Mises, Hayek, and Friedman

Gosh- it almost rhymes, doesn't it? A foray into Austrian and conservative economics.

While studying updated Keynesian economics, I keep hearing about the other side, exemplified by Ludwig von Mises, Friedrich Hayek, and Milton Freidman- prominent leaders in successive phases of conservative economics in the 20th century. Additionally, the Atlantic magazine recently ran a puff profile of Ron Paul, with glowing references to Mises, whetting my curiosity about this virtually forgotten economist.

Reading samples of their work, it quickly becomes apparent that we are not dealing with equal intellects. Hayek (The road to serfdom) is far and away the deepest and most interesting of the bunch. Friedman was solid in some respects, but was overly ideological, cherry-picking his stories and evidence, failing to quite understand banking, and wedded to both his hypotheses and to always being right. Which is very annoying. And Mises.. just an out and out crank, whose ongoing theme is that gold is the only reliable form of money. For all his cult-like following, Mises never gained a permanent academic position, either in Austria, or later in the US, indicating that others saw him similarly. Here is a relatively coherent sampling of Mises's thought.

(I am indebted to Bill Mitchell's blog for ongoing insight into these issues, and to a 2002 review of later parts of this history, by David Colander.)

Mises
The immediate predecessor to Mises was the Austrian economist Eugen von Böhm-Bawerk, who, in opposition to Marx, developed the idea that capitalists, far from exploiting labor, offer labor the opportunity to work and gain income in advance of sales, taking upon themselves the risk of enterprise and economic uncertainty. He wrote extensively on the roles of capital and interest in a modern economy. He, Mises, and Hayek all cut their teeth in the Austrian finance ministry, which was in the thick of world-wide problems with gold, silver, and bimetallic monetary standards, followed by the German and Austrian hyperinflations of the 1920's.

At the beginning of this story (late 1800's), most people were only comfortable with some precious metal backing (or actual content) to their currency. For example, the US went off the gold standard during the Civil War, and issued greenbacks for the first time. This allowed inflation, which essentially amounted to confiscation of private wealth in the North for the sake of war finance. The Confederacy did the same, with far more disastrous hyperinflation. (As had the Continental Congress before them.) Popular sentiment as well as contemporary economic theory forced the country back onto the gold standard within a decade, leading to the chronic deflations of the late 1800's. While now all countries are permanently on fiat paper money, in those days none were, and the lessons of history all said that paper money led inexorably to inflation.

Original greenback

Given the metallic standards, money was originally a mostly private affair. The original way a mint worked was as a service to private people, not as an issuer of the government's money. You brought your gold or silver to the mint, and it would mint you your coins as per the official coinage weight and design of the day. The mint might charge a small fee, and that would be that- money supply established! Mises makes a great deal of this origin of money- that people come up with money as a spontaneous convention, which in many cultures has converged on the most precious, portable (in small amounts!), durable, and divisible substance- gold.

"I would like to attack the problem from another point of view and say: “There is nothing in the world less fit to serve as money than paper, printed paper.” Nothing is cheaper."

The issue, of course, is that a gold standard, while it does virtuously constrain everyone in a monetary system, including the government, has many disadvantages as well. Firstly, it is not elastic. When economic production doubles, does the gold supply double? Maybe yes, probably no. They are not fundamentally coupled, so one's money will be worth different amounts of real goods as new gold discoveries are made, or as economic growth makes static gold more valuable. This is a particularly painful problem in the case of deflation, where those with gold (banks, rich people) find their real wealth increasing effortlessly, while those producing goods, and especially those in debt, find what they sell buying less, and their debts rising in value over time.

As Mises acolyte Murray Rothbard puts it: "In a developing free-market economy unhampered by government-induced increases in the money supply, prices will generally fall as the supply of goods and services expands. And falling prices and costs were indeed the welcome hallmark of industrial expansion during most of the nineteenth century."  Planning for Freedom, p.247

A shocking and typically blind statement, really. While the Austrian school is inflation-phobic in the extreme, and supposedly supports "sound" monetary value, it turns out that deflation is just fine. This obviously shows which side of the perennial class conflict they occupy. I would also note that deflation exhibits an exponential process of sorts when it is rapid (as does inflation conversely). As the currency becomes more valuable, it gets horded, and less is used for economic activity or lent out. What is the point if just holding it gets you regular returns? Less exchange leads to more deflation, and the system seizes up with nothing happening, unemployment prevalent, and no easy way out. So proper monetary management aims for a Goldilocks mean of stable monetary value- the ideal is 1-2% inflation which encourages money circulation and investment, without eroding its value unduly.

Also, government temptations hardly disappear on a gold standard. A customary way to run such a standard is to issue paper notes redeemable for gold at a set amount. But does the government have to hold a full amount of gold to "back" each note and outstanding ledger entry with gold? Not really. As long as it has enough to meet the expected traffic of redemptions, it only needs enough, say, to back 1/10 of the outstanding currency. How about 1/20? Or 1/100? These kinds of games are every bit as tempting as running an outright fiat currency, and at some point, public confidence breaks down, a run occurs, and the government summarily "closes the gold window", as Nixon finally did in 1971.

So, as Keynes said, gold as monetary backing is a barbarous relic. But Ron Paul and countless gold bugs and libertarians around the world pine for its return, as part of a more general program of breaking the stranglehold that contemporary governments have over us all. It is our collective faith in our collective government that is the monetary standard now, and while there have been many bumps on the road, we seem to have the sophistication these days to make a go of it.

The formative experience for the Austrians was the German (and Austrian) hyperinflation of the 1920's. This horrible and traumatic loss of a key foundation of civilization seared into them a distrust of government and a love of gold that still animates so many today and gives gold coins a semi-mystical aura to the older generation. The German experience is well-told here, (but see here for a contrasting account), and I will only mention a couple of aspects. First is that the process began easily enough. A weak government didn't want to tax to cover its needs, but kept spending without a macroeconomic rationale. It also allowed its all-too-independent central bank to lend excessively, especially to foreign currency speculators. This set the stage for continuous inflation.

Second, many investors and businesses did fine in the inflation- those who were a step ahead could take out loans soon to be worthless, and/or buy real estate or gold to preserve their savings, etc. Life certainly became more complex, but some people came out ahead- it isn't only the government that wins. Lastly, such inflation leads to an interesting exponential process, where as it heats up, everyone gradually realizes that their money is becoming worthless, and all money gets sucked out of its hiding places- mattresses, savings accounts, etc. The beginning of this process creates the illusion of prosperity, but the end of course creates the spiralling worthlessness where people are paying for bread with wheelbarrows of notes.

Friedman
So Mises kept preaching the gospel of "sound money" and the dangers of government control, topics that were continued in various forms by Hayek and Friedman. Friedman wrote an interesting book on bimetallism- the once-common practice of backing money with both silver and gold, (Christmas theme, anyone?), which he deems more stable than either silver or gold alone, for what that is worth in hindsight. The reason is that the more inflationary metal will always drive out the lesser. If gold is getting scarce and more valuable, then people will hoard it and instead bring their silver to the mint for coinage. Thus, in a world of economic growth, where a metal standard is almost always deflationary, it is better to have two horses to choose from, rather than only one, as geologic and technologic vagaries alter the supplies of these metals (for instance, cyanide processing of gold ores). Friedman doesn't come out explicitly for a return to such a standard, but sighs and moans about the bad historical behavior of governments with fiat currencies.

Friedman's mantra is that inflation is always a monetary phenomenon. In a way, this is a truism, since the problem certainly is money getting less valuable. But the underlying idea just isn't correct, since Zimbabwe's catastrophe shows that plummeting real economic production can also cause a disconnect between money value and the economic production base it rests on, again leading to inflation. And it can be a banking problem as well, if banks are not closely regulated. It isn't always the government "printing" excess money. He is right, however, that inflation is never merely a psychological issue of "wage expectations" and the like. There have to be real factors at work.

