Money that floats

An Austrian-school economist faces reality ... and sees the light.

The great debate in economics, during this crisis and over the longer term, has been between Keynesians and Austrians / austerians, (lately represented by the Chicago school, also called classical economics). Is government good? Is gold better than paper money? Do unregulated free markets lead to stability and prosperity? Do federal deficits ever have be paid back? Austrian economists tend to be fixated on gold and so-called "hard-money" policies, urging a return to pre-central bank days when the business cycle boomed and purged in a constant and damaging whipsaw. The "Neo-Keynesian", (aka neoclassical synthesis) and micro-foundations turn of the last few decades has been a triumph of the Austrian school, even if we have not quite gone the whole distance back to gold. We have deregulated, feted the CEOs, reduced taxes, and tried to box the government into impotence and disgrace. We had almost forgotten about Keynes, and the general prosperity that strong interventionist government policy fostered in the mid 20th century, after the Great Depression.

The Keynesian school is most intriguingly represented by MMT economics, which is a bit beyond the mainstream, but a growing movement to resuscitate Keynes and his more left-oriented successors, and to take fiat money seriously, particularly the vast powers it gives the government to foster stable economic conditions and universal employment. The bywords are fiat money- money that is not gold, and not "hard", but rather whose amount is continually adjusted by the government via its central bank and treasury to accommodate economic growth and other aims, and which floats against all other currencies, thereby freeing the issuing country of any "pegs" or dependence on external standards, metalic, political, or financial.

"The New Depression and the Great Depression were both caused by credit-fueled economic booms. In both instances, the boom began when the link between money and gold was broken. The earlier episode began in 1914 when World War I destroyed the Gold Standard in Europe. This time the credit boom began when the United States severed the link between dollars and gold in 1968 and then destroyed the Bretton Woods international monetary system in 1971."

Richard Duncan has rather thin credentials, working for various asset management companies, and briefly for both the World Bank and the IMF. But this is his third book, and has the kind of title, "The New Depression: the breakdown of the paper money economy", that leaps off the library's new book shelf. My expectations were of a doctrinaire gold-bug, and indeed, quotes of Ludwig von Mises, Friederich Hayek, and Irving Fisher are abundant. Even Murray Rothbard comes in for a cameo. Duncan hammers again and again, with seeming horror, at the fifity-fold growth of credit that has engulfed the US over the last fifty years, complete with countless exponentially rising graphs that make no mention of any correction for inflation. Of course, to the hard money acolyte, inflation is fundamentally illegitimate. One should be able to bury one's dollars in the back yard and come back to them a hundred years later to find their value unchanged.

But halfway through the book, something shifts. Duncan not only makes his peace with the current reality, but makes a stunning about-face.

"Capitalism was an economic system in which the private sector drove the economic process through saving, capital accumulation, and investment. The government's role was very limited. The United States has not had that kind of economic system for decades. ... This is not capitalism. Market forces no longer drive the economy. The current system is government-directed, but not planned. Government policy is determined through a process of compromise between the demands of competing power blocks: big business, the banking industry, the military, the elderly, and the general public, which, until recently, had grown to expect en ever-improving standard of living. Deficit spending and fiat money allowed the government to satisfy all those competeing demands for more than a generation. During that time, a key component of government policy has been to channel ever-greater quantities of credit to the household sector. As total credit expanded 50 times in less than 50 years, it created wealth and kept the American Dream alive. ... Capitalism became Creditism, for lack of a better word."

But then... "It is crucial to understand, however, that Rothbard and von Mises lived and wrote in a different time. Were they alive today, is it certain that they would still condemn fiat money as a great economic evil. It is not certain, however, that they would recommend the laissez-faire method as the correct solution to the current crisis in the global economy. In fact, it seems inconceivable that they would."

He goes on to lambaste the conservatives of today for their austerity policies, for he clearly sees that government spending is the only thing keeping the ship afloat in the face of private deleveraging. Indeed, their politics could not be more cynically cruel and perfidious, as of his writing back in 2012:

"All of them understand that a weak economy and high unemployment will increase the chances of a Republican candidate being elected president in November 2012. Therefore, it is very unlikely that the House will pass any government spending measures that would improve the short-term economic outlook before then."

And indeed, he seems to argue the more spending, the better, with conditions. His explicit policy proposal is a three trillion dollar stimulus package to transition the US entirely to solar energy by 2025.

