Further Empirical Evidence for the Universal Constant h and the Economic Work Function

Analysis of Historical Unemployment data for Japan (1953-2011)

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In a companion article on the Japanese unemployment situation, see Ref. [6] in the links given below, it was shown that an extremely stressful and unhealthy trend seems to have been established in Japan, going back to 1998. The historical unemployment data obtained from the Japanese Statistics Bureau website (http://www.stat.go.jp/english/data/roudou/index.htm, click on historical data 2) shows that while the population has been rising, the labor force x has been decreasing since 1998, see Figure 2 in Ref. [6]. This is an unnatural situation, unlike what we find, for example, in Canada (see Ref. [5]), where the labor force has been increasing steadily since 1976 with increasing population. The decreasing labor force implies that many Japanese who should be in the labor force are (too discouraged and may be) exiting the work force. A decreasing labor force coupled with an increasing unemployment level, and especially the fact that this trend has long been established, makes the whole situation an extremely stressful one and calls for URGENT action on the part of business and political leaders in Japan. This painful and literal coiling back of the Japanese economy, on to itself, is illustrated dramatically by the unemployment diagram in Figure 1, where the line segments with arrows indicate the direction in which the economy has been moving since 1992 to the present. The links to several related articles, published over the last two plus weeks, on the US, Australian, and Canadian economies are given below. 1. http://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-Whathappened-in-the-Obama-years Published July 10, 2012. Obama years. 2. http://www.scribd.com/doc/99857981/The-Highest-US-UnemploymentRates-Obama-years-compared-with-historic-highs-in-Unemployment-levels Published July 12, 2012. All US historical data (1941-2012) 3. http://www.scribd.com/doc/100500017/A-First-Look-at-AustralianUnemployment-Statistics-A-New-Methodology-for-AnalyzingUnemployment-Data, Published July 19, 2012. Recent Australian data (Jan 2011-June 2012). 4. http://www.scribd.com/doc/100720086/A-Second-Look-at-Australian-2012Unemployment-Data Published July 22, 2012.

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5. http://www.scribd.com/doc/100910302/Further-Evidence-for-a-UniversalConstant-h-and-the-Economic-Work-Function-Analysis-of-US-1941-2011and-Canadian-1976-2011-Unemployment-Data Published July 24, 2012. 6. http://www.scribd.com/doc/100939758/An-Economy-Under-StressPreliminary-Analysis-of-Historical-Unemployment-Data-for-Japan Published July 24, 2012.

4.00

2002
2010

Unemployed, y [millions]

3.50 3.00

1998
2.50 2.00 1.50 1.00 0.50 0.00 65.5

1992 (65.78, 1.42)

Coiled-serpent like pattern 1992-2010

66.0

66.5

67.0

67.5

68.0

68.5

Labor force, x [millions]

Figure 1: Dramatic illustration of the literal coiling back on to itself of the Japanese economy. The unemployed y was increasing gently with increasing labor force x, between 1992 and 1998. Then an about turn occurred and the unemployment level reached a maximum in 2002. This was followed by a sharp drop in unemployment, with an expansion of the labor force, but the situation reversed itself very quickly with the economy making another U-turn in the WRONG direction. Nonetheless, we again find remarkable and convincing evidence in the Japanese unemployment data for EXACTLY the same numerical value for the universal
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constant h in the law y = hx + c = h(x x0), deduced earlier by considering the historical US (1941-2011) and Canadian (1976-2010) unemployment data. Here x is the labor force and y the number of unemployed, and h and c, the slope and intercept of the straight line. As the labor force x increases (over the long term, due to the natural increase in the population), the number of unemployed y is also usually found to increase. The historical data for Japan, plotted in Figure 2, is no exception to this universal trend. The numerical values of h and c can be readily deduced by surveying this x-y unemployment diagram carefully and looking for the relationship between those unique (x, y) pairs that represent special events in the history of the economy, such as local maxima or local minima, i.e., the years when the unemployment level was either very high or very low. As we see in Figure 2, the unemployment levels usually fluctuate and keep going up or down (with the passage of time) with an increasing labor force.
4.00

Unemployed, y [millions]

3.50 3.00 2.50

B
2.00 1.50

A
1992 (65.78, 1.42)

1.00
0.50 0.00 35.0

C
40.0 45.0 50.0 55.0 60.0 65.0

70.0

75.0

80.0

Labor force, x [millions]

