Saturday, January 29, 2011

Why does spirituality exist?

What is spirituality, after all?

When you clear away the theological shrubbery, the social horrors of organized religion, the misogyny, and the self-delusion, the core of religion is a personal experience of spirituality. I don't mean this as a supernatural phenomenon, but as the undeniable experience of happiness and one-ness that comes over many people to various degrees and gives them the idea that- yes!, there is something amazing about the world that lies outside our common experience. Why do we have that feeling?

At the outset, I'll observe that in the absence of supernatural evidence, the question is not which of the world's religions has the correct account of spirituality, but why they exist, despite each being wrong in detail. (Excepting Buddhism, perhaps, if one takes its core as more strictly philosophical than supernatural. It does not even try to account for spiritual feelings, while assiduously cultivating them with arcane mental practices.)

At any rate, we are left with evolution as the plausible source for spiritual emotions, as it is for our many, many other emotions and capacities. People seem quite ready to trace their unpleasant emotions to evolutionary roots- disgust, jealousy, bitterness, hatred, regret. But less ready to trace their pleasant emotions in the same way. But isn't sex just as sweet for dogs and elephants as it is for us? They move heaven and earth for it, so we should conclude that whatever goes on in their heads, they have very strong positive emotions/motivations, likely to be essentially the same as the ones we rhapsodize about.

So, spirituality. What function can it serve, being so abstract and ethereal? Where could that have entered on the long road from oceanic slime to us? I'd suggest that spirituality is an intense form of happiness and  motivation, and thus a critical tool for biological systems. It covers several distinct feelings, from solidarity with one's social group to solidarity with and love of nature in general, to feelings that one has solved the existential mysteries of the universe through blinding, though inexplicable, insight.

The most concrete component or aspect of spiritual feeling, I think, is the epiphany- the feeling of having connected some amazingly disparate dots into a significant relationship. This is in part what our brains were built for, connecting up so many cells, sub-modules, and senses so that we not only can operate on a day-in day-out basis in a complex world, but can model reality abstractly and solve problems within those mental models. It is fascinating to see the squirrels outside our window solving their problem- how to get into the bird feeder. One can practically see the gears turning, and one has to ask- how do they know when they have come up with a solution?

They don't test every model they make in their minds in the real world. They don't even know consciously all the models they are working on (remember our right-brain, intuitive skills?). So how do they know when they have hit upon a solution that connects desire with reward? They know through an epiphany- the coalescence of a model of the target condition with their model of reality, after running dynamically through possible actions. The brain does the work in the background, and signals a positive result with this intense feeling. Of course, then they also get the tangible reward of food, but that would never have come without the first flash of recognition.

Spiritual feelings are, in part, epiphanies of a special kind- not concretely tied to the seed one is after, but to mysteries and puzzles that are both deeper and less accessible. Their depth makes their resolution highly motivated- the whole of existence seems to hang in the balance! But their lack of accessibility and empirical connection allows all sorts of models to substitute for the humble empirical model used to test whether a modelled route to the bird feeder really works.

So it is a free-floating feeling, prompted by a cloud, a waterfall, a look. Something that excites the mind with deep and unusual connections, both between mental points and with the world at large. The simplest characterization might be that it consists of love for the world and existence. Drugs like ayahuasca seem to promote such connections and feelings at high rates, far above what we experience in normal life. But their significance remains steadfastly unconscious.

We may be fundamentally changed, but rarely know why- the world is seen in a new way, felt in a new way. We feel more connected with other people and existence in general, taming that otherwise ever-present existential dread. With any luck it makes us more humane and better people. That this outcome is so frequent is a clue that spiritual feelings have a critical (and evolutionary) role in creating feeling-connections to all that is around us, providing the deepest kind of motivation for living and doing.

It is, incidentally, somewhat ironic that it is the scientists of today who are most up in arms about the whole-ness of our natural world, warning about climate change and other degradations we are visiting upon the biosphere. They express a basic respect and connection with nature that other cultural forces, especially the commercial world and its ideological defenders, work day and night to atomize and destroy. While the scientific position is rationally argued in terms of irreversible species loss, biodiversity loss, plain economic costs, and social justice vs the most vulnerable populations around the world, its core is clearly spiritual- a sense of the sacredness of nature that is horrified by wholesale, irreversible, destruction.

So the spiritual emotion seems partly to signify a tectonic shift in the unconscious. We know consciously that something has happened, and long to make sense of it. Here enters theology, rationalization, and all sorts of magical thinking. Explanatory models are typically implanted by tradition or indoctrination- we are born again, or saved by Christ, or touched by god, or allowed to look into the celestial spheres, etc. As with the Greeks, so it is with us- whatever arises from the unconscious is most easily clothed as divine.