Incidentally, do we hear about the "money supply" on the evening news any more? No we don't- this was Milton Friedman's hobby horse, now thankfully retired. It turns out that all the measures of "money supply" are hopelessly uninformative- it is terribly hard to measure, and impossible to control in any direct way. These days, the Federal reserve just sets the interest rate to adjust the rate of money/credit growth coming from the banks, and leaves it pretty much at that, barring the kind of special crisis/financial meltdown we are currently in.

Hayek
Now let me turn to Hayek, author most famously of "The road to serfdom". The title sounds a bit alarmist, even McCarthyite, and the book does veer a bit back and forth between froth and sober political theory. But the core consists of very sound analysis, both political and economic, that today we regard on both the left and right as conventional wisdom. His ideal is traditional English liberalism, (strongly laissez-faire), advocated with the true fervor of a former student of Mises and an immigrant who spent the height of his career teaching at the London school of economics.

Planning
His first theme is relatively straight economics, inherited from the Austrian school and developed by Hayek into Nobel-prize work: the superiority of markets over socialist or communist economic planning. Hayek wrote at a time (1940's) when socialism had been intellectually respectable for decades, and many thought that the economic miracles of the Soviet Union showed that it was a truly viable economic, if not social, system. The bloom was not quite off the communist rose (sickle?), and socialist parties would continue to have strong influence in Europe for decades, though increasingly defanged in favor of liberalism (just look what has become of the Labor party in England!). The economic successes of the Nazi system also provided strong arguments in favor of direct state economic control. Fascism was thought, in economic terms, to be the practical middle way between communism and laissez-faire.

There was, in short, a real debate whether the burgeoning complexity of modern economic systems would be best met by explicit state planning, or whether the old system of higgledy-piggledy markets would continue to be up to the task. Hayek was a complete believer in the latter, making the trenchant argument that complexity is exactly what markets do best, organizing millions of personal preferences and a thousands of supply constraints into an efficient system perfectly suited to continue serving human needs for private goods into the modern age. As we might put it now, markets are parallel processing information systems, far superior to the kind of serial processing, however well-meaning, that bureaucrats can devote to economic affairs. In this, of course, he was doing little more than restating Adam Smith, however important it was at the time to do so.

He was fully aware of the need for public goods and the many forms of public support (legal, educational, macro-economic, regulatory, etc.) needed for markets to work, so wasn't as doctrinaire as many other Austrian acolytes. But he didn't compromise in his conviction that in the long run, the Soviet system in particular could never outproduce the free systems of the West ... if the systems of the West remained free!

"The refusal to yield to forces which we neither understand nor can recognize as the conscious decisions of an intelligent being is the product of an incomplete and therefore erroneous rationalism. It is incomplete because it fails to comprehend that the coordination of the multifarious individual efforts in a complex society must take account of facts no individual can completely survey. And it fails to see that, unless this complex society is to be destroyed, the only alternative to submission to the impersonal and seemingly irrational forces of the market is submission to an equally uncontrollable and therefore arbitrary power of other men." p.224

Freedom
Freedom was the mainstay of Hayek's, and the Austrian philosophy generally. Mises had a whole mythology of markets being the natural state of man, who voluntarily exchange goods with no compulsion or state apparatus. To which I have one answer- the family, the even more elemental state of nature comprising complete state control of the means of production, as well as everything else. Hayek stuck with easier territory, explaining how markets are one important mechanism of freedom, allowing each consumer the sovereign choice of products, (barring monopolies and other problems), and bending each producer to virtual slavery at the customer's beck and call (had never heard of advertising, apparently).

Freedom to employ capital, freedom to choose products, and freedom to work and be paid by one's ability- each was central to Hayek's view, and each was in danger when the private economy was put under what went by the name of "planning" at the time- socialism or communism. Once one official is given the task of specifying what widgets should be made here, for the common good, some other price has to be "stabilized" there, some worker has to be shifted around over there, and pretty soon, the whole system has to be run out of 10 Downing Street. That was the road to serfdom that Hayek was talking about, and, among many other examples, our military-industrial complex is eloquent testimony to the inherent morbidities of such a system, however well-intentioned.

The issue was quite live at the time, as Britain was destined to keep some of its war-time economic planning apparatus in place into peacetime, to minimize disruptions on returning to free markets, to help repay its enormous wartime debts, and as part of the Labor party platform. Britain's excellent state-run health care system was born at this time, as a continuation of war-time institutions. The socialists argued that wartime planning worked so well that it was the only solution to long-term economic competitiveness against such planning behemoths as Soviet Russia.

The Nazi economic system was another influential template, with its stunning success in putting everyone in Germany to work and building, out of the economic ruins of the Weimar Republic, an economic juggernaut that almost defeated the entire Western world. After the war, Eisenhower took a page from that playbook by building the American Autobahn, er, interstate highway, system.

"It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error."
- Mises

Nazism
Hayek devotes some attention to exploring the origins of Nazism, making an interesting case that it was the unholy spawn of left and right low-brow anti-liberal sentiment in Germany, combining socialists and nationalists. Thus the name: national socialism, which is so curious to the naive observer. It is sort of as though Sarah Palin decided to ally herself with American labor unions and the Chamber of Commerce in a new system combining jingoistic nationalism, militant trade protectionism, and encouragement of "rational" monopolies among the largest businesses. All for the low, low price of dictatorship!

"It will be those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused who will thus swell the ranks of the totalitarian party." p. 153

"The way in which, in the end, with few exceptions, her scholars and scientists put themselves readily at the service of the new rulers is one of the most depressing and shameful spectacles of the whole history of National Socialism." p. 209

"It should never be forgotten that the one decisive factor in the rise of totalitarianism on the Continent, which is yet absent in England and America, is the existence of a large recentgly dispossessedmiddle class." p.229

The point, of course, is that what seems like rational planning at the outset turns inexorably into a nightmare of state control over everything and everyone. Such systems also select for exactly those people who are willing to make the brutal tradeoffs that liberal-minded idealists would blanch at, and which democracies would endlessly dither over: "... socialism can only be put into practice only by methods which most socialists disapprove ..." (p.151).

Hayek makes lengthy points about the rule of law, and how it is antithetical to a regulatory, "planning" state. If the law sets out explicit rules confining the state's behavior, then it can not really meet economic contingencies as they arise. At the same time, such a rule of law constitutes a guarantee of personal freedom, since the state is boxed up with its explicit rules, while the individual is free to live around them.

To put it in aphoristic terms, if the law knows you and you don't know the law, you live in despotism. If the law doesn't know you, but you know the law, you are (relatively) free. Proper laws (public, non-retroactive, limited in scope, etc.) can be changed through democratic institutions. But if the law authorizes open-ended/arbitrary forms of meddling, regulation, "planning", excessive secrecy, and so forth, then we are, as it were, on the road to serfdom.

What to think of all this? Hayek's concerns were understandably overheated due to the dramatic times. His fallacy was of the classic slippery-slope variety, and though we have to ask how free we really are in our highly regulated, patted-down, terror-alerted nations of today, the basic ethic of English liberalism seems to remain alive, even ascendent. China over the last three decades has essentially taken the road back from serfdom. There was a middle way, and it wasn't fascism. It was Keynesianism- the insightful use of state power to manage economies on the macro level against the all-too inevitable failures of free markets, without displacing them, indeed making them more fair, robust, and effective.

Unfortunately, over the last couple of decades, Keynesianism went into occultation in academia, as Friedman, Lucas, and other Chicago school neo-Austrians pursued their ivory tower models of perfect markets, rational actors, and evil governments. The resulting public debate is now weirdly unmoored from its proper foundatations, as mainstream economists hold their noses as they recommend Keynesian stimulus, and simultaneously engage in self-defeating deficit hysteria. The ideological content of mainstream economic thought is so prevalent that it goes virtually unnoticed, making explicit and persistent corrective public commentary so critical.

The Austrians and their progeny make the basic error of thinking markets are the point, where they really are a tool, of human betterment. And conversely, of thinking that government is somehow optional instead of integral in the economic system (that we can "go Galt", as it were). As we have learned in countless areas like health care, environmental management, and the financial system, markets can be disastrously defective, completely unable to cope with problems of their own making or with others we desperately need to solve. Indeed, functioning markets require rather close state supervision. There is no shame in that, and we should continue to search for ways to use markets creatively and as widely as possible (e.g. a carbon tax, cap-and-trade). But ultimately, the buck stops with the state, so it is better to tend to the long-term health of our political systems than to denigrate them as incapable of doing what they so patently need to do.