"Solar energy would rank among humanity's greatest accomplishments. Low-cost energy would make possible a host of other private sector innovations, with wealth-creating possibilities beyond comprehension. This is just one example of the opportunities that our new credit-based economic system makes possible. There are many others. A large government-directed investment program to develop genetic and biotechnology would create medical miracles. Heavy government investment into nanotechnology would generate a new Industrial Revolution."

And so on. There is much more to say about this author's conversion to what is in essence Keynesian MMT economics, with a few fig leaves here and there. (His total lack of fear of China stopping its US bond purchases, his recognition that US federal deficits offset trade deficits, allowing the private sector to escape deflation, his proposal of a global minimum wage (!), his recognition of World War 2 as the ultimate stimulus package despite having zero direct investment value, etc.)

Once faced with reality, and evidently without an ideological or political need to carry water for the business elite or the 1%, (or indeed to abide by his book title), this author, starting from such unpromising beginnings, and with a good bit of expertise in the world of finance, makes a complete about-face and recognizes that our vast real productivity could be put to much more sustained and forward-thinking use if we intelligently employed the vast tools that an elastic, flexible (and floating) currency provides ... to put everyone to work. This author is only a minor example, but one senses that the classical economics paradigm is weakening significantly, after a long period in the sun.

• Is bitcoin like gold? In good or bad ways? Is it a viable currency?
• One religious tax-avoidance scam, finally broken.
• Yet the pope ... finally has something good to say.
• Wall street is your new landlord.
• More in the annals of corporations-are-people. Do corporations have religions feelings? Do their feelings outweigh the individual feelings and choices of their employees?
• Is the future of the electric car in batteries or hydrogen?
• Human brains are not just bigger mouse brains.
• MMT rant about "loathsome" Wall Street.
• The economy remains dismal.
• Fight bubbles (especially when fraud is rampant!) with regulation, not the blunt club of interest rates.
• An ode to home.

There is no disembodied computation

A review of John Searle's Mind.

Douglas Hofstadter had a few tart words about John Searle in his book "I am a strange loop", which was odd, since Searle seems to have a rather congenial position on the philosophy of mind, on the whole. This motivated me to read a book I happened across recently, John Searle's 2002 "Mind". This appears to be his final summation on the subject of the mind, and does turn out to have some very odd positions, which I will ignore for lack of space (free will and quantum mechanics, especially).

He pulls the common philosopher's trick of defining all other positions in very unflattering ways, and then charges in with his own position, which in comparison seems reasonable and correct. Which on the whole, I think it is, actually. He claims that dualism and materialsm are both wrong. Well, what other positions are there?

The philosophy of mind has indeed been a mess, due to intuitions so overwhelmingly strong that they swamp reason. And also due to the unique ontological status of subjectivity, which makes many thinkers despair of our ever being able to "explain" it from the customary third-person scientific perspective.

The most popular position, by far, historically, has been dualism- the idea that while our brains may be necessary for thinking, as perhaps a radio is necessary to hear radio transmissions, the real thinking and perhaps feeing goes on somewhere else, in a "soul", which with any luck will go marching on when we die. It is the natural position of any thinking person, since thinking seems effortless, immaterial, abstract, and entirely ungrounded in any mundane matter, much less something as gross as the brain. Remember that the Egyptians regarded the brain as just so much snot, to be drained and discarded asap while they preserved all the other really important parts of the body for its rich afterlife.

In the other corner is materialism, which follows the overall trend of scientific observations in the many relevant fields to the conclusion that our minds are entirely a product of our brains, that brains operate within the known parameters of chemistry, and that there is nothing "supernatural" or otherwise shifty going on in there. The universe causally closed, everything happens for mechanistic reasons, and that applies to the brain/mind as well. How exactly the sensations of consciousness arise from these substrates is not yet known, but can be (and is being) studied with the standard toolchest of science. Which will (by this theory) eventually give us a thorough theory of consciousness that at least lays out all the neural correlates of mental activity and a full theory of how they function dynamically... even if it does not allow observers to experience someone else's consciousness, which seems a rather high bar, really.

Searle makes what seems to be an extreme attribution, which is that materialists do not think that consciousness exists (the eliminativists, for instance). This applies to some, surely, but can hardly apply to all those materialists who are studying consciousness in the lab. So on the face of it, this move seems specifically designed to give Searle a provocative statement to make, to whit that all materialists are wrong. Then he swoops in with his own formulation, which is "biological naturalism". And you could be forgiven for thinking that this is identical with a materialism that does not think that consciousness is a bunch of hooey.