It is extremely tempting to kill two birds with this one stone- to unite mystical, spiritual feelings with the conscious conundrums of existence, and think that the former signify divine sanction for whatever cosmic theology we have devised or learned about. But where's the evidence? There is no evidence. Such rationalizations are mere hypnotic suggestion and indoctrination. Better to value the feeling for its own sake and on its own terms. And better to learn about cosmology on its (scientific) terms, keeping the two separate.

On my desktop, the pictures that give me the deepest sense of awe tend to be those deep views of the universe sprinkled with wheeling galaxies- the more you look, the more you find. The possibilities are endless. Who knows what is taking place in these countless far-off worlds? Who would ever have imagined the scale of this universe?

Detail from one astronomy picture of the day, from the Hubble telescope.

This tonic of awe, with its doses of humility, appreciation, and love, seems a common and important emotion, elevating our sense of reality, humanity, and purpose in direct opposition to the mundane race for existence that occupies us otherwise. It is deeply important and worthy of veneration. But that doesn't mean it has analytic content.

That is why the universal secret of moderate religions is that they value theology far less than they value sensitivity, civility, and the general idea of sacredness. They are humanistic, if you will. The "religio - ligare" of connection is more important than the righteousness of theory and "belief".
"Let the gloomy monk, sequestered from the world, seek unsocial pleasures in the bottom of his cell! Let the sublimated philosopher grasp visionary happiness while pursuing phantoms dressed in the garb of truth! Their supreme wisdom is supreme folly; and they mistake for happiness the mere absence of pain. Had they ever felt the solid pleasure of one generous spasm of the heart, they would exchange for it all the frigid speculations of their lives, which you have been vaunting in such elevated terms." - Thomas Jefferson

"At the risk of anthropomorphizing a social convention, money capital longs for exotic forms."
"And debt can be a great conservatizing force; with a large monthly mortgage and/or MasterCard bill, strikes and other forms of troublemaking look less appealing than they would otherwise."
"From society's standpoint, SIVs are unambiguously harmful." ... "Theoclassical economists also assured regulators that independent experts, particularly top tier audit firms, would never give favorable opinions to fraudulent corporations."
  • Bill Mitchell quote of the week:
"The creation of a pool of unemployed people as a method of permanently disempowering workers in the labour market is not the end of the story, because it soon becomes apparent that this pool has to be strategically managed in order to engender the sort of desperate competition for jobs that the policy elites hope will thereafter drive productivity."
I'll note in passing that driving productivity is the least of it. What the agenda mostly drives is upward redistribution of income and wealth, as job scarcity lowers wage expectations through the lower end of the employment ladder, labor costs go down, and more profits can be diverted to management and capital.

Saturday, January 22, 2011

Baby genes take big steps

Fascinating insights from a study of recently evolved genes in fruit flies

The molecular revolution in biology has changed studies of evolution almost as much as it has changed mechanistic studies of how cells and bodies work. In both fields, the fruit fly (Drosophila) holds a central place as an experimental organism- for studies of development in molecular biology and genetics, and for studies of recent evolution among the many closely related species of its family. Several genomes have been sequenced, yielding ever more-detailed information about the path of evolution in relatively short times.

A recent paper asks whether we can identify genes born recently among the drosophilids, and if so, what kind of genes they are. Do they arise from duplication of an existing gene, or other mechanisms? Do they diverge rapidly from the parent they are copied from, or not? Do they tend to be unimportant or important?
" ... we identified 566 young genes that had originated within the past 35 million years (Myr) and 11,909 old genes that are shared by the 12 Drosophila genomes (>40 Myr)."
With genomes in hand, the lineage of individual genes can indeed be elucidated, up to a point. A gene might appear in one sub-lineage on the linear DNA where it was not before. It is new, and further (similarity) analysis can say whether it was duplicated from an existing older gene, or from some junky region of DNA, or has no visible source at all.

Lineage of the species used on left, and a diagrammatic example of one baby gene on right (yellow), appearing within a small aligned segment of each genome, top to bottom.

The authors find that 80% of the new genes arose from duplication of existing genes by DNA copying, 12% arose from duplication via an RNA intermediate, (the originating gene was transcribed, and its spliced mRNA was copied back into DNA by a reverse transcriptase), and 8% arose de novo from non-gene DNA regions. Needless to say, this process is totally uncontroversial among biologists, but represents the mythic "gain of information" that anti-evolutionists claim is patently impossible. This distribution of sources makes a great deal of sense, since it is easier for a gene to duplicate and then diverge, versus arising from some non-coding sequence which is typically full of stop codons and other serious barriers to encoding a sensible protein. Indeed, I am somewhat amazed that any genes could be classed as originating de novo in this way- they were probably originally very short, as shown in section E of the figure.