• Martin Wolf, on the inevitability of Irish default, and generally on liberalism in a strong state: "The Irish banking system is worse than too big to fail; it is too big to save."
• Pottersville- Austrian ideal, or "planned", progressive mess?
• Obama's message is ... the GOP is right!
• Another reason to disregard mainstream economics textbooks.
• The free market and shopping: our real religion?
• Gender and deep reporting.
• Is the Afghan government for or against the Taliban?
• Love in grade school.
• Corruption in the US, political and intellectual.
• But there are occasional glimmers of sanity in the media.

Evolvability, speciation, and sex

Self-fertilization sure is convenient, but it spells doom in the long run.

One of the larger questions in evolutionary biology is about the level of natural selection. Dawkins leads the fundamentalists in saying that the level of selection is the gene. Nothing but the gene, ensconced within individuals which live or die by their individual genetic traits. Others, including Stephen J. Gould towards the end of his life, couldn't help but see a wider picture, where species and even genera had distinct high-level traits that are, over long periods of time, weeded out by natural selection.

I am very much in the group selection (also called multi-level selection) camp, seeing selection acting on many levels, from the single nucleotide to genera and kingdoms. The issue isn't whether DNA is the heritable material, (supplemented by culture to some degree among higher animals), and thus the ultimate locus of heritable selection, but whether selection can be thought of coherently as acting on higher levels such as groups whose members share some kind of selectable traits in common, and thus can be differentiated from other groups in the struggle for existence.

Perhaps this is merely a matter of perspective, were the gene fundamentalists emphasize that any change in population frequencies is due to the gain or loss of individuals, (and individual genes), whatever their traits might be that gain expression at higher organizational levels- such as altruism, herd instinct, exogamous mating, tendency to speciate, etc. Group selectionists, in contrast, emphasize the trait rather than the transmission mechanism, see group-level traits as irrelevant on the individual level, and thus see natural selection as irrelevant there also.

At any rate, a recent paper (and review) was a very nice demonstration of a species-level trait with serious consequences- self-fertilization versus self-incompatibility among plants. Most plants produce both male and female gametes (pollen and ovules). Some exceptions (dioecious) come in female and male versions, and example being the date palm. Buying such palms can be a tricky business at a young age, since only the females grow dates, and can't be sexed till they give fruit.

However, most plants produce both male and female gametes, often having anthers and ovules within the same flower. How do they ever manage to mate with other plants? Putting aside macro-physical mechanisms such as having gametes mature at different times, or putting them on different structures on the same plant, or the most glorious mechanism of all- using insects or birds for cross-pollination ... most such hermaphrodytic plants have molecular incompatibility systems, where the "self" pollen grains are recognized when they hit the pistil, and are summarily blocked from germinating or growing down into the ovule.

Molecular incompatibility systems are quite complicated, with proteins expressed on the pollen surface, other protein receptor proteins expressed in the stigma/pistil, multiple variants of each spread through the population, and close genetic linkage between the matching ligand/receptor gene pairs so that the host plant always rejects its own pollen. (Related paper on the intricate system in Petunia.) Such things are difficult to evolve, and easy to lose by mutation.

And lose them they do. This paper starts from the observation that such systems are frequently lost over evolutionary time, creating the fascinating question: why maintain such costly systems of outbreeding, much like the elaborate exogamous-marriage traditions common in tribal societies? The cost for plants is clear- a fortunate plant, dispersed by a helpful squirrel or jay, may find itself far away from its origin, ready to colonize new habitat. But it can't if no pollen wafts its way from a compatible partner. End of story. Some higher animals have developed parthenogenesis for similar reasons of convenience, but finding mating partners is generally easier for mobile animals than for plants, so the issue is less pressing and the trait much less common.

The problem, of course, is that sex is great- it promotes genetic diversity and recombination, allowing bad genes to be combined into loser individuals and good genes into winner individuals. Shuffling genes through all the individuals of a population releases variation rather than confining it to the clones of each self-fertilizing lineage, fated to live or die by the co-lineal sibling genes it is stuck with. Beneficial mutations arise far less frequently than harmful ones, making this clonal restriction a losing proposition. By promoting population-wide recombination and diversity, sex improves adaptation, which is where this paper hangs its hat.

The authors looked at 356 species of the Solanaceae family of plants, (nightshade, potato, tobacco, chili pepper, tomato, etc.), classifying them as self-incompatible or self-fertilizing. This family and its ancestors have maintained self-incompatibility systems with dozens of alleles for ~90 million years, yet continually gives rise to self-fertilizing species as well. These derivatives don't recover self-incompatibility, so this is a one-way street, a ratchet that tests whether there is something about self-incompatibility that is beneficial enough to withstand constant loss of species to the auto-sexual "dark side", as it were.

Looking at a phylogenetic tree of these species, constructed with help from molecular data, (from publicly reported chloroplast genes), the authors derive rates of speciation, and rates of extinction. Actually, a phylogenetic tree is built from extant organisms, so it isn't going to directly provide rates of extinction. The authors derive them by magical (err- mathematical) means via repeated modelling and simulation of similar trees, which I have neither the data nor expertise to assess.

Phylogentic tree of selected Solanaceae, (root starts at 36 million years ago), with self-incompatible (SI) species in purple, compatible (SC) species in blue/turquoise. C diagrams the model of transitions between SI and SC species, with lambda = speciation, mu = extinction, r = net diversification rate. A and B show the deduced relative rates for each process among the species classes. Rates are given in per million years.

To get a feel for what is going on, however, note in the figure that self-fertilizing plants (turquoise) are sprinkled throughout the tree (outside circle) quite evenly. Very few form deep roots that lead to large lineages devoid of self-incompatible species. This is not what you would expect from a frequent one-way process leading to evolutionarily successful self-fertilizing plants. But it is what you would expect from a process that frequently and from the very earliest times gives rise to self-fertilizing plants that then also die out relatively quickly.

Their statistical conclusions are displayed in the graphs (A, B), with lambda as the speciation rate, mu as the extinction rate, C standing for self-compatible, and I for self-incompatible. Lambda-C (yellow) is quite high. Self-fertilizing plants colonize new areas very well, and specialize quickly. However mu-C (grey-blue) is higher still, indicating that those novel self-fertilizing species can't manage to adapt well on the long term, probably because they can not utilize a population-wide reservoir of variation as efficiently as out-breeding plants can. The result (r: the net diversification rate, graph B) is that self-fertilizing species don't hang on for the long term: lower long-term net diversification. Disease might be a particularly difficult challenge, demanding ongoing diversity and recombination in the population to meet the constantly evolving threats from pathogens.

A Dawkensian could construct the finding that inbreeding species do worse on the species level in a gene-based narrative. Individuals in these species are becoming less fit as whatever beneficial mutations they build up are trapped in their parochial lineage, held hostage to whatever other problems that lineage might have. Their gene complements are not keeping up with those of out-crossing species that systematically recombine to join the best of local and even distant variation into better-optimized plants, whose greater accessible population variation likewise serves as a buffer against bad times and unforeseen conditions. In short, outbreeding plants evolve better, though not faster, than their inbreeding congeners.

While such a gene-centric construction would not be wrong and is important to appreciate for a micro-level analysis, outbreeding also seems to be an eminently species-level trait, as is extinction, making a group selection view appropriate as well. The divergent trends of species sharing either fertilization trait creates a conceptual species-level or higher rule that we can see as group trait, by which species live or die, on the very long term. Indeed, for the purposes of variation and adaptation, outbreeding populations form what could be thought of as super-organisms. So sex is good- very good for species, which is why individuals put so much effort into it, pumping out clouds of pollen, luring insects to their lush crevices, and making our world such a colorful and biologically networked place.