He does have various useful ideas, one of which is about reductionism. His position assumes (as do all materialist positions) complete reductionism, in that brain processes are composed of (can be fully reduced to), biological phenomena like neuron firings, channel openings, population rhythms, etc., and that each of these phenomena are composed of chemistry in action, which in turn *is physics and quantum mechanics in action, etc., down the rabbit hole. Higher levels of explanation have their own synthetic properties and logic, but do not rely on novel properties of the universe unavailable to the lower levels.

But all this does not amount, in Searle's view, to something he terms ontological reductionism. Just because something is caused entirely by a level we regard as lower or more fundamental doesn't mean that it is only and "nothing but" that other level. The first-person, interior experience is in some clear and axiomatic way intrinsically different from the third-person view of the same processes (by way of a brain scan, perhaps). This is a form of perspectivism, and puts a stop to conceptual reduction, in some respect. When consciousness, whatever substrate it is based on, looks inward, it sees nothing, and indeed knows nothing, of any substrate. When it is impaired, such as in dementia, it winks out and disappears, without having been, to its own perspective, been "explained" by any simpler principle or level of reality.

"The real problem with all forms of reductionism, as we will see, is that they are confronted with the question, Are there two phenomena or only one? In the case of water, there is really only one phenomenon. Water consists entirely of H2O molecules. Ther are not two different things, water and H2O molecules. But when it comes to identifying features of the mind, such as consciousness and intentionality, with features of the brain, such as computational states or neurobiological states, it looks like there have to be two features, because the mental phenomena have a first-person ontology, in the sense that they exist only insofar as they are experienced by some human or animal subject, some "I" that has the experience. And this makes them irreducible to any third-person ontology, any mode of existence that is independent of any experiencing agent. Calling attention to the difference between the first-person ontology and the third person is really the point of all these argument against this sort of reductionism."

It is like saying the ecology is reducible to chemistry, with the caveat that ecology has its own ontological rules and existence.

I am not sure that I have portrayed Searle's view justly. But it seems reasonable enough as an attempt to dissolve the assumption that he points out has been rampant in philosophy as it has been in lay thought about the mind- that the mind and body are two different things in some fundamental way, rather than in a perspectival way that is so easily consonant with materialism and everything else we know about the world.

I would add another comment to this, which is that all computation appears to be embodied. That realm of abstractions, whether one takes it as real in a Platonic sense and something we discover, or as a synthetic exercise of human creativity making its best simplifications out of material reality, it does not compute on its own. Only in computational devices, like our minds or computers, or in material reality itself, do such rules, whatever their intrinsic nature, manifest on any active level. What is being learned about our brains at many levels reveals the mechanics of our various sensory and cognitive pathways in ever-increasing detail, making of the soul something much like god- a fugitive concept that exists only in the narrowing gaps of what we do not yet know; denizens of the inner or outer worlds, respectively.

• Koch on consciousness.
• Are we going to tax carbon, or just give up?
• And about that J P Morgan deal... we are giving up there too.
• What it takes to make the rich seem deserving of their riches.
• George Washington, our wealthiest president.
• A few more tidbits on JFK, and a reason why.
• Bubbles are not the way to reflate the economy.
• Note to Zimmerman jurors...
• Should we all just have accounts at the Fed?
• Economic quotes of the week, Krugman on our stagnation:

"Assuring people that they can get a positive rate of return on safe assets means promising them something the market doesn’t want to deliver – it’s like farm price supports, except for rentiers."

• Or a Republican pollster, courtesy of Bill Black:

"David Winston, a Republican pollster close to House leaders, said that especially in a slow-growing economy, lawmakers have a hard time selling voters on proposals like fixing Social Security to avoid shortfalls in the 2030s.
‘That pressure isn’t there,’ he said. ‘People are more like, ‘I’m in a job where I’m clearly underemployed. How did this happen? How do we resolve underemployment as a problem, as opposed to dealing with Social Security in 2033?’" 

• Or Bill Mitchell:

"Conclusion: The NAIRU as estimated is a very dangerous concept for the well-being of ordinary people."

• Or Paul Krugman, again:

"... it’s clear that the shift to 401(k)s was a gigantic failure."

• Or Dan Kervick:

"For one thing, there is a complete absence of thoughtfulness in Summers’s talk about what could account for the fact that the financial sector needs to loan households vast amounts of money just so that they can afford to buy all of the output they produce. That reality seems passing strange, doesn’t it? Why rising household debt instead of rising household income?"

