/mappingbillionaires-in-the-americas/ There are 442 billionaires with citizenship from the United
States, more than in any other country in the world and even more than in all the other countries in The Americas together, which have a total of 129 billionaires. Those 442 ultra-rich from the U.S. own a combined wealth of $1,872.5 billion, three times more than the combined wealth of billionaires from the rest of the Americas, $572.5 Billion. The average fortune of a billionaire from the U.S. is $4.2 billion, while the average fortune of a billionaire from any other country in the Americas is $4.4 billion. If we exclude Carlos Slim, the worlds richest with an estimated net worth of $73 billion, the average net worth of American billionaires from countries other than the US drops to $3.9 billion.

5. Average Billionaire Net Worth by Country: Full List, by Edwin Durgy, March 13, 2013, http://www.forbes.com/sites/edwindurgy/2013/03/13/averagebillionaire-net-worth-by-country-full-list/ 6. Forbes Billionaires Asia-Pacific Map, by Ricardo Geromel, April 1, 2013 http://www.forbes.com/sites/ricardogeromel/2013/04/01/forbesbillionaires-asia-pacific-map/ Provides combined net worth data for each country. 7. Forbes Map of Billionaires of Latin America, by Ricardo Geromel, March 22, 2013, Provides combined net worth data for each country,
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http://www.forbes.com/sites/ricardogeromel/2013/03/29/mappingbillionaires-in-the-americas/

8. Forbes Billionaires, Special Issue, March 23, 2013, Profiles of the Top 20 Billionaires on pages 86 to 89. 9. The First Rich List, by Arik Hesseldahl and Claudia DeMairo, September 27, 2002, http://www.forbes.com/2002/09/27/0927richestphotos.html see also http://www.forbes.com/2002/09/27/0927richest.html The combined fortune of the 30 richest was $3,680,000,000 ($3.68 B) and the average net worth was $0.123 B ($122,666,666). The full list of the 30 richest men in 1918 may be found on page 15 of 17 of this article. 10. The Hurun Report, http://www.hurun.net/hurun/aboutusen.aspx 11. Hurun Global Rich List, http://www.hurun.net/usen/Default.aspx A Microsoft Excel with the full list of 1453 billionaires is available at this website, which was downloaded, sorted by country of citizenship, and analyzed to prepare this article. 12. Average Net Worth of the Forbes 2013 Billionaires: Summary of Regional Analysis, Published April 1, 2013, http://www.scribd.com/doc/133321333/The-Average-Net-Worth-of-theForbes-2013-Billionaires-and-Summary-of-the-Regional-Analysis Fuller discussion of entropy and Plancks average energy expression. 13. The Empirical Evidence for Entropy outside Physics, Published March 24, 2013, http://www.scribd.com/doc/132059874/The-EmpiricalEvidence-for-Entropy-Outside-Physics-Wealth-Distribution-among-thebillionaires-of-2013-Forbes-and-Hurun-Rich-Lists Plancks description of entropy and the Generalization of Plancks expression for the average energy U is discussed along with a brief discussion of Einsteins work function. 14. The Average Net Worth of the Top 10 Billionaires in a Country, Published March 11, 2013, http://www.scribd.com/doc/129863162/Average-Worth-of-the-Top-10Billionaires-in-a-Country 15. Bibliography, Articles on Extension of Plancks Ideas and Einsteins Ideas beyond physics, Compiled on April 16, 2013, http://www.scribd.com/doc/136492067/Bibliography-Articles-on-thePage | 30

Extension-of-Planck-s-Ideas-and-Einstein-s-Ideas-on-Energy-Quantum-totopics-Outside-Physics-by-V-Laxmanan 16. Bureau of Public Debt, http://www.treasurydirect.gov/ Click on Treasury Direct, then monthly statement of debt and find Debt to the Penny in the left side bar. The debt on April 30, 2013 was $16,828,845,495,183.90 or $16.829 trillion. 17. An MIT Non-Economists View of the Harvard-UMass Debt/GDP Ratio and Economic Growth Debate, Published April 26, 2013, http://www.scribd.com/doc/138076426/An-MIT-Non-Economist-s-Viewof-the-Harvard-UMass-Debt-GDP-Ratio-and-the-Economic-Growth-Debate 18. Iceland Votes Against Austerity: Analysis of Icelands Debt-GDP, Published April 28, 2013, http://www.scribd.com/doc/138345921/IcelandVotes-Against-Austerity-Analysis-of-Iceland-s-Debt-GDP-Data-2002-2012