• A bit of biological history, in New Zealand.
• Overview episode of mid-empire economics from the outstanding History of Rome podcast.
• Should we use deterrence to prevent crime?
• Case for the carbon tax.
• Get some vitamin D.
• A paper on the cycles of economic history, and Abba Lerner.

"For Lerner inflation that occurred before 3 per cent unemployment was a product of faulty institutions, not a problem inherent in markets. Thus he refused to accept that the target level of unemployment should be raised to whatever level required to stop inflation."

• In a related vein, some economic fallacies, by Vickrey.

"Government debt is thought of as a burden handed on from one generation to its children and grandchildren.

Reality: Quite the contrary, in generational terms, (as distinct from time slices) the debt is the means whereby the present working cohorts are enabled to earn more by fuller employment and invest in the increased supply of assets, of which the debt is a part, so as to provide for their own old age. In this way the children and grandchildren are relieved of the burden of providing for the retirement of the preceding generations, whether on a personal basis or through government programs."

Though I would hasten to add, this applies only in financial terms. In real terms, the older generation gets whatever it needs from the services of the younger, so the savings serve only to make the older generation financially able to demand the requisite services on the market, not magically able to provide directly for themselves. The "payback" is the share of future real production diverted to those who have previously saved into bonds and other assets.

Unemployment is unnecessary

Imagine a world where unemployment is a dim and barbarous memory

Unemployment doesn't exist in primitive societies. Everyone has something to do, and at the same time, no one has a "job" or gets paid. Everyone helps to do what needs to be done, and gets a share of the results. Social tools as well as self-interest get everyone to pitch in, and in extremis, one who is not pulling his or her weight may be ostracized.

With the rise of money, capitalism, and technology, humanity gained huge productive powers, allowing each person to exchange his, (or now her), expertise for the infinitely various products of others. An ironic problem with this world, however, is that it is too productive. It is possible for the entire population to survive based on the work of only half, or less. Indeed, agriculture takes up only 3% of the workforce in the US. What are the rest of us to do? Ideally, most of us might lie back in leisure, with Mai Tais supplied by the employed workforce.

Unfortunately, deciding who should be among the slackers isn't an easy problem, and unless one is the beneficiary of unusual inherited wealth, each of us needs income, based on our contributions to the community, in order to get a share in return, not just of Mai Tais, but of absolute necessities. In short, one needs a job. Conversely, society at large does not need any specific person to have a job. It can get along fine either way.

In positive economic times, this is not a problem, as jobs can be made of all sorts of pursuits. Musicians, mimes, bankers, buskers .. whatever can attract a buck is a job (just not blogging!). But sometimes there aren't enough bucks to go around. The current crisis is a classic case of financial collapse, with plunging investment and rising savings, leading to contraction of economic demand ... which is less bucks being spent, and thus fewer jobs.

In the lala land of conservative economists, (Chicago and Austrian schools), the labor market is always perfect, and anyone out of work just doesn't want a job at the going rate. They are lazy slackers. But that ignores the vast assymmetry of the labor market, best indicated by the seeker-offer ratio, now officially at five job seekers per job on offer. And this is a conservative estimate, since the official unemployment rate of ~9.5% misses significant classes of workers who either are so discouraged that they are not even looking anymore, or who have part-time work and would like full time work. With these classes, the unemployment rate is more like 16% and the ratio more like eight to one. Clearly, these are impossible odds, taunting seven of those ex-workers, day after day, month after month. They will be doing unpaid work (laundry, dog-walking, thumb-twiddling) for some time to come.

Unemployment rates, with U6 including discouraged, and part-time wanting full time work.

So the money economy drives everyone to participate to get money, but at the same time does not necessarily supply enough jobs to all who want them. Underemployment can be a stable condition, since the unemployed do not create the economic demand that leads the private system to invest in more productive capacity that creates more jobs. Thus the classic Keynesian policy of government picking up the slack by spending the missing amount (fiscal spending) to create that demand when demand is short of aggregate economic capacity, which can be conveniently defined as the existence of unemployment.

The second classic Keynesian idea is to create "automatic stabilizers", such as unemployment insurance and other safety net programs, so that when the business cycle hits a pothole, the federal government automatically (no legislation needed- no hands!) spends more into the economy on assistance programs while it simultaneously takes in less revenue in taxes. These work well as counter-cyclical policy, (except when economically illiterate legislators enter a state of deficit hysteria at the bottom of a cycle), but in the US, they are relatively weak. Unemployment insurance amounts to ~$1200 per month, on average, and has a limited term which has been only grudgingly extended in the current downturn on an ad hoc basis.

Other countries, such as Germany and Australia, have stronger insurance and other programs which help their economies (and workers) weather economic storms with much less disruption. (pdf, and see here.)
But obviously, there are problems with paying people to not work. Even if one takes the liberal-left view that people on average want to work and contribute to the greater good, incentives are important. That is why the economists I have been reading of late promote the idea of putting the unemployed directly to work on public projects.

This idea is typically called the "Job Guarantee" (JG) concept in the MMT literature. But to me that sounds like a political loser, so I will instead call it the Everyone Works concept (EW). The basic idea is that the Federal government funds, and local governments offer, jobs to anyone who wants one, at a basic civilized salary. For able-bodied workers, the government would no longer simply send money to those out of work, but would rather put them to work on local projects of a public nature, from litter collection to ESL instruction to road construction. Looking around, I see no shortage of public needs going unfilled, and it is really a crime to let the unemployed fester psychologically while not using their labor for beneficent ends.

Obviously the devil is in the details- how much are they paid, who hires them, who fires them, what do they do, and so on. The pay would be a living wage, which in my book would be 1.5 times the poverty level, or ~$30,000 per year / $2,500 per month, plus benefits. These jobs are on-going, depending on the mutual desires of the worker and employer. All EW workers would be paid the same, and naturally at this level, a strong incentive remains to find a private sector job at higher pay. This level would also set an effective minimum wage policy, obviating the need for continued legislation on that front. Youth might enter the workforce through this kind of program as a matter of course, resembling in some degree the national service ideas the come up in other contexts.

The EW program would have strongly competitive aspects, since the public need for work varies widely, from menial to artistic, technical, and beyond. Workers would apply & compete for jobs suiting their interests and talents. While local agencies would be obliged to hire each applicant for some kind of work, that may be as menial as litter removal or ecological restoration. Workers could likewise be fired from jobs if they didn't perform well, ultimately ending up on litter removal detail if otherwise unwilling to work at a higher level. If still not conforming to public needs, a worker could be completely fired and handed over to the deeper social safety net for psychological evaluation, counseling, etc. as needed. But this safety net would be much reduced, since the major pathologies of chronic unemployment would be a historical curiosity.

The WPA and CCC during the depression were inspiring examples of such programs, still paying dividends today in their physical and artistic achievements. Hoover Dam was built by an army of the unemployed in a public works project lasting only five years during the depths of the Great Depression. At a time when our infrastructure is crumbling, other public goods are rotting for lack of maintenance, and workers are going begging for jobs, a wide-ranging work program could usher in a new age of economic stability as well as improved public amenities.

A more modern example exists in Argentina, where an economic crisis prompted the government to start an EW-type program called Jefes de Hogar (Heads of Households), offering half-time community work and half-time schooling or training to all comers. This has been very successful in reducing poverty, stabilizing the economy, and enhancing development, especially in rural areas, at a cost of 1% of GDP. (See here and here for pdf reviews.) It has also pulled people out of the informal economy and employs many who had previously not sought employment at all.

Workers in this program would be trained as needed for new skills, and would also facilitate their search for private sector jobs by having their current work situations open to private employers, with job search components integrated, to a limited extent. Private poaching would be welcomed, and private employers would be assured of workers in better psychological condition, and often with extra skills, compared to those currently coming from the army of the unemployed sitting on couches and twiddling their thumbs.

Clearly, this kind of program would seem to be more geared towards low skill workers whose efforts are more easily fungible and usable for basic public service projects, whose private sector work tends to be more sporadic, and whose pay would be in the range of the EW wage. But I think all sorts of professional and skilled workers could find quite useful roles to play in a sufficiently open program, especially if they had a role in identifying and bidding for public needs. The program could use and enhance intellectual flexibility.