• Economic graph of the week: a discussion of the relationship of governmental debt to economic growth, across many countries. Not much of a relationship, really. And the curves only really start heading down about 5X GDP, which is far, far beyond where we are now. Up to about 3X GDP, the effects are uniformly positive- i.e., not a "burden".

Down at the ribosome factory, an archaic jumble

Ribosome production is another clue to the very messy RNA world.

As previously noted, the ribosome, which translates our DNA code from mRNA copies into the final protein, is a sort of time capsule from the very distant past in the history of life. When RNA was the dominant molecule and proteins and DNA were just getting a foothold, or in the case of DNA, may not have been invented yet at all. It is a bit like, if in the history of civilization, metalworking was stuck at the blacksmithing stage. To make up for the lack of efficiency while all other areas of the economy zoomed ahead into the industrial age (and remained completely dependent on the smith's work) they could only increase production by vast increases in scale, making blacksmithing the predominant industry of the whole economy. In bacteria, ribosomes make up over a quarter of dry cell mass.

The ribosome, with RNA looking like train tracks and proteins like bits of foam. The large subunit is in aqua, and the small subunit in yellow.

The ribosome is at its core an RNA enzyme, not a protein enzyme. In later eras it became festooned with proteins around its outside- there are over 80 of them in eukaryotes, but they make up only 40% of its weight and have only incidental roles. The core catalytic actions of the ribosome remain RNA-based, taking tRNAs charged with amino acids, (the "L"-shaped molecules in fluorescent colors, below), matching them to mRNA codons as they get threaded through the machine, and linking their amino acids into a growing protein chain. It is a triple RNA nexus, just as one would imagine originally happened if RNA came first in the history of life, and proteins came second, with DNA a distant third.

Why did RNA come first? Because it is a molecule that combines the essential elements of biology- the ability to adopt moderately stable shapes and do things like catalyze reactions, and the ability to be copied, be mutated, and evolve. Unfortunately, it is terrible at all of these roles, but in the land of the blind, the one-eyed molecule is king. So over time, better molecules came along to usurp both of the key roles of biology: DNA to store genetic information in a more stable way, and proteins to form structures and catalysts with far, far greater facility than RNA.

But obviously, the transition from one to the other was tortured and complex, and in the case of protein synthesis, it never really happened. We are left with the hulk that is the ribosome, an enormous  and inefficient relic. But that is not all. A paper recently delved into the process that produces ribosomes themselves, which is another story of waste and inefficiency. They found that some of its consituents are related to tRNA processing, showing unexpected relations among the actors in this ancient process. The findings are pretty minor, but it is a nice opportunity to think about this odd corner of biology.

Ribosome production is so onerous that it typically occupies its own cellular zone- the nucleolus, a sub-compartment of the nucleus in eukaryotes. This is where the DNA genes for the ribosomal RNA (typically present in the DNA in many copies, to better ramp up production) congregate and get transcribed by their very own RNA polymerase. This is also where many processing steps happen with the participation of proteins and RNAs imported from outside the nucleolus, like chopping up the full-length RNA into a few pieces, chemical modifications of certain RNA positions, addition of proteins and other RNAs, and the unusual chemical modifications of those proteins in various places. Much of this processing is guided by yet other RNAs that are complementary to various portions of the ribosomal RNA, and have to be pried back off the structure with helicases later on (see below). And then in the end, the whole mess is transported out of the nucleus through nuclear pores that are barely large enough to accommodate it.

I should add that research on ribosomal processing is something of a backwater in molecular biology. The complexity is daunting and technically difficult to deal with, and the whole process is sort of "housekeeping" for the cell, not involved in cancer, development, cognition, or other exciting issues. But still, the advancing tools of the field allow progress on all fronts. Here, the researchers solve the atomic structure of a complex of two proteins, Rrp7, and a partner, Utp22, that seem to be two of those transiently acting proteins that help the ribosome along to maturity- part of a vast support staff.

Structure of the Utp22+Rrp7 complex, with Rrp7 on the right side in brown and purple. This is the side that binds to the developing ribosome. The D# modules are all part of Utp22. Each partner of this complex is essential for its further ribosomal maturation.