Mechanisms of gene birth.

After origination, the authors find that sequence divergence was typically rapid and extensive. Median divergence of the encoded protein sequences was 47%. Chimerism was common, with segments of the new genes expanding, disappearing, and rearranging (again, note E in the figure). Young genes also showed elevated rates of non-synonymous substitution (replacements in the three letter genetic code that change the coded amino acid, as opposed to synonymous substitutions which don't change the amino acid). This indicates positive selection, or an overall lack of selection for a time ... though not too long, or else the nascent gene would have caught a stop mutation and been inactivated. Genes normally show a strong bias to synonymous substitution, since other mutations tend to be deleterious or fatal.

Most interesting was the author's observation that young genes have virtually the same chance of being essential to the organism as older genes. They carried out a screen over ~200 genes of those identified above that were less then 35 million years old, with an RNAi knockout method, where an inactivating RNA matched to the selected gene is engineered into the flies, eliminating that gene's expression. 30% of these mutants ended up dead when gene expression was knocked down, the same rate as for all other genes in the fly. So it seems that not only can novel genes arise rapidly and take on enough function to be preserved by selection, but they can take on essential functions as well.

Why is that? The authors track down the parents of many of these young genes and ask whether they are also essential. No, they are not at a significantly higher rate than chance. The acquisition of essential function by a new gene seems largely independent of the role of the parent gene, though the numbers here are small. The fact that new genes not derived from duplications also acquired essential function at a lower, but still substantial rate (19%, vs 31%), indicates the same thing- that it isn't the origin of a gene that determines its importance to an organism, but the details of what process it happens to insinuate itself into and how it does so, which can range widely whatever a gene's origin.

"Our observation of lethal phenotypes caused by the knockdown of young genes suggested that essential vital genes have been frequently generated in recent evolutionary periods. A new gene might not have become essential immediately after its origination. It, however, can integrate into a vital pathway by interacting with existing genes, and such interaction would be optimized by mutation and selection. This coevolution may lead to the new gene becoming indispensable."
It is remarkable to see this data- one more payoff of the sequencing revolution. The surprising amount of change documented in young genes prompts the authors to claim that neofunctionalization is far more common than I would have thought. This means the adoption of new functions by a gene, as opposed to sub-functionalization, which is the splitting of existing functions between a parent gene and its offspring. For instance, if an important developmental gene functions in both early embryonic and later brain development, a duplication may allow the two copies to specialize/sub-functionalize for each role, each doubtless remaining highly important for the organism, but perhaps only the one functioning in early development being essential in laboratory conditions. Without further details on all the functions involved, it is hard to evaluate the author's claim, but there is no doubt that this form of molecular paleontology is an exciting frontier, taking us way beyond the interpretation of fossils.
"The prevalent gene structure renovation, together with the independence between parental gene essentiality and new gene essentiality, support the neofunctionalization origin of essentiality for most new protein-coding genes, many of which may contribute to the lineage-specific developmental program."

"Government debt, for example, can be thought of as a means for upward redistribution of income, from ordinary taxpayers to rich bond-holders."...
"Public debt is a powerful way of assuring that the state remains safely in capital’s hands. The higher a government’s debts, the more it must please its bankers."...
"But the violet of interest is no longer hidden behind graceless parts of speech alone; mathematics is now the preferred disguise."
  • A few notes on stuttering.
  • Remember that the rich supported the South in the Civil War.
  • Skidelsky on Keynes for today...
"A Keynesian analysis would put global imbalances at the heart of the current economic meltdown. Keynesian unemployment is triggered off by an imbalance between planned saving and investment that is liquidated by a fall in output. The imbalance can be initiated either by an increased desire to save or a reduced desire to invest, or by a mixture of both. An increased desire to save (by the Chinese) subjected the US economy to deflationary pressure."
"Rather, it comes from the feeling that Western civilization is increasingly unsatisfying, saddled with a system of incentives that are essential for accumulating wealth, but that undermine our capacity to enjoy it. "
"Judt considers the success of that welfare state was a double-edged sword. By reducing insecurity “their success would over time undermine their appeal”. In other words, we forget what we have and what our past generations fought for and why."

Saturday, January 15, 2011

The thirty year read

Whence Europe? ... Some notes on the thirty year war.

With some trepidation, I started on a history of the thirty year's war. And true to its reputation, it was dreadful- not just the war, which was that and more, but the book as well. A classic example of "one damn fact after another", the author trying to cram several volumes of outstanding scholarship into one phenomenally condensed doorstop of 850 pages. Plus, in a book that deserves a new map every couple paragraphs, the major map of central Europe was accidentally left out, leaving only a sprinkling of cursory battle maps.