Who would pay for it? Under current conditions, the budget for 16% of the labor force of about 160 million in the US would be $770 billion dollars, roughly the proper scale of stimulus spending we need yearly till the economy gets back on its feet. If the US resumed a serious commitment to full employment, with unemployment rates of 2-3%, as existed fifty years ago, the needed funds would decline to $120 billion per year, easily affordable on an ongoing basis in view of the widely positive effects. For comparison, unemployment insurance, welfare, foodstamps, and EIC currently make up, very roughly, $200 billion in average years like 2006.

Can we afford it? The cost of EW hardly exceeds the sort of non-work programs which it would largely replace. So yes, we can afford it. During recessions, extra spending channelled through EW  would have positive effects on aggregate demand and the revival of the private economy, on the health of the labor market, and on the morale of workers involved, not to mention local public amenities, infrastructure & services. As the private economy revived, EW jobs would evaporate and localities would return to lower levels of federal support. One of the most pernicious aspects of the current downturn is that state and local governments have had to cut disastrously at exactly the time when needs are greatest. An EW program would allow the power of federal counter-cyclical spending to reach down to these lower levels in a stronger and systematic way.

Shouldn't unemployed people go the entrepreneurial route, making small businesses and creating jobs? In an ideal world, unemployed people would pull themselves up by their bootstraps, start bakeries, manicure shops, delivery services... anything that could bring in a piece of that economic pie. But even if the initiative and skills were there, it still wouldn't work from a macroeconomic perspective, since the pie just shrank. Just as there are fewer jobs than applicants, there is less spending (aggregate demand) than people who need that spending, whether through large or small businesses. So here again, someone (the government) needs to step in to the breach with counter-cyclical spending.

Would EW public work programs be boondoggles and make-work? Localities would have substantial incentives to make good use of this labor, it being at their disposal for projects of their choice, for their constituents. One could imagine a worker-initiated proposal system for projects, reviewed by local experts or elected officials. Localities may also wish to compete for workers from other places, based on quality of work offered, though the primary focus would be on local labor that is temporarily unemployed.

Of more worry, perhaps, is the possibility of EW workers displacing regular government or contract workers with competing skill sets, since people from all sorts of professions would participate. The local government would have an interest in keeping its permanent skill sets and loyal workers. But at the same time, the public employment sphere has become remarkably bloated and could perhaps use some novel competition of this kind, from talented people temporarily out of private work.

If this competition is too much for local governments to bear, despite their professed dedication to the public's welfare, they could contract with NGOs and philanthropies for projects that fulfill a public goods mandate, well away from the duties of regular civil servants. Remember that even if the work is of no significance whatsoever, half of the program goals are still achieved, which are macroeconomic stabilization and civilized income support for the unemployed. As Keynes said, paying people to bury fiscal dollars and then unleash others to dig them up again would be rational policy in recession conditions. Creating public goods is a highly desirable goal, but not the only one.

When all is said and done, this kind of program is a way to improve the standing of labor in the US, forming a more useful and helpful safety net with positive macroeconomic and cultural benefits. A typical countervailing argument, presented in one of the above-linked analyses of the Argentine program, is that such programs "reduce job search intensity", while increasing the quality of private sector jobs the workers ultimately take. In short, they make labor less desperate. Personally, I would regard that as a good thing. It is time for employers to do a little work in the labor market!

• Kristoff compares the US with Argentina.
• A fellow blogger covers unemployment trends.
• The unemployed are pariahs, to pampered employers who have jobs.
• In the black community, the unemployment fire is out of control.
• Predatory loans and business corruption- at the root of the financial crisis.
• The contest of wills goes on in Afghanistan.
• Our bodies, our religions.
• GOP congressman: gimme my free healthcare now!
• Occasional Republican appalled at colleague's climate change corruption.
• Bill Mitchell quote of the week, courtesy of Chicago-school über-economist Robert Lucas in 2003, saying that the business cycle is dead:

"My thesis in this lecture is that macroeconomics in this original sense has succeeded: Its central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades. There remain important gains in welfare from better fiscal policies, but I argue that these are gains from providing people with better incentives to work and to save, not from better fine tuning of spending flows. Taking U.S. performance over the past 50 years as a benchmark, the potential for welfare gains from better long-run, supply side policies exceeds by far the potential from further improvements in short-run demand management."

At this late date, Ben Bernanke, who comes from the same perspective and is also critiqued in Bill's post, is trying desperately to perform monetary miracles without calling for more fiscal spending, which to his school (the supply-side, give money to the rich and wait for it to trickle down, school), is anathema. So interest rates are beaten down to zero at all terms, banks are given vast liquidity, and we wait for their animal spirits to revive. But it is spending that creates demand that calls forth investment, hiring, and further economic activity. Bernanke is gingerly and reluctantly stepping in that direction, having the decency to say that current unemployment is "unacceptable". To congressional Republicans, it seems to be quite acceptable, even desirable, if it weakens Obama.

Did we screw up Afghanistan?

Conventional wisdom is that the US "deserted" Afghanistan after the Soviet withdrawal in the 90's, so everything afterwards was our fault.

Mired as we are in a decade-long nation-building and counter-insurgency project in Afghanistan, I keep thinking about its antecedents and background. A frequent narrative is that the US, after supporting the Mujahideen (jihadists) operating out of Pakistan through the 80's against Soviet occupation, dropped them like hot potatoes and was therefore derelict in its humanitarian, moral, and strategic duties in rebuilding Afghanistan.

It is surely a complicated issue, but I'd like to suggest that this narrative is wrong, and that the US was holding to its principles in leaving Afghans to their own devices, and doing very much the right thing. It seems deeply patronizing to say that without our "adult" supervision, the many fighters who had made the Soviet military machine cry uncle couldn't come up with a viable political structure for their own country. The natural presumption had to be that the Afghans, after so much sacrifice, had earned the right to direct their own affairs and form a government to their own liking.

In the first place, the analogy to our own revolution comes to mind. Would we have wanted France to "assist" us in setting up a new government, perhaps supervising our constitutional conventions or installing a temporary king? Clearly not. We muddled through with the Articles of Confederation for a decade, without any serious interference from Europe, and were glad of their neglect. After a decade or more of valiant war, the Afghans would hardly have wanted to exchange one colonizer for another, however well-meaning. Even now, after their own political system melted down further through chaos, civil war, and through to Taliban tyranny, it would be hard to say that the majority of Afghans want us there. Nor would Russia or the international community have seen us as terribly benevolent in taking advantage of the sudden collapse of the Soviet system by rushing into a former client.

Secondly, Islam presents itself as the ultimate political structuring ideology. It is a complete solution- a "government in a box", if you will, encompassing the spiritual system, social system, and political system. We had our Founders and our enlightenment principles, leading to durable social and political structures. Islam has its thorough compendium of Koran, hadith, sharia, and other legal structures, expressed to various extents in current Muslim states. Pakistan calls itself an Islamic republic, and Afghanistan just as much views itself as an Islamic state, whatever the vagaries of local tradition. Both should have been able to cooperate as friends and allies to bring the Islamic political vision to pass for the Afghan people.

Now of course I write with my tongue partly in cheek, since the empirically speaking, Western enlightenment principles of government are far superior to what Islam has been capable of, mired as it is in frankly medieval political theory with huge gaps where rational government, personal freedom, and popular legitimacy would otherwise be (though ironically, Islamic government during its golden age, a millennium ago, wasn't so bad). One solution is that of Turkey a century ago, which threw the whole Islamic edifice out the window and started from scratch on a Western model. And cancelled the caliphate for good measure. Egypt, Jordan, Syria, Saudi Arabia, Indonesia, and other Muslim countries have all tried to find middle ways, none very good to Western eyes. But who are we to criticize? If another country can keep itself together and not trouble its neighbors, that should be well enough. Right?