Rrp7 contains the key region that binds the small complex to an RNA site within what later becomes the small subunit of ribosomal RNA, but it requires a guide RNA (snR30) which has to bind the rRNA and stabilize a particular kink before it can do so. What happens next? That part is less clear. Utp22 may bring along other proteins and enzymes, but it doesn't have enzymatic activity itself. The authors do not delve into this aspect, unfortunately. Its role may actually not be to do anything in particular for the ribosome, but simply to bind this intermediate state, and then when released to regulate a set of ribosomal protein genes in a system that makes their gene transcription responsive to the overall level of ribosome processing and production.

"The complex structure of Utp22 and Rrp7 shows that they are unlikely to possess any enzymatic activity and that they rather function as an essential building block in the 90S preribosome."

A small area of the ribosomal RNA, (18S), showing a few sites where Rrp7 binds and can be cross linked (green nucleotides), and also showing the guide RNA, snR30 in blue, which transiently binds to and stabilizes the ribosomal RNA, and is essential for subsequent Rrp7 binding.

What the authors find interesting is the evolutionary history of Utp22, which is that it developed from a tRNA processing enzyme called the CCA-adding enzyme. This enzyme adds a special three-nucleotide end to all tRNAs which is not originally present in their DNA code. Why? Who knows- probably another historical hack that came along prior to the rise of what we regard as more orderly & conventional (dogmatic, one might even say!) molecular biology. A copy of this enzyme was re-purposed to become this small subunit ribosomal RNA processing factor, eventually losing both its catalytic activity (of adding nucleotides to RNA ends) and its RNA-binding function (which was taken over by Rrp7).

This is only a taste of the intricacies of this field. Biology is full of hacks and workarounds, also called adaptations, but the ribosomal system takes the cake for its overall cost, its focus on RNA as the central and primordial molecule, and its byzantine chemical and macromolecular complexity. Life is certainly weird tech, but it isn't always high tech.

• Earliest life pushed back by about 70 million years.
• We need a much bigger discussion of where our economy is going.
• What ever happened to public education?
• Krugman talks up MMT.
• Krugman is making at least one person's head explode.
• Whom did QE help?
• More reasons to hate Pakistan, if any are needed.
• The Senate is still an unconstitutional and broken institution.
• What's going on with unions? We need a new labor regime.
• Education is not the cause of the recent rise in economic inequality.
• The endangered species act is 40 years old. Yay!

Who pays for structural unemployment?

Just where are people supposed to get work-related skills?

Another conservative meme of the moment is that current unemployment is "structural", rather than something we can address through government action. Problem solved! And thankfully, by this theory unemployment is all the fault of the unemployed themselves, who didn't have the foresight to train themselves for the entrepreneurial info-tech jobs of today.

Economists typically divide unemployment into three classes- cyclical, frictional, and structural. The frictional component is what even the best job market would show ... the inescapable lag between losing one job and gaining another, which becomes a constant low rate of unemployment at any one time. Nothing the government can do here. Cyclical unemployment is attributable to weak business conditions, such as classically where auto sales are low, some workers are laid off, but are immediately rehired when business picks up again. Here, the government could do something, if you adhere to Keynsian theories, but conservatives regard such meddling as not only distasteful, but ultimately self-defeating since the market always knows best the most efficient level of activity and employment.

Last is structural unemployment, where the worker in question can not find work because she is unskilled in any work that is on offer. Plenty of jobs may go begging, but the nothing offered matches this worker's skills.

A good deal of work has shown that, inconveniently for conservatives, the current job market is not beset with a high degree of structural unemployment. Firstly, it is inconceivable that just as Lehman collapsed, tens of millions of workers let their skills lapse and can not be gainfully employed by anyone in the US. Nor is the job market beset with wild imbalances of very high pay being offered for specialized jobs, due to uneven labor demand, as employers suddenly changed their technologies and practices in the wake of the global financial crisis. No, the problem is classically one of low demand, caused by financial panic and its ensuing destruction of economic activity, with a longer-term component of deleveraging from a vast overhang of debt, with an even longer-term component of income inequality that smothers broad consumer demand and impairs the consistency of that demand.

But even if the structural story were true, what should we do then? There is always some mismatch between skills needed and skills on offer. Currently, employers put out absurdly detailed lists of what they want, to fend off excess applicants, and probably to maintain negotiating leverage against any that dare to apply. That is if they are serious about the ad and don't already have someone lined up for the job. So advertised skill sets are not realistic benchmarks for gauging structural mismatches.

Pay is a better benchmark. Are employers willing to pay substantial premiums for specific skills? Again, the current job market and income data are telling us, no, this is not common. But at some point, given a large pay differential, it becomes more economical for employers to train an employee missing particular skills rather than expect them to walk in from the street, even if that street is the entire internet.