But enough complaining. There were many interesting themes in play. What caused the war? Could Europe ever go back to such a condition? Why do countries meddle in each other's affairs? What changed about Europe's political order afterwards? Does democracy fundamentally change the equation?

My capsule history of the conflict would be that after the advent of Protestantism in the early 1500's, it spread like wildfire in northern Europe for two reasons- for its intrinsic theological rationale that the bible should be the touchstone of belief and that salvation needn't be intermediated by an official church that was so obviously flawed- even corrupt- in many dimensions. And secondly, for the opportunity nobles had to escape the Catholic hierarchy and taxation by setting up a local alternative church structure. This second reason was most obvious in the case of England's Henry VIII, but operated throughout northern Europe. The Catholic world used all the levers at its disposal to reverse this trend in the later 1500's, fighting the "Wars of religion" in France against the Huguenots, and using its control of the upper hierarchies of the Holy Roman Empire to force re-Catholicization in a quiet, but persistent way over several decades.
"The duke [of Bavaria] felt that Catholics had given too much ground already since 1555 and that it was high time for them to take a firm stand to prevent the Empire from sliding into chaos. The stance was influenced by a book, Autonomia, published in Munich in 1586 by Andreas Erstenberger, a secretary at the Reichshofrat, who criticized the toleration extended by the Catholic politique faction in France in an attempt to pacify the Huguenots. For Erstenberger, there could be no 'autonomy', since freedom of conscience was simply a license to serve the devil." p.220 
Protestants througout Central Europe became fed up with this treatment, which impinged on their political and religious rights/power/autonomy. Eventually, with the empire in a weak state as well, they saw war as the way to independence, starting with a revolt in Bohemia (which had its own rich pre-Lutheran history of Protestantism in the Hussites). Both sides were evenly matched, and the war dragged on, galloping and ravaging over most parts of the Austrian and German countryside for the notorious thirty years (1618 to 1648). A decade in, the Protestant side was very weak and also divided (the Lutherans and Calvinists couldn't stand each other), and outside powers started to participate- first Denmark, followed by Sweden on the Protestant side, and Spain (fellow Hapsburgs) on the Catholic side. In the last decade or so, France, despite being Catholic, entered the fray allied with Sweden on the side of the Protestants, due principally to its strategic competition against Spain and the Hapsburgs.
"Tschernembl was prepared to abolish serfdom in return for peasant support by 1620, but his [Austrian noble] colleagues rejected this, preferring an alliance with the sultan [!] instead." p. 310
Eventually, with resources thinning, and the armies shrinking, both sides realized that their territory was being slowly carved up by foreign powers (all the while, Sweden claimed to be promoting "German independence"!), and came to their senses, taking eight years to negotiate the Peace of Westphalia, 1648. This treaty (including the likewise long-awaited Spanish-Dutch peace) was highly structured, and did a good job of demobilizing the antagonists, settling territorial claims, and most importantly, resetting the religious parameters/norms of the Empire. Local nobles could still set the public religious character of their territories, (public processions, bell ringing, etc.), but some toleration was extended to private worship, with recognized groups (Calvinists, Lutherans, Catholics) allowed to practice everywhere, and others (Jews, Protestant splinter sects), still allowed to be ostracized if the ruler wished, but only after due notice, and with some degree of consideration. Protestants were also made equal before the law which before had favored Catholics systematically, advancing secularism.
"The disputes after 1648 no longer concerned fundamental truth, but the relative weights of Protestant and Catholic territories in imperial institutions. This political aspect had been present before 1618, but was overlaid by a theological militancy lacking after 1648. Theologians no longer influenced policy" p.769
"Only the pope rejected the entire settlement [of Westphalia] in his decree Zelo domus Dei, which he issued in August 1650 but backdated to 26 November 1648 to reaffirm his envoy Chigi's earlier verbal protests." p.754
"Pope Urban VIII excommunicated Florentine public health officials after they banned religious assemblies and processions to help combat infection [of the plague]." p.811
"Together with Thumshirn, his Altenburg colleague, Lampadius proposed extending German liberty to ordinary peoiple by granting full freedom of conscience. This was further than most Protestants were prepared to go, especially when they realized it would be difficult to deny Catholic minorities similar rights. Calvinist millenarianism had encouraged many to go to war. Though diehards were still predicting the imminent end of the Habsburg monarchy ten years after the war, most had long stopped believing such nonsense. War had become part of everyday life and had lost its impact as a sudden scourge of God." p. 722
It is clear that the participants (most of them, at least) had learned an important lesson in religious affairs. While still far from the religious freedom and disestablishment that flowered a hundred years later in America, religious control was dialed back an important notch, reducing the incidence of "thought crime", legal liabilitites, and other intrusions into this most personal sphere of identification, imagination, and creativity. In the next generation or two, J.S. Bach would move freely between Lutheran and Calvinist sponsors to create his extraordinary opus of religious and secular music.