So one question is how capable the Mujahideen were of founding a decent Afghan state. We knew they were no Jeffersons and Madisons, but still, we had little right to meddle in their post-war arrangements. In fact, many had been brutalized through the Soviet war and related internecine wars, to the point that they could hardly conceive of a government not imposed at the tip of an RPG launcher. They also continued the age-old fissiparous traditions of Afghan tribalism which saw little need for a central government at all, but rather an unending small-bore contest of charismatic personalities and ad-hoc militias, harkening back to ancient Greece and before. But that again would not be a huge issue for us on the outside, as long as some internal arrangement arose, however decentralized.

This is one reason why Ahmad Shah Massoud, the Panjshir warlord most resistant to the Soviets and the Taliban, remains so revered in Afghanistan. He seems to have been the one person closest to a founding father, among all the parochial warlords and mafia figures, who towards the end of the Taliban era was broadcasting a broad vision of a unified and civil Afghanistan, before being assassinated by Al Qaeda. He was the only major leader not coopted by Pakistan, Iran, Russia, or other foreign powers, as well as not being Pashtun and thus particularly interested in a non-sectarian vision of Afghan unity. Now the country limps along under the tutelage of Hamid Karzai, originally thought to be a similarly unifying figure, but as it turns out, one with a much smaller vision, with deep problems of corruption and nepotism, who has been seriously undermined by our own failures and lack of understanding.

Another large question is the influence of Pakistan. After supporting Afghan nationalism for so many years, it was hard to believe (for a naive person, perhaps) that the Pakistanis would so thoroughly abdicate their brotherly and Islamic role in Afghanistan's postwar future by promoting the most vicious civil war, continuing instability, and ultimately, the rule of astoundingly regressive Islamists orginating from the madrasahs of Pakistan (the "students", or Taliban). But that is what happened.

Of course, the Pakistanis have little to crow about in their own governance or neighborhood relations, so this also would have been less surprising to experienced US policy makers. All the same, the malign influence of Pakistan, even if fully recognized, was hardly reason for us to enter the treacherous Afghan political scene in a more direct way, especially as we had let Pakistan control our aid to the mujahideen for years. Even now, when Pakistan remains the bulwark of Al Qaeda and Taliban resistance to Afghan and US interests, we are, of all things, giving them arms and calling them our "allies".

So we were honestly and rightly reluctant to have any deep role in Afghanistan after the Soviet era. Should we have given more aid? Perhaps, though it is hard to see to whom that aid should have gone. Should we have watched developments carefully and nurtured our own intelligence and language capabilities for Afghanistan? Of course. Should we have put the screws on Pakistan to turn off their spigot of arms and not play strategic games with their neighbor, poor and weak as it was? Sure, that would have been nice, but ineffective in light of our current influence on their perpetually self-defeating policies. By the late 90's, we had put Pakistan in the deep freeze anyway over their nuclear testing.

Now, two decades on, we are very much in Afghanistan, and need to be clear on the vast scope of what we are trying to do. Which is, to reshape the political culture of Afghanistan from top to bottom, easing Afghans out of a civil war mindset, sidelining Pakistan's influence, and protecting nascent civil life and political institutions, patterned partly on Western models, from the constant assaults of insurgent violence and islamist ideology. It is an enormous job, and not one we would have willingly gotten into without the absolute necessity of "fixing" a nexus of failed governance and playpen of global jihadery.

Can we fix it? That we pulled the bacon out of the fire in Iraq is promising as a model, but the problems of Afghanistan are less tractable- especially the influence of Pakistan and the Afghan's own lack of experience in state structures vs tribalism. We are perpetuating the civil war as participants, so it is hard to say that our influence is entirely good and pacific. Nevertheless, the main need is time, since the core of the job is a slow process of cultural change. Afghan minds are turning from internecine warfare to democratic political contests and quality of government issues at all levels. The deal is that we will leave once enough Afghans have turned the corner and once the middle tier of warlords and mafiosi has been disempowered, replaced by public servants. The US and NATO, as representatives of, let us just say- empirically superior Western governing practices, are protecting and teaching, but it is up the Afghans to listen and hear.

• The civil surge.
• Eating in Afghanistan.
• Women in Afghanistan.
• Nation-building: what US soldiers do.
• Kristof on Pakistan.
• Van Morrison- shirt's tight, but the music is hanging out.
• On the meaning of baptism.
• Social security: not broken.
• We know very well who is to blame for the crisis.
• Bill Mitchell quote of the week:

"The current state of affairs – with appallingly high unemployment and low activity levels – can be considered an equilibrium in the sense that there are no dynamics present that will change the situation. Firms are producing and hiring at levels that are consistent with their sales. The unemployed clearly desire higher consumption and would buy more goods and services if they were working but that latent demand is “notional” and not effective (backed by cash). The market fails to receive any signal from the unemployed and so firms cannot respond with higher production."

..."My own profession should hang its head in shame for being instruments of this religious persecution of the disadvantaged."

The genomics revolution will not be televised

The genomics revolution has happened.. on the scientist's bench, but not in the doctor's office.

Scientific American had a very good article on the genomics revolution, ten years after the first human genome was fully sequenced. That sequence was a signal event in the progress of human knowledge, as was the prefiguring discovery of DNA's structure fifty years before. But who has benefitted? There is no comfortable way to say this ... biologists have made out like bandits so far. They (especially Francis Collins) promised a transformation of medicine resulting from the knowledge gained through this sequence, but that train has hardly pulled out of the station ... yet.

Biologists have seen their field transformed by this new knowledge and associated technologies, which have multiplied their power to ask questions of organisms. Where they were happy to know how one or two genes responded to a drug or other condition, now they measure the response of every gene in an organism. Where they spent years mapping the mutation and gene responsible for an interesting phenotype or disease, now it may take only days to figure out the gene's location.

What's the slowdown? Obviously, it has to do with complexity. Even with the genome in hand and with accelerating technical capacities, understanding doesn't come as rapidly. The blueprint metaphor for the DNA code doesn't quite work because it is not actually a scale model or drawing of the organism's morphology, or a neat drawing of its chemistry either. Instead, the DNA is a digital code for rune-like protein sequences that assemble themselves into dynamic animated super-heroes that fly around the cell doing difficult-to-understand jobs, controlled not by a single mastermind, evil or not, but by a bogglingly complex network of whatever happened to crop up during evolution. Perhaps a sprinkle of protein phosphorylation here, a location-specific DNA controller there, and indirectly regulated protein degradation as well. It all goes into the pot of what makes our biology go.

Integrating all this action and re-action conceptually, as the cell does in the flesh, has been an enormous problem that has made computer sciences particularly important in biology. But success in that kind of modelling remains tantalizingly far off. Biology is in essence an alien technology, perhaps the most alien technology we will ever encounter, having nothing to do with our macroscopic technologies of carpentry, stone-hewing, metal-working, etc. Its principles are completely different, and not simple.

Another issue is about what is even possible with respect to medicine. Not every malady will ever be addressable by a drug in the current paradigm, which is making drugs that interfere or help the function of proteins. Only when we gain the capability of using drugs to directly control and change genes throughout the body's DNA will our pharmacological powers truly be omnipotent, something still quite far off, and of course full of ethical conundrums as well.

But back down to earth... the most interesting point made in the article was about a push over the last decade to map common variants in the human genome, among people and populations, in hopes of identifying the most important disease-causing genes and pathways. (One example is the HapMap project.) Because sequencing one genome was of course not enough- we had to sequence lots of genomes and compare them to figure out how people differ, in all those interesting ways that make us happy or unhappy. Eventually, every person will have their genome sequenced, which will be a rich and central part of the individual and collective medical record.

But the logic of this first variant hunt was fatally flawed, for eminently Darwinian reasons. The idea behind it was that many traits, like hypertension or diabetes, are common. Thus the genetic variants that cause them should be common as well, making them easy to detect with the modest sequencing technology of the day. But actually, this was like looking under the street light just because you can, rather than because the keys are there. Genetic variants become common in a population precisely because they are inoffensive, perhaps even fitness-enhancing, not because they are the primary causes of the diseases that doctors and geneticists were hunting around for.