19. A Brief Survey of the Debt-GDP Relations for Some Modern 21st Century Economies, Published May 1, 2013, http://www.scribd.com/doc/138912093/A-Brief-Survey-of-the-DebtGDP-Relationship-for-Some-Modern-21st-Century-Economies 20. Legendre, On Least Squares, English Translation of the original paper http://www.york.ac.uk/depts/maths/histstat/legendre.pdf ; see also http://www.stat.ucla.edu/history/legendre.pdf 21. Adrien-Marie Legendre, http://www.robertnowlan.com/pdfs/Legendre,%20Adrien-Marie.pdf; see also http://link.springer.com/content/pdf/bbm%3A978-3-540-743033%2F1.pdf (Ref.221 cites one my articles on dendritic growth or the theory of how snowflakes grow!) 22. Line of Best-Fit, Least Squares Method, see worked example given http://hotmath.com/hotmath_help/topics/line-of-best-fit.html The formula for h used in this example is an actually approximate one and was used, before the advent of modern computers, since it only involves the determination of x2 and xy and the sum of all the values of x, y, x2 and xy. The exact formula, is given below, with xm and ym denoting the mean or average values of x and y in the data set, and ym = hxm + c since the bestfit line always passes through the point (xm , ym).

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h = (x xm)(y ym)/ (x xm)2 Determine the deviations of the individual x and y values from the mean, or average, (x xm) and (y ym). Determine the product (x xm)(y ym) and their sum. This gives the numerator in the expression for h. Determine the square (x xm)2 and the sum. This gives the denominator in the expression for h. This also fixes the intercept c via ym = hxm = c . Then, using the regression equation, determine the predicted value yb on the best-fit line and the vertical deviation (y yb) and the squares (y- yb)2. The sum of these squares is a minimum. This can be checked by assigning other values for h (using any two points) and allowing the graph to pivot around (xm, ym). The regression coefficient r2 = 1 - { (y- yb)2 / (y- ym)2 } is a measure of the strength of the correlation between x and y (or y/x versus x). For a perfect correlation, when all points lie exactly on the graph, r2 = +1.000. 23. Babe Ruths 1923 Batting Statistics and Einsteins Work Function, Published April 17, 2013, http://www.scribd.com/doc/136489156/BabeRuth-s-1923-Batting-Statistics-and-Einstein-s-Work-Function 24. Babe Ruth Batting Statistics and Einsteins Work Function, To be Published April 17, 2013, http://www.scribd.com/doc/136556738/BabeRuth-Batting-Statistics-and-Einstein-s-Work-Function 25. Max Planck: The Quantum Hypothesis, in Great Experiments in Physics,
Edited by Morris H. Shamos, Dover Publications (1959), pp. 301-314. English translation of the original paper by Max Planck with brief explanatory notes by Shamos.

26. Great Experiment in Physics: Firsthand Accounts from Galileo to ... - Page 367 books.google.com/books?isbn=0486253465
Morris H. Shamos - 1959 - Preview - More editions

Firsthand Accounts from Galileo to Einstein Morris H. Shamos ... See quantum hypothesis; Planck, Max radiation, Maxwell's principle of, 185; density of, 306, 307; nature of, 216-217; rectilinear propagation of, 216 radioactivity, and atomic ... http://books.google.com/books?id=NwkXXyXmQdcC&pg=PA367&dq=plan
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27. 28.

29.

30. 31.

32.

ck+shamos+quantum+hypothesis&hl=en&sa=X&ei=2HVcUbfTGaC0QGl9YCQBg&ved=0CDEQ6AEwAA#v=onepage&q=planck%20shamos% 20quantum%20hypothesis&f=false (The original text of Plancks December 1900 paper may be found by clicking on the link given here.) A Brief biography of Max Planck, http://cosweb1.fau.edu/~jordanrg/bios/Planck/Planck_bio.htm Max Planck: The Reluctant Revolutionary, by Helge Kragh, Physics World, December 2000, pp. 31-35, http://www.math.lsa.umich.edu/~krasny/math156_article_planck.pdf Planck, the Quantum and Historians, Phys. In Perspective, 4 (2002), pp. 170-215. by Clayton A. Gearhart, http://employees.csbsju.edu/cgearhart/pubs/PQH.pdf see discussion of Boltzmanns definition of entropy starting page 181, equations 5 and 6 on page 182, the expressions given here and Boltzmanns example of now entropy arises. Also, see equation 7 on page 186 for total number of complexions, equations 8 and 9 on page 188 and page 202. One Hundred Years of Quantum Physics, by Daniel Kleppner and Roman Jackiw, http://www.4physics.com/phy_demo/QM_Article/article.html Theoretical concepts in physics, by M. S. Longair, Cambridge University Press (1984). http://www.amazon.com/Theoretical-Concepts-PhysicsAlternative-Reasoning/dp/052152878X Chapters 9 to 15 (case studies IV and V) and also chapters under Case Study II (Maxwell equations and electromagnetism) are highly recommended and cover the Planck and Einstein laws which are actually founded upon Maxwells work. On a heuristic point of view about the creation and conversion of light, by A. Einstein, 1905, Einsteins original paper which showed light can be viewed as particles with fixed energy quanta,
http://www.ffn.ub.es/luisnavarro/nuevo_maletin/Einstein_1905_heuristic.pdf