"One recent study of the European Union  presents it not as a single, centralized Westphalian super-state, but as a 'neo-medieval empire', with the process of integration remodelling the continent along lines not dissimilar to the Holy Roman Empire."
A fascinating line in the book likens the Holy Roman Empire to what is taking shape once again in the form of the European Union. Like the Empire, the EU is not directly democratic, but rather works through delegations sent by member countries, much as the various estate holders, electors, bishops, and princes of the Empire gathered in the Reichsrat. The EU may be less class-ridden, but no less autocratic, handing down rules and decisions that are resented all over the EU. The lines of governance are similarly hazy, with querulous citizens condeming the Brussels bureaucrats, and a blizzard of institutions defying understanding. It could be termed Byzantine!
"The EU operates through a hybrid system of supranational independent institutions and intergovernmentally made decisions negotiated by the member states."
Could the new system break down as the Empire did? Hostility is certainly building in Euro countries as their economies melt down, accompanied by occasional riots. The deficit countries vainly try to cut their way to health and beg for rescue, while the donor countries (principally Germany) feel superior and resentful in return, never having dreamed that economic integration meant actually integrating - for better and for worse. At the same time, an unsettling new religious dynamic has taken hold, between a confident/reactionary Islam among segregated immigrants, an ossified Catholicism, and the mostly indifferent mass of average citizens, trending to apatheism or atheism. The Dutch have once again been at the vanguard, horrified at the return of religious violence.

So while the EU continues expanding outwards into the Russian sphere of influence, some rot has set in at the core. Indeed, Brussels itself is at the heart of a small secession battle between the Belgian Flemish and Walloons. Either the system can continue to muddle through, much as the Empire tried to, with ambiguous governance vacillating between local and EU management, possibly with some members exiting due to extreme economic distress (Ireland, Greece). Or it could centralize more effectively, establishing clearer lines of governance, integrated and trans-national fiscal managment that automatically funds less productive areas with money and migration from more productive areas. The former is analogous to the situation of the Empire prior to the thirty year's war, whereas the latter might resemble something more like the US, with a strong federal system. After the thiry year's war, the empire was stronger, with better governance and more federal character, but still succumbed to the nationalistic state concept a century and a half later.

This is more of a thought-experiment than a thorough analogy, but it is interesting how historical themes can recur on very large scales. Religion does not currently present itself as the primary focus of conflict and for that reason one can have some confidence that Europeans will keep emotions in check, even if unemployment remains high, poorer countries settle into uncomfortable dependence, and economic growth stagnates overall. Democracy also forms an important check, since we no longer have the free-lancing nobles who could contract alliances, raise armies, and start wars with little to no oversight.

One further angle of interest is how the war resembles the Afghan war we are currently engaged in. What@!? There are similarities. One is how surrounding powers use the conflict to further their own aims at the expense of the main antagonists. Another is the sheer length of this civil war, with occasional shocking descents into brutality that confound any religious interpretation. Another is its religious character- with each side claiming to have a truer interpretation of a common tradition, while all such propaganda claims are routinely subordinated to tribal affiliation, military exigency, and the various corruptions of warlordism.

The Thirty Year's War ended mostly with a restitution of the existing legal system, with a few noble warlords added to the imperial system, and several disposessed, but the overall structure more tweeked than revolutionized. One has to hope that the Afghan war has a more positive and fundamental outcome, though a simple de-emphasis of theocratic power would be highly significant in itself. In the derogatory words of a recent commentator, the US intervention has been "... designed to drag Muslim Arabs and Afghans through the Renaissance, the Reformation, the Enlightenment, the French Revolution and the Industrial Revolution in the space of a few years, at gunpoint." That certainly points to the difficulty, and we only can hope that time plus mutual understanding and the template that the painfully gained European/Western governance solutions provide can make some speedier headway.

Lastly, does all this connect with the recent Tucson shootings and our own polarization? I don't think so, for the basic reason that our political polarization is not real. The heated rhetoric and revolutionary fervor of our Tea Party friends and conservative shouters is all smoke and no fire. I see it as a huge cloud of obfuscating propaganda spread over the cultural battlefield so that the real interests at play- the rich and corporate powers that foot the bill- can maintain their current course of corrupting our government, taking handouts/bailouts, raising their income share, and beating down the power of workers and labor. However resonant their rhetoric with the large-amygdala and paranoid crowds, its purpose is not to take up actual arms, but to browbeat the government to keep its mitts off corporations, and the Democratic majority into a new sense of "normal", exemplified by their incantation that America "is a center-right nation". It isn't. It is a secular democracy with the mechanisms in place to resolve our many differences and injustices peacefully, as long as we also have the intellect to cut through the smoke and see what is really going on.