Figure 2: The x-y unemployment diagram for Japan for the period 1953-2010. Starting with the lowest labor force and the unemployment level for 1953, in the
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lower left corner, we find that the unemployment levels increase with increasing labor force and keep fluctuating between the three parallels, with the general equation y = hx + c, with h = 0.0956. We will now discuss how the significance of the numerical value of h and how it was deduced. This is actually an average slope deduced from the data for the three developed and advanced economies: US, Canada, and Japan. Line A, y = 0.0956x 2.96 = 0.0956 (x 30.96). Line B, y = 0.0956x 4.05 = 0.0956(x 42.35) and for Line C = 0.0956x 4.86 = 0.0956 (x 50.82). Notice the cut-off labor force x0 = - c/h increases as we move down these parallels and hence the unemployment levels decreases.

Table 1: Determination of the Universal value of the slope h from the Japanese Unemployment data
Labor Unemployed, Change Change Slope h force, x y (millions) x y (millions) 39.89 0.75 1953 40.55 0.92 1954 41.94 1.05 1.39 0.13 0.0935 1955 65.05 1.36 1991 65.78 1.42* 0.73 0.06 0.0822 1992 67.52 3.4 27.63 2.65 0.0959 2001 66.17 3.36 24.23 2.31 0.0953 2009 Note: The slope h = 0.0822 for 1991 and 1992. However, if y = 1.43 for 1992, instead of 1.42, the calculated slope will increase to h = 0.0959. Accordingly, the (x, y) pairs for several unique points (local maxima or minima) in this diagram have been compiled in Table 1 along with the slopes determined between these points. The slope h = 0.0959 for the line joining 1953 and 2001, h = 0.0935 for 1954 and 1955, h = 0.0953 for 1955 and 2009. The average value of these three slopes h = 0.0949 and, quite amazingly, coincides EXACTLY with the unique value of the slope h determined earlier for the US economy by preparing an exactly similar plot, see Table 2 below and also Figure 4 in Ref. [2]. Year

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Table 2: Further Confirmation for the Universal value of the slope h for the US and Canadian economies
Labor Unemployed, Change Change Slope h force, x y (millions) x y (millions) Highest Unemployment levels recorded for the US economy (1941-2011) 1941 1982 2010 55.91 5.56 110.204 10.678 54.294 5.12 0.0943 153.889 14.825 97.979 9.265 0.0946 These two slopes are relative to 1941. Slope between 1982 and 2010, h = 0.0949 which coincides EXACTLY with the average value of the slope for the Japanese data. Slopes deduced for the Canadian economy 10.491 0.744 1976 13.779 1.6095 3.288 0.326 0.0991 1988 18.329 1.516 7.838 0.772 0.0985 2009 18.5251 1.484 8.034 0.740 0.0921 2010 All three slopes are relative to 1976. The average of these three slopes for the Canadian economy is h = 0.0966 Year

The US data points to a value of h = 0.0946 based on an analysis of the three (x, y) pairs for 1941, 1982, and 2010, which represent local maxima being the highest recorded unemployment levels. These three (x, y) pairs can be shown to lie on a PERFECT straight line, with the slopes of the line segments being h = 0.0943 (1941 and 1982), 0.0949 (1982 and 2010) and 0.0946 (1941 and 2010). The Canadian data for 1976-2010, on the other hand, reveal only two points which represent local maxima. Hence, the slope h of the line joining these two maxima may or may not be significant. (A value of h = 0.072, lower than the US value of h = 0.0946, is deduced from these two points.) However, the Canadian data reveal several local minima as the unemployment level keep fluctuating up and down with the steady increase in the labor force x as a function of time, see Figure 1 in
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Ref. [5]. A slope h = 0.0966 can be deduced for the Canadian unemployment data if we consider these local minima. In summary, we now have accumulated further evidence for a single universal value for the slope h in the linear law y = hx + c relating the labor force x and the unemployment level y.

Japan: Slope h = 0.0949 USA: Slope h = 0.0946

(with one of the three slopes for the US being exactly 0.0949)

Canada: Slope h = 0.0966

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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 ground-based 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
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Planck, referred to here as the generalized power-exponential law, might actually have many applications far beyond blackbody radiation studies where it was first conceived. Einsteins photoelectric law is a simple linear law, as we see here, 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.

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