This is one more element that is being lost in our abysmal job market. Not only are employers happy about not having to give employees raises and pay them decently, they can be so selective in hiring (if they hire at all) that training is an afterthought. It used to be that sending an employee to school was not unheard of, even for advanced degrees. Now it is entirely on the worker to get the skills needed, often through schools and training programs that leave them drowning in debt.

And the frictional employment picture is likewise closely related to the general job market. Friction is going to be dramatically different in good versus bad job markets. In good times, any warm body will do, and will be trained to do the work. In bad times, friction can extend out endlessly, to the point that a worker leaves the workforce entirely, as droves have done doing during this crisis. So these classes of unemployment are far, far less distinct than commonly thought, and all relate strongly back to the underlying strength of the job market and its driver, aggregate demand.

Thus it is doubly, even triply, important for the government to restore economic activity in slack times, so that the labor market isn't destroying workers and their families, and letting skills through the population rot. Such wastage is surely going to affect future economic prosperity and particularly our real capacity to care for the elderly and maintain other common services.

• Is false hope better than no hope? And is reality hopeless? And the religious bias towards indoctrination ... why is this OK?
• A small environmental success- getting the lead out.
• Does GDP growth serve us, or do we serve GDP growth?
• The median wage is down.
• Bank lending is still anemic, especially in terms of productive investments. Monetary policy is clearly insufficient. And if you add this to declining public investment, and we are headed downhill.
• A different cognitive style, or just not that bright?
• Stephanie Kelton on why federal deficits are good.
• Ditto from Paul Krugman. Who really serves future generations?
• Why not deploy stop-and-frisk on the suits?
• And tax them too.
• Economic passage of the week:

"According to the Harvard study, most people believe that the top 20 percent of the country owns about half the nation’s wealth, and that the lower 60 percent combined, including the 20 percent in the middle, have only about 20 percent of the wealth.  A whopping 92 percent of Americans think this is out of whack; in the ideal distribution, they said, the lower 60 percent would have about half of the wealth, with the middle 20 percent of the people owning 20 percent of the wealth.What’s astonishing about this is how wrong Americans are about reality.  In fact, the bottom 80 percent owns only 7 percent of the nation’s wealth, and the top 1 percent hold more of the country’s wealth – 40 percent – than 9 out of 10 people think the top 20 percent should have.  The top 10 percent of earners take home half the income of the country; in 2012, the top 1 percent earned more than a fifth of U.S. income – the highest share since the government began collecting the data a century ago."

A strange loop it is to write about one's I so much

Review of Douglas Hofstadter's "Gödel Escher Bach" and "I Am a Strange Loop", thus saving the reader roughly 1000 pages of helpless digression.

Douglas Hofstsadter laments in his preface to his sequel ("I am a strange loop"; ISL, 2007) to his much  more famous "Gödel Escher Bach" (GEB, 1979) that for all its fame and prizes, including the Pulitzer prize, most people he meets didn't get the point of GEB. And no wonder, as those points flit by with great rapidity amidst a welter of puns, word games, abstruse code exercises, maddening repetition, dilatory dialogs, and wayward tangents.

But here they are (apologies for my lack of expertise ... please comment on any inaccuracies):

" The possibility of constructing, in a given system, an undecideable string via Gödel's self-reference method, depends on three basic conditions:  

1. That the system should be rich enough so that all desired statements about numbers, whether true or false, can be expressed in it. ...
2. That all general recursive relations should be represented by formulas in the system. ...
3. That the axioms and typographical patterns defined byitsrules be recognizable bysome terminating decision procedure. ... 

Satisfaction of these three conditions guarantees that any consistent system will be incomplete, because Gödel's construction is applicable.
The fascinating thing is that any such system [human thought and language are the obvious references] digs its own hole; the system's own richness brings about its own downfall. … [analogy to critical mass in physics and bomb-making] ... But beyond the critical mass, such a lump will undergo a chain reaction, and blow up. It seems that with formal systems there is an analogous critical point. Below that point, a system is 'harmless' and does not even approach defining arithmetical truth formally; but beyond the critical point, the system suddenly attains the capacity for self-reference, and thereby dooms itself to incompleteness."