  • Meanwhile, Pakistan trends back towards medievalism and state theology.
  • And Pakistan's war against us continues...
  • The answer to Tucson? More guns!
  • Paranoid schizophrenia, for the doctor, and for the family.
  • Regulation is good for jobs. Regulation by the Fed would have saved millions.
  • The US and Cuba go back a long way.
  • Moving the needle in our political thought.
  • Bill Mitchell quote of the week, courtesy of Mr. Carey, as quoted by Victor Quirk
"The twentieth century has been characterised by three developments of great political importance: the growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy."

Saturday, January 8, 2011

A modest proposal

The US Senate deserves to be a more bipartisan and consensus-driven body.

I don't think there has been enough bipartisanship in Washington. The bickering that goes on, the disagreements and finger-pointing, it is all so disagreeable. Why can't they all just get along? So I'd like to make a modest proposal: the Senate should become a consensus body. That's right- every Senator would have to agree to any new piece of legislation or other business. There- doesn't that make you feel better already?

I know, I know- the constitution says that each Senator shall have only one vote. And requires two-thirds majorities for only a few specific cases, making it obvious that regular business should be decided by majority votes. But it also gives each house the power to make its own rules, and if the Senate decided that not 50%, not 60%, not 67%, but 100% agreement is what the American people deserve from their legislators, then what court could possibly disagree?

You are probably thinking that a consensus system would give the craziest Senators (Jim DeMint? Bernie Sanders? Grudge match!) the ability to hold any legislation and indeed the entire government hostage to their whims and "needs", however corrupt or ideological. But you aren't seeing the bigger picture. Consensus; kumbaya; compromise- those are the magic words in any political system. Sure it's going to be a tough road, but finding those great policies that we can all agree on- that is the golden path to a better future. We've seen it work in the UN- look what they have been able to accomplish!

Yes, this proposal would make the Senate our outstanding political body, able to cool the passions whipped up elsewhere in our divided and bitter system, ready to divine the real public interest that our citizens know lurks beneath the extreme platforms of the self-interested political parties, and willing to dedicate itself to the highest and most sacred goals of complete agreement, unanimity, hallowed consensus.

Greatness awaits us, if only we can find the will to empower each of our Senators with this sacred trust- to squelch partisanship, to search, and keep searching, for compromise, and then to search some more, wherever it can be found.

Saturday, January 1, 2011

Will we have to pay it back?

What is the fate of the US national debt? Is it some kind of emergency?

Much of our national economic discussion revolves around the national debt, which is "burgeoning", or "skyrocketing", or "spiralling out of control". Euro countries have tried (unsuccessfully) to mandate specific levels of debt to GDP (60%) as some kind of threshold of respectability or safety. What does all this mean and do mainstream economists (and politicians) know what they are talking about when they warn of dire problems with the debt? Are we leaving a burden of debt to the children and grandchildren? Do we have a choice in the matter?

Longtime readers will already know the answer ... no, and it is not a problem, and no, we have no choice in the matter. I am as usual indebted to Bill Mitchell for the general background on this story, though I am here mangling the story on my own.

Let's start with the basics. Federal debt represents promises to those who are rich enough to save their money (exchange dollars for long-term bonds, also denominated in dollars). Those promises are two-fold. First, to redeem the full amount borrowed on the due date, redistributing money from some people at that future time to others at that time. Second, of course, is to pay the stated interest in the meantime. Both payments can be made by the currency-issuing government without question- there are no solvency issues. An implicit promise connected with the first is to maintain a solvent market in these bonds on an ongoing basis, making them essentially liquid assets.

For the government, the utility of this practice is not to get dollars. The government can make those any time it wishes. Unfortunately, legislators and many others still think this way, and create the archaic legal structure requiring the government to offer bonds to "cover" all deficit spending. The real point in contemporary practical terms are: 1. To drain liquidity (i.e. inflation pressure) from the economy. (Such drains are not terribly effective unless offered at higher than market rates to attract money not otherwise saved, however, and since bonds are in essence liquid anyhow, there is little net effect.) 2. To create a market in government bonds which helps all financial actors manage their affairs by hedging long-term rates, especially the Fed and Treasury themselves with respect to banking regulation and interest rate control. 3. To furnish a savings vehicle to the rich that is ultra-safe and tied to the political stability of the country.