33. On a heuristic point of view concerning the production and transformation of light, Paper 5, in Einsteins Miraculous Year: Five Papers that changed the face of physics, Princeton Univ. Press (1998). http://press.princeton.edu/einstein/materials/light_quanta.pdf 34. Einsteins Quanta, Entropy, and the Photoelectric Effect, by Dwight E. Neuenschwander, Excellent discussion about how Einstein arrives at his
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conception of light quanta from the property called entropy possessed by radiation in the form light,
http://www.sigmapisigma.org/radiations/2004/elegant_connections_f04.pdf

35. The electron and light quant from experimental point of view, May 23, 1924, Nobel Lecture, by Robert Millikan, see Figure 4 on page 63, for experiments with sodium. The straight line graph for photoelectric experiments confirms Einsteins law. The slope of the graph gives the universal Planck constant h, one of the fundamental constants of nature. http://www.nobelprize.org/nobel_prizes/physics/laureates/1923/millika n-lecture.pdf 36. Einsteins Photoelectric Equation and Contact Electromotive Force, by R. A. Millikan (click here), Phys. Rev., Vol. VII, No. 1 (1916), Second Series, pp. 18-32. In this first paper, published in 1916, Millikan provides only two data points (V0 and f values) for the experiments with lithium metal. 37. A Direct Photoelectric determination of the Plancks h, by Robert A Millikan, (click here) Phys. Rev. Vol. VII No. 3 (1916), Second Series, pp. 355-390 http://mapageweb.umontreal.ca/leonelli/PHY3320/millikan.pdf More detailed experiments with lithium (5 data points) and sodium (6 data points) are presented in this second paper, also published in 1916. 38. The Photoelectric Effect, by M. Brandl, Project PhysNet, http://www.ifsc.usp.br/~lavfis/BancoApostilasImagens/ApEfFotoeletrico /The%20Photoelectric%20Effect%20-%20m213.pdf See sketch on page 5 showing parallel lines (K-f graph) for sodium and potassium. 39. On Cathode Rays, Nobel Lecture, May 28, 1906, by Philip Lenard, http://www.nobelprize.org/nobel_prizes/physics/laureates/1905/lenardlecture.pdf 40. Focus: Centennial Focus, Millikans Measurement of the Planck constant, Phys. Rev. Focus 3, 23 (1999), April 22, 1999, by Gerald Holton, http://physics.aps.org/story/v3/st23 41. The Millikan experiment to verify the Photoelectric relationship, http://tap.iop.org/atoms/quantum/502/file_47016.pdf 42. Photoelectric Effect, http://physics.tutorvista.com/modernphysics/photoelectric-effect.html

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43. The Hypothesis of Light Quanta and the Photoelectric Effect,

http://www.kutl.kyushu-u.ac.jp/seminar/MicroWorld1_E/Part3_E/P36_E/photo_electron_E.htm

The following schematic diagrams are copied from Ref. [43].