What the researchers found, at the cost of about $100 million, were lots of variants, but precious few with any effect on disease, and those with only tiny effects. They were essentially useless either for diagnosis or for the important work of studying genetic networks/pathways of disease. This led to a lot of papers (and news reports) about gene X linked to, say, alzheimers, which later turned out to be insignificant. It turns out that rare variants are the ones that are far more influential for diseases with genetic components. We all have lots of variants, and the ones that kill us are likely to be quite rare in the population, understandably enough. But more always come along, to be sifted out again and again via selection.

A similar story has happened with the specific condition of autism, which has been found to be related to variants in a stunning number of genes- dozens, if not hundreds. It looks like autism arises from defects in a broad developmental process in the brain that can be derailed into some characteristic groove by many genetic defects, each of which are naturally weeded out during evolution and thus never become common in the population.

So, sadly, ironically, but perhaps not surprisingly, molecular biologists had a weak understanding of evolutionary biology, were smitten by their new sequencing toys, and thought that the most accessible data (common variations) would be informative, or at least were able to convince their peers/funding agencies to that effect. The common variations have certainly been useful in some ways, however, such as tracing human ancestry over time and geography. And, now that we know the forces involved, in setting a baseline of sorts for low-impact genetic variation.

Now that rare variations are far more accessible as sequencing technology advances, researchers have been increasingly successful in finding genetic links to diseases. But what of it? One dream in the field was that genetic testing would be able to help us predict disease propensity with great accuracy. But if the disease-causing genetic variants are rare if not novel, and, in scientific terms, uncharacterized, they can't be used for a reliable prognostic test. This dream remains essentially unrealized. On the other hand, finding genes with stronger ties to diseases, by directly sequencing affected people and their families, helps the research enterprise tremendously, finally filling in some of the nodes in the networks that break down or go haywire in disease.

One example is a recent paper in Science by researchers who sequenced all the protein-coding genes of tumor cells from eight different human ovarian tumors. Amongst the scattershot mutations common in cancer cells, (these were not inherited germline mutations, but somatic mutations that arose during tumor development), they found four genes that had been hit more frequently. These four where then resequenced in a panel of 42 ovarian cancer tumors, 24 of which showed mutations in one gene whose product regulates chromatin accessibility. This gene had never before been thought of as a tumor suppressing gene, but its super-high rate of co-involvement here showed it to be one. Thus one more piece is added to our knowledge of how one kind of cancer can escape normal cellular controls. But knowing that this gene's inactivation can contribute strongly to cancer brings us little closer to a medical treatment, unless we have a way to replace its function ... i.e., to do gene therapy.

• Unlike basic science research, medical studies are a minefield of error as well as waste.
• You know it's hot when Ms magazine complains that not enough new atheists are women.
• Black and godless.
• Obama's unrequited good work.
• BofA and its MMT accusers discuss its fraud. Quite illuminating.
• Bill Mitchell quote of the week, quoting Joseph Stiglitz:

"JOSEPH STIGLITZ: My view is we cannot afford not to stimulate the economy. So, you know, anybody that says we should go back to austerity or we should not have a second-round stimulus just doesn’t understand economics. And let me be very clear about this. If we don’t stimulate the economy, the economy is going to get weaker. When the economy gets weaker, tax revenues go down and expenditures go up. Already, more than 40 million Americans are on food stamps. Number of people on Medicaid is reaching record levels. So, revenues go down, expenditures go up, deficits get worse. If you stimulate the economy, then people get jobs, they spend money, tax revenues go up. Now, if we spend the money on investments—investments in education, technology, infrastructure—you grow the economy in the short run from the stimulus, you grow the economy in the long term because of the returns that you get on these investments."

Bonus quote of the week, from Rand Paul: 

"There are no rich. There are no middle class. There are no poor. We all are interconnected in the economy. You remember a few years ago, when they tried to tax the yachts, that didn’t work. You know who lost their jobs? The people making the boats, the guys making 50,000 and 60,000 dollars a year lost their jobs. We all either work for rich people or we sell stuff to rich people."

Milton and the image of god

John Milton: poet, pamphleteer, sarcast, theologian, raconteur, Puritan, prophet.

I've enjoyed a recent biography of John Milton, spurred by the 400th anniversary of his birth. The author (Hawke) is unfortunately a bit overbearing and occasionally unreliable, going off on postmodern/Marxist tangents with precious little support from his subject. Yet all the same, Milton comes through as quite a specimen- voracious reader, auto-didact, polyglot, revolutionary, and leading intellectual of his time. Most unusually for a bookworm whose financial support was usery (money-lending), he was pulled into government service through the turmoil of the English revolution and served as its intellectual correspondent, answering (well, sarcastically attacking, actually) enemies both foreign and domestic. A propagandist and spin doctor, we might say in the modern parlance.

There are perhaps three key elements to Milton's career and thought- his early pampleteering and miscelleneous poetry about freedom in general and freedom to divorce in particular, his government career were he attained great fame for defending the execution of King Charles I and other innovations of the Cromwellian regime, and lastly his magnum opus, Paradise Lost.

Milton was a userer, something of a cross between a banker and a loan shark, as was his father before him, leading to a financially comfortable existence. He was extremely well-educated, but mostly at home, with tutors and by his own efforts which were unremitting, learning Latin, Greek, Hebrew, French, Spanish, Italian, Dutch, and Old English. He entered training to become an Anglican priest, and obtained a degree from Cambridge, but then returned home to study and ruminate, becoming a Puritan, though not a particularly straight-laced one. At Cambridge he may have been strongly influenced by the American advocate of religious freedom, Roger Williams.

After a quite grand continental tour, including visits with Grotius, an elderly Galileo, and many other machers and thinkers of the day, Milton settled into further study. He had an unshakeable faith in his destiny as a great poet and intellectual, and though well-liked by his friends, had by this point precious little to show for it, and no positions other than as a self-directed student and a colleague of his father's.

In his early thirties he got entangled with a debtor in Oxfordshire, and came away with a bride half his age. While the origin of the transaction is unclear, the consequences are not. Mary Powell, all of 16, turned out to be rather more dull than shy, and didn't suit Milton's intellect and spirit at all. She fled back home within months, leaving Milton to stew in a legal limbo from which he produced some of mankind's more stirring appeals for freedom. Milton was trapped by a system that granted divorce for sexual non-performance or adultery, but not for psychological incompatibility. Essentially no divorce was possible while both remained alive. (Mary died nine years later, after eventually moving back in and bearing four children.)


"The mind is its own place, and in itself 
Can make a heav'n of hell, of hell a heav'n."
- The author, Paradise lost, Book I


Milton's grand theme was a hatred of servility, whether in domestic affairs (against entrapment in uncongenial marriage, and for household rule by the wiser, of whichever sex), in religious affairs (against popery as well as Presbyterianism, indeed all kinds of religious hierarchy and state establishment), in the state (against monarchy and against censorship), and in personal life (against the slavery of lusts and vices).


"Better to reign in Hell than serve in Heaven."
- Satan, Paradise Lost, Book I


His great philosophical insight was that the moral ascendence and freedom he so valued was meaningless without its evil foil. A consequence was his support of uncensored publication, which by exposing bad and immoral views, strengthened better ones. It also led to his great epic character, Satan, who presents the temptations and snares without which humans could never do great deeds and attain high character.


"I cannot praise a fugitive and cloistered virtue, unexercised and unbreathed, that never sallies out and sees her adversary but slinks out of the race, where that immortal garland is to be run for, not without dust and heat."
- Areopagitica


Milton was swept up in the revolutionary mood as Charles I, who had established essentially tyrannical rule justified by divine right, lost control of Parliament, fought a civil war against it, and was finally tried and executed by Oliver Cromwell. The English had entered unknown, revolutionary territory, without precedent in recent European history and appalling to most onlookers. (Groups such as the Quakers, Ranters and Diggers originated at this time.) Even within England, the king's execution was highly unpopular. But Milton had unique insight, having read deeply in the classics of antique history, seen the various governments of Europe in action, and written on the issues of his day from an often heretical point of view.