All the references to Bach and Escher in GEB are really tangential examples of self-reference. It is Kurt Gödel's work that is the core of the book, as it is of ISL. Gödel made a critique of the Principia Mathematica (PM), by Alfred Whitehead and Bertrand Russell, which attempted to build a tightly closed system of axioms and logic that was both incapable of rendering false statements, and also comprehensive in its ability to found all relevant aspects of mathematics and logic. But Gödel showed that it was incomplete, which means that it could represent paradoxical statements that could not be either true or false. It did indeed found all mathematical logic on very uncontroversial axioms, but it developed (painfully) a language for all this that was so rich that it was impossible to keep within the bounds of truth alone.

Gödel's paradigmatic statement, constructed out of unspeakably complicated machinations of the PM tools (and which Russell never accepted were proper machinations) essentially created the statement "This statement is false". But Hofstadter admits that self-referencing paradox is not the only possible type of ambiguous, unresolvable statement Gödel created or suggested- there is an infinite zoo of them.

The point is that truly intelligent systems are open. They are not cognitively or computationally bound by their programming to tread around some threshing track time, and time, and time, again. They not only are responsive parts of their environment, but more importantly have the symbolic capacity to represent imagined realities, real realities, (and the self!), in such recursive, endlessly complicated ways that no theorem-bound system of cognitive computation can account for it. In this way we are endless, multilevel, strange, loops.

But there is one aspect of all this that is most odd, which is Hofstadter's focus on the self, which is prominent in both books, and especially, even gratingly, so, in the second. Much of his conceptual play concerns self-reference, which is enjoyably loopy. Many philosophers and thinkers generally seem to think self-consciousness the very height of consciousness itself. Perhaps even its definition. As Hofstadter says, "Just as we need out eyes in order to see, we need our 'I''s in order to be!". But I don't think that is the case, at least not consciously. Self consciousness certainly comes along in the package of cognitive complexity, once one is making models of everything conceivable about the world. But to me, the core of consciousness is far more basic- the sense of being, not of self. And the core of the sense of being is made up of the flow of sensations, especially pain and pleasure.

I frequently see squirrels from my window, playing, chasing, eating, hiding, calling, etc. They are especially interested in the bird feeder and have tried no end of strategems to get into it. They are clearly highly conscious beings, driven by pleasures and pains, just as we are. They wouldn't know what to do with a mirror, but nevertheless we immediately empathize with their desires and fears, clearly communicated and experienced by themselves. Their consciousness is not infinitely expansive by way of symbolic representation, as ours is, but nor is it negligible.

Hofstadter makes a special project of declaring that mosquitos have zero consciousness, thus sanctioning his frequent bloodthirsty murders, when he is otherwise a principled vegetarian. Why be a vegetarian if you are interested only in symbolically self-referential and unbounded forms of consciousness? Obviously something else is going on, which he jokingly names "hunekers"- small sub-units of consciousness, of which he assigns various amounts to animals and humans of various grades and states.

"Mosquitos, because of the initial impoverishment and the fixed non-extensibility of their symbol systems, are doomed to soullessness (oh, all right- maybe 0.00000001 huneker's worth of consciousness- just a hair above the level of a thermostat)."

But don't mosquitos experience pain and pleasure? Their behavior clearly shows avoidance of danger, and eager seeking of sustenance and reproduction. We know that the biology of animals with nervous systems (not bacteria) organizes these motivations in an internal experience of pain and pleasure. Would Hofstadter compacently sit down to a session of pulling the legs and wings off of mosquitoes he has caught? I think not, because though we certainly don't know what is going on in those very tiny heads, if anything it is the integration of perception, pain, and pleasure in ways that must earn our empathy, and which amount to a level of consciousness radically beyond that of a thermostat.

Hofstadter adds in the analogy of a human knee reflex, saying that perhaps a mosquito's mind is at that level, which no one would claim is conscious. But the integrative work being done, and the whole point of the integration, is quite different in these cases, making it seem much more likely, to me at least, that the mosquito is working with a very tiny, but intensely felt, bit of consciousness. Indeed one might posit that there need not be any particular relation between the cognitive complexity of an animal's consciousness and the degree of its feelings. We know from human infants that feelings can be monumental, and consciousness of hurt (and pleasure) be extremely acute, with precious little cognition behind them. Do we therefore empathize with them less?

This leads to the more general issue of the relation between consciousness and its physical substrate. Despite the talk of "souls", Hofstadter is a thorough naturalist, steeped in the academic field of artificial intelligence. While he has shown much greater proclivities towards philosophy than programming, the basic stance is unchanged- consciousness is a case of enormously complicated computation with (in the human case) the infinitely rich symbol sets of language and whatever is knocking around internally in our mental apparatus. All of which all could conceivably happen on a silicon substrate, or one of orchestral instruments, or other forms, as long as they have the necessary properties of internal communication, logical inference, memory, etc.