The next question is- why do we have deficits anyhow? Aren't they due to the immorality and spinelessness of our legislators? Not really. It certainly is easier to spend than it is to tax, but there are other endogenous factors that create the room for federal deficit spending. Here in California, as in the Euro countries, we are truly financially constrained by taxation, and have to borrow for any excess spending from private bond markets which exposes us to very serious interest rate and solvency issues.

But at the federal level which issues the currency, there are no solvency issues at all, and even the interest rate is set by the Fed, (at short terms), easing those issues as well. The real problem is inflation. The special job of the currency issuer is keep the value of the currency stable. Taxes come in and can be burnt. Spending goes out and does not immediately have to be "covered" by taxes, bonds, or other sources. The government makes it all up as it goes along.

Over in the private economy, regarded in isolation, firms make goods and pay out wages, which are used to buy goods, making the virtuous economic circle. If people decide to save money instead of spending it, then perhaps it gets used (as capital) for long-term investment through the banking system, again being used for spending, though now by businesses rather than individuals. If money is horded outright, however, then the identity between income and spending has been broken, and economic activity declines via deflation. Conversely, if the government feeds extra money into the system by its spending, economic activity rises. But there are limits to how much the private system can produce, beyond which extra money just causes prices for the existing goods to go up- i.e., inflation.

To make room in the private economic system for all the goods the government demands but doesn't produce, it needs to drain demand- typically by taxation. Taxes keep people working to produce goods that they can not themselves buy, so that the currency-issuing government can buy them, without causing inflation. This leads to the obvious prescription that if the private economic system becomes unbalanced, either producing an endogenous boom with inflation, or a depression with loss of credit, money, and economic activity, the government should play the anticyclical role of altering its tax and spending policies to balance the private sector, insofar as its benevolent and farsighted regulatory apparatus has failed to provide that balance in advance.

So far, so good- this is basic Keynesian economics. Taking this to an international scale, the US is not only the currency issuer for the US economy, but to a large extent for the world economy. Other countries (such as the government of China, and individuals all over, notoriously including Russia) wish to save in dollars. This creates quite a bit of extra demand for dollars, which we can supply by running continual federal budget deficits. Much of this international demand is expressed through our trade deficit, which is heavily negative, and will be for a long time.

Add this international demand to continual domestic desire to save dollars, plus overall economic growth, and one can see that the government is obligated to run deficits for as far as the eye can see, and thus rack up mounting federal debt, all quite consistent with keeping the purchasing power of the dollar stable over time without inflation. So there is no need to "balance" the federal budget, either all the time, or even over the business cycle. The only real need is to balance the deficit spending of the government with the currency desires of all those who want to drain dollars from the system by saving, all of which is integrated by the metric of inflation. If inflation is low, then more money needs to be created, either by government spending directly, or by somehow provoking the banking sector to create credit. It is especially important (and easy) to do so when inflation and interest rates are extremely low, as they are now, with concomitant unemployment.

So our politicians have not been scurrilous or spineless, but have reacted to the concrete pressures of the economic system, which demand continued deficits. For the moment, the Republicans on the federal level can have their cake and eat it too. Reagan cut taxes, raised spending, and expanded the debt by leaps and bounds (as did Bush Jr.). The "starve the beast" mantra is inoperative while we have the capacity, and indeed the need, to incur continual deficits to fund current account and savings leakages (which could be summarized as savings, domestic and abroad). In California it is a different story, where an unwillingness to part with tax cuts and to balance the budget have led to a breakdown of government and flirtation with insolvency.

Now we get to the real question.. whether this debt that is piling up so high is bad, and what will ever happen to it. Consider the overall scales involved. Total wealth in the US stands at about $57 trillion, annual GDP at about $14 trillion, and the Federal debt at $14 trillion. It is alot, but we have had higher debt withouth incident, and Japan has three times this level of debt, in proportional terms, also without incident. It represents just a fraction of private wealth, most of which is held as debt of one sort or another as well, after all. It also represents a stable savings pool, unlikely to be drawn down, since citizens in the US at least will always want to save money for retirement, etc. in this form. In that sense, it never will be "paid back", ever. As some people draw down their savings, others will buy up new bonds, and the net position is unlikely to change very much, except upward as we become collectively richer. Whether the government wants to pay out the requisite ongoing interest is another matter, but again, not a solvency issue, rather one of inflation control and political choices given all our other communal responsibilities.

Does all this debt, representing savings of people here and abroad, "crowd out" private investment? Certainly not- interest rates are plenty low to encourage private investment. Indeed, the developed world is awash in excess capital. That is why the financial industry has gained so much economic share in recent decades. We have fewer productive investment opportunities than we have capital, leading to speculation on top of bets on top of wagers in the casino of Wall Street, all in the race for higher returns. It also has likewise led to desperate searches for high returns outside the US, leading to whipsawing capital flows that have destabilized small countries. The government's provision of a safe and stable savings vehicle is a blessing in this environment.