44. Plancks Blackbody Radiation law rederived for more general case, May 30, 2012, http://www.scribd.com/doc/95329905/Planck-sBlackbody-Radiation-Law-Rederived-for-more-General-Case

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45. What is Entropy? June 3, 2012, Discussion of example given by Boltzmann in 1877 http://www.scribd.com/doc/95728457/What-is-Entropy 46. Money in Economics is Just like Energy in Physics: Extending Plancks Law Beyond Physics, Published Jan 14, 2013, Introduction to the generalized statement of Plancks radiation law and application to describe the maximum point on the profits-revenues graph of a company (the old, GM, Ford, Yahoo), http://www.scribd.com/doc/120324960/Money-inEconomics-is-Just-like-Energy-in-Physics-Extending-Planck-s-law-beyondPhysics 47. Rate of Creation of Billionaires: Analysis of 2013 Forbes Billionaires list, http://www.scribd.com/doc/128944910/The-Rate-of-Creation-ofBillionaires-Analysis-of-the-2013-Forbes-Billionaire-s-List Millikans experiment discussion and regression equations for lithium and sodium. 48. Airline Quality Report: An Analysis of On-Time Percentages, Published April 18, 2013, http://www.scribd.com/doc/136760664/Airline-QualityReport-2013-Analysis-of-the-On-Time-Percentages 49. Airline Quality Rating 2013, Purdue University, e-Pubs, April 8, 2013, by Dr. Brent D. Bowen (Purdue University, College of Technology) and Dr. Dean E. Headley (Wichita State University, W. Frank Barton School of Business) http://docs.lib.purdue.edu/aqrr/23/ 50. Airline Quality Report 2013: An Analysis of On-Time Percentages, Published April 18, 2013, http://www.scribd.com/doc/136760664/Airline-Quality-Report-2013Analysis-of-the-On-Time-Percentages 51. Austerity is hurting our health, say researchers, Reuters, by Kate Kelland, April 28, 2013, http://www.reuters.com/article/2013/04/28/usausterity-idUSBRE93R0G820130428 Austerity is having a devastating effect on health
in Europe and North America, driving suicide, depression and infectious diseases and reducing access to medicines and care, researchers said on Monday.

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About the author V. Laxmanan, Sc. D.

The author obtained his Bachelors degree (B. E.) in Mechanical Engineering from the University of Poona and his Masters degree (M. E.), also in Mechanical Engineering, from the Indian Institute of Science, Bangalore, followed by a Masters (S. M.) and Doctoral (Sc. D.) degrees in Materials Engineering from the Massachusetts Institute of Technology, Cambridge, MA, USA. He then spent his entire professional career at leading US research institutions (MIT, Allied Chemical Corporate R & D, now part of Honeywell, NASA, Case Western Reserve University (CWRU), and General Motors Research and Development Center in Warren, MI). He holds four patents in materials processing, has co-authored two books and published several scientific papers in leading peer-reviewed international journals. His expertise includes developing simple mathematical models to explain the behavior of complex systems. While at NASA and CWRU, he was responsible for developing material processing experiments to be performed aboard the space shuttle and developed a simple mathematical model to explain the growth Christmas-tree, or snowflake, like structures (called dendrites) widely observed in many types of liquid-to-solid phase transformations (e.g., freezing of all commercial metals and alloys, freezing of water, and, yes, production of snowflakes!). This led to a simple model to explain the growth of dendritic structures in both the groundbased experiments and in the space shuttle experiments. More recently, he has been interested in the analysis of the large volumes of data from financial and economic systems and has developed what may be called the Quantum Business Model (QBM). This extends (to financial and economic systems) the mathematical arguments used by Max Planck to develop quantum physics using the analogy Energy = Money, i.e., energy in physics is like money in economics. Einstein applied Plancks ideas to describe the photoelectric effect (by treating light as being composed of particles called photons, each with the fixed quantum of energy conceived by Planck). The mathematical law deduced by Planck, referred to here as the generalized power-exponential law, might
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actually have many applications far beyond blackbody radiation studies where it was first conceived. Einsteins photoelectric law is a simple linear law and was deduced from Plancks non-linear law for describing blackbody radiation. It appears that financial and economic systems can be modeled using a similar approach. Finance, business, economics and management sciences now essentially seem to operate like astronomy and physics before the advent of Kepler and Newton. Finally, during my professional career, I also twice had the opportunity and great honor to make presentations to two Nobel laureates: first at NASA to Prof. Robert Schrieffer (1972 Physics Nobel Prize), who was the Chairman of the Schrieffer Committee appointed to review NASAs space flight experiments (following the loss of the space shuttle Challenger on January 28, 1986) and second at GM Research Labs to Prof. Robert Solow (1987 Nobel Prize in economics), who was Chairman of Corporate Research Review Committee, appointed by GM corporate management.

Cover page of AirTran 2000 Annual Report

Can you see that plane flying above the tall tree tops that make a nearly perfect circle? It requires a great deal of imagination to see and to photograph it.

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