For Hofstadter, consciousness is necessarily a high-level phenomenon. It depends on, but is not best characterized by, particular neurons, and certainly is not specifically associated with quantum phenomena, microtubules, or any of the other bizarre theories of mind / soul that various pseudo-theorists have come up with to bridge the so-called mind-body divide. Indeed he spends a great deal of time (in ISL) on consoling himself that his wife, who died unexpectedly and young, lives on precisely because some part of her high-level programming continues to function inside Hofstadter, insofar as he learned to see the world through her eyes, and through other remaining reflections of her consciousness. Nothing physical remains, but if the programming still happens, then the consciousness does as well.

I have my doubts about that proposition, again drawing on my preference for characterizing consciousness in terms of experience, feeling, and emotion, not symbology. But if one has been trained by one's wife, say, to thrill to certain types of music one hadn't appreciated before, then one could make the case in those terms as well.

The question is made more interesting in a long section (in ISL) where Hofstadter discusses a thought experiment of Daniel Dennett, as written about at great length by Derek Parfit. Suppose the Star Trek transporter really worked, and could de-materialize a person and send them via a (sparkling) light stream to be re-assembled on another location, say Mars. Suppose next that an improved version of this transporter were later devised that didn't have to destroy the originating person. A copy is faithfully made on Mars, but the Earth copy remains alive. Who would be the "real" person / soul? Imagine further that the transporter could send multiple copies anywhere it chose, perhaps depositing one copy on Mars, and another on the Moon, etc... What & who then?

Parfit reportedly mulls this over for a hundred pages and agonizes that there is no way to decide which is the "real" person. Hofstadter also makes remarkably heavy weather of the question, finally hinting that a reasonable way to regard it may be as a faithful doubling, where none of the clones have any priority, all are equivalent, and each goes on to an independent existence built on the structure and history of the original person. Well of course! In programming, this is called a "fork" where a program is replicated and both copies keep running in perpetuity, doing their own thing. No need to fret over soul-division or irreducible essences- if the physical brains and bodies are faithfully reproduced in all detail, then so are the minds in all respects. Each will carry on the prior consciousness and other internal processes, differing only by the occurrence of, and interaction with, subsequent events.

And one can extend this to other substrates, supposing that some means has been devised to replicate all the activity of a human brain from neurons into, say, silicon. Just making such an assumption assumes the answer, of course. But the real question is- at what level would the modelling have to be faithful in order to generate a replicated consciousness? Do all the atoms have to be modelled? Clearly not. The model Hofstadter and I share here is that the overall activity of the brain in its electrical activity and structure-to-structure communication constitutes consciousness. So it is the neurons the need to be modelled, and that perhaps only roughly, to recreate their communication flow and data storage. Generate enough of those elements that perceive, that condense and flag significant information, that tag everything inside and out with emotional valences, that remember all sorts of languages, and world events, and experiences, at explicit and implicit levels, that coordinate countless senses and processes, and we might just have some thing that has experiences.

• And dogs- are they conscious?
• J P Morgan, et al. Their practices were not just "shady", they were criminal fraud; signing false affidavits, scamming loan customers and investors alike, corrupting appraisers, LIBOR fixing, etc.
• Should atheists take an economic position?
• And do they have better morals?
• Another way the health-related free markets don't work. Big data is fundamentally incompatible with broad-based insurance.
• Two can play that game... "Last month, the U.S. raided an Afghan convoy carrying a Pakistani Taliban militant, Latif Mehusd, who the Afghan government was using to cultivate an alliance with the Pakistani Taliban."
• The Koch folks- apparently too embarrassed to stand up for their own beliefs.
• Unwritten institutions are often the most important- the long shadow of slavery & oppression.
• Cuddly capitalism- yes, it really works.
• Our infrastructure is unsightly and unsafe as well as decrepit. And underfunded.
• Bill Mitchell on why full employment shouldn't just happen for the sake of killing people.
• Quote of the week, from Paul Krugman:

"A society committed to the notion that government is always bad will have bad government. And it doesn’t have to be that way."

• And, on rentiers and interest rates:

"But right now we’re awash in excess savings with nowhere to go, and the marginal social value of a dollar of savings is negative. So real interest rates should be negative too, if they’re supposed to reflect social payoffs."