And of course, much of the money spent by the government represent investments- in this case for various public goods: building roads, saving the economic system, funding extra research, moving the country slowly to sustainable energy, funding wars, taking care of old people, and similar goals. Each expenditure needs to be judged on its merits, but on the whole, paying for these public goods with cheap credit is a very good deal.

We will have to pay it back only when / if the large macroeconomic tides change direction- when people elsewhere no longer value the stability and portability of the dollar, when China decides to actually buy goods from us instead of collecting our dollars to promote their exports and their dollar peg. Perhaps in a decade or two, China will let its currency fully float, will become the managerial and political beacon of the world, and the renminbi will replace the dollar as the defacto world currency. Also, domestic savers might change net direction, if our demographics get sufficiently out of kilter, with more people retired and living off their savings than young and saving. It is these large-scale movements of demand for dollars that may some day require the government to actually balance its budget, or even collect excess taxes to forestall inflation from all those previously saved dollars flowing back into the US economic system, perhaps in the face of insufficient productivity.

But there are two important points to make. First, this time of reckoning is very far off. The macroeconomic position of the US remains dominant in the world, and China faces enormous challenges in supplanting that position, not least of which is their own looming demographic transition thanks to the one-child policy. For all our problems, the US is unlikely to lose its leading economic and political position in the coming decade, and any such change is likely to come quite slowly. The best things we can do to forestall a rapid descent are: to promote orderly international institutions that will continue the general trend of peaceful state relations, to aggressively get off fossil fuels which weaken our international position and threaten our economic viability, and lastly, to continue focusing on high-quality education, so that we will have the real economic productivity, ecological sustainability, and cultural vitality to support a growing crop of old people (i.e. me!).

Secondly, even when this tide turns, decades into the future, the adjustment may not be very difficult. Citizens will probably continue saving money, biasing the government budget towards deficit. GDP will continue to rise. Interest rates may have risen, reflecting inflation expectations and disinterest in bond purchases, making government borrowing more onerous. Our high spending on defense, and oil, and other legacy economic drains (including interest on the debt) will then face real limits and political choices, but not catastrophic ones.

Note that as soon as the government budget was temporarily balanced during the Clinton administration, the federal debt also began to fall. So it won't take draconian fiscal surpluses to address the debt when / if that time arrives. Someday, the free lunch of international dollar demand and domestic net saving will cease or plateau, and we will have to balance our budgets. But that time is very far off, and will arrive, in my estimation, quite gradually.

So, to recap, Federal deficit spending is not a matter of choice, if we wish to meet international and domestic saving desires, each of which are very favorable for the US. While we don't necessarily have to match budget deficits with bond/debt issuance, such debt is a very long-term issue which will be easily handled by future generations, (just as they will handle their accumulated private debt/investments), as long as they are not shortchanged by our robbing them of real economic potential, such as by poor education or continued addiction to fossil fuels.

  • Graphic on miscellaneous debts and expenses, large and small.
  • Paul Kennedy ruminates on the geopolitical future. Quite insightful, except on the deficit.
  • The NYT has an outstanding series on the Civil war, plus timeline.
  • Black Sun provides a comment on the climate.
  • Bill Mitchell quotes of the week:
"We already know that economics teaches students to be non-cooperative, more selfish and less honest. We learn that “students of economics are indeed much more likely to free-ride in experiments that called for private contributions to public goods” (see Marwell, G. Ames, R. (1981) ‘Economists Free Ride, Does Anyone Else?’, Journal of Public Economics, 15, 295-31).
"Marglin then argued that by relying on “value judgments implicit in foundational assumptions about the self-interested individual, about rational calculation” etc, and “it is these assumptions that make community invisible”:
"In arguing for the market, economics legitimizes the destruction of community and thus helps to construct a world in which community struggles for survival."
So mainstream economists actively promote policy agendas that undermine what other social scientists have found to be binding constructs for happiness and social stability – families, collectives and communities.
"People with liberal views tended to have increased grey matter in the anterior cingulate cortex, a region of the brain linked to decision-making … Previous research showed that electrical potentials recorded from this region … were bigger in people who were more liberal or left wing than people who were more conservative.
Conservatives, meanwhile, found increased grey matter in the amygdala, an area of the brain associated with processing emotion. This difference is consistent with studies which show that people who consider themselves to be conservative respond to threatening situations with more aggression than do liberals and are more sensitive to threatening facial expressions."