He understood, as few others of his time we able to articulate, that the principle of the matter was that any monarchy or state was built on the support of the people. The monarch was their instrument, (echoed by his contemporary Hobbes in his Leviathan), not the other way around, and should be deposed and even killed if he was working against the general interest. Milton noted acidly that a tyrant is a moral liability to the nation on a very personal level as well, ensnaring its people in corruption and licentiousness, as his rule feeds on servility rather than on virtue.


".. but rather seek
Our own good from ourselves, and from our own
Live to ourselves, though in this vast recess, [hell]
Free, and to none accountable, preferring
Hard liberty before the easy yoke
Of servile pomp."
- Mammon, to his fellow demons recently cast in hell. Paradise Lost, Book II


Milton had faith that god's hand was upon the revolutionary government, while not going so far as some of his contemporaries who saw the Apocalypse and second coming around the corner. In this he was sorely disappointed after Cromwell died, his system crumbled, and the English turned back towards restoration. He never reconciled himself to the return to state servility and church establishment, (which immediately cannonized Charles I as an Anglican saint!), but was lucky to keep his head, and kept it down the rest of his life, working on a history of Britain, Paradise Lost, and a few other works, despite having gone blind from glaucoma.

I find it ironic that Milton was a ferocious iconoclast in line with Puritan ideology, denigrating all images, altars, relics, costumes, and even church buildings as likely to inspire devotion which detracts from that due to god directly. Yet he produced literary images by the bushel. His prose and poetry is laden with allusions both pagan and scriptural, to the point that his over-the-top style commands its own eponym: Miltonic. From what I understand, the theory was that literary metaphors point to their meanings in a direct way not as prone to displace their referents in human devotion as physical objects can. But now Paradise Lost has been illustrated multiple times, including by William Blake, and many of his allusions are indecipherable to any but the most devoted English major, making the project somewhat odd from an iconoclastic point of view.

Not only that, but Milton saw himself as a prophet, both in political terms, speaking as he does to our time for freedom of conscience in speech, religion, and state, and also in personal terms, as having received Paradise Lost from a heavenly muse (even from the holy spirit) which fed him nightly installments of the extravagant story. While Protestants and Puritans believed in independent and close interpretation of the bible, I think they would have been surprised by someone claiming to hear directly from god, and getting such rich material in return, churning in countless pagan sources and virtually deifying Satan.

Milton's Christian belief, unorthodox and unchurched as it was towards the end, involved the most complex images, all of which were, to my reading (as an atheist), false in detail and false in their ultimate signification, and thus idolatrous. Even to fellow believers, his imagery would have to be viewed as gratuitous and suspect, since so little was based on clear scriptural precedent. Andrew Marvel gave Paradise Lost an introductory poem that assures readers of its ultimately conventional theology despite its wild imagery, a defense that was probably sorely needed on a sensitive point.

In short, Milton was writing his own revised and improved scripture, which would be idolatrous if done without divine inspiration. So he claimed such inspiration, and the fanciful epic has been happily swallowed by Christians of all stripes who enjoy seeing their vague sentiments fleshed out in such bravura fashion. But if we stand back for a moment, it should become clear that Milton was making this poetic world out of his own rich imaginative storehouses, which technically would be idolatry even for those in basic agreement with his theology. That is the issue with artistic embroidery, whether confined to poetry or practiced in architecture, liturgy, vestments, icons, paintings, etc. It simply can't be right as a statement of factual reality and therefore detracts from pure religion (practiced by Quakers, perhaps, or Spinoza). If taken in the secular artistic sense customary in Western art, then no harm is done. But if it is presented as divinely inspired, even a new revelation?


"Whose fault? Whose but his own? ingrate, he had of me
All he could have; I made him just and right,
Sufficient to have stood, though free to fall."
- God, speaking of man and his fall: Paradise Lost, Book III


The thesist will immediately counter that I am being excessively literalist and don't understand, or "get" religious art. Such expressions may be artistically embroidered, but at their core adhere to conventional belief. There is a line between "truth", as defined by theology, tradition, and custom, and the "art" comprising everything else which inspires the reader/viewer/listener with elevated thoughts and ideas all consistent with, and pointing back towards, the core "truth".

My point, however, would be that such a line doesn't actually exist. There is no discernable line where inventive imagination ends and vetted fact begins. Attempts to codify even the most basic "party" line of this sort, such as the Nicene creed, generated enormous conflict, both at the time and since, besides being incoherent and unprovable even on their own terms (e.g. Tertullian's "Credo quia absurdum"). The varying choice of creeds and scriptures ends up being either individualistic and conscience-driven, as for Milton and the Puritans, or else decided by temporal authority. Which, of course, is the position of the Catholic church, which despairs of managing its theologians in any rational way, but subjects them to blatant hierarchical subjugation, headed by the Papal dictator (whom Milton regularly refered to as Antichrist) who issues infallible bulls of doctrine on the one hand, and suppresses or even excommunicates those with whom he (for it is always a he) disagrees on the other.

With no real line between art and theology, my conclusion is to treat theology and religion as art. Milton brought such artistry to new heights, adding something of a new gospel to the religious and secular canons. If we take him too seriously, he himself would scourge us as idolators and say that only few have the ears to hear the high-flown metaphorical and dramatic language he uses. Very well, but where is the destination to which he points, however elliptically? No external sign exists. As far as I can tell, it is in our glorious psyche.


"I sung of Chaos and eternal Night;
Taught by the heavenly Muse to venture down
The dark descent, and up to re-ascend,
Though hard and rare: Thee I revisit safe,
And feel thy sovran vital lamp; but thou
Revisit’st not these eyes, that roll in vain
To find thy piercing ray, and find no dawn;
So thick a drop serene hath quench’d their orbs,
Or dim suffusion veil’d. Yet not the more
Cease I to wander, where the Muses haunt,
Clear spring, or shady grove, or sunny hill,
Smit with the love of sacred song; but chief
Thee, Sion, and the flowery brooks beneath,
That wash thy hallow’d feet, and warbling flow,
Nightly I visit: nor sometimes forget
So were I equall’d with them in renown,
Thy sovran command, that Man should find grace;
Blind Thamyris, and blind Maeonides,
And Tiresias, and Phineus, prophets old:
Then feed on thoughts, that voluntary move
Harmonious numbers; as the wakeful bird
Sings darkling, and in shadiest covert hid
Tunes her nocturnal note. Thus with the year
Seasons return; but not to me returns
Day, or the sweet approach of even or morn,
Or sight of vernal bloom, or summer’s rose,
Or flocks, or herds, or human face divine;
But cloud instead, and ever-during dark
Surrounds me, from the cheerful ways of men
Cut off, and for the book of knowledge fair
Presented with a universal blank
Of nature’s works to me expung’d and ras’d,
And wisdom at one entrance quite shut out.
So much the rather thou, celestial Light,
Shine inward, and the mind through all her powers
Irradiate; there plant eyes, all mist from thence
Purge and disperse, that I may see and tell
Of things invisible to mortal sight."
- The author, speaking of his own blindness, Paradise Lost, Book III

• Total enchantment, WoW-style. Who needs religion?
• Prayer.. not working so well in this instance.
• Richard Dawkins sues his Los Angeles-based web-producer for embezzelment of hundreds of thousands of dollars, including "a weight reduction program (or weight loss meals) purchased from Freshology, Inc." Ouch!
• The Pakistani/Haqqani war on Afghanistan. One wonders how we can justify giving any money, let alone military aid, to this disastrous regime. "Kurram is also thought to be a possible safe haven for al Qaeda's top leaders. Last week, a NATO official told CNN that Osama bin Laden was hiding in an area between Kurram and the northern district of Chitral in Pakistan's northwest. Bin Laden is said to be living comfortably and is being aided by members of the ISI."
• Bill Mitchell, on the "catastrophe of the human essence"- humanities and education. Video of a recent talk, and quote of the week:

"Much of what Keynes subsequently said was previously developed by Marx. He started from the proposition that capitalists aim to accumulate ever increasing wealth by extracting surplus value. The generation of profit thus requires two actions: (a) surplus value creation as the object of production which aims to reduce the payments to labour (limit their consuming power); and (b) Sale of commodities in market which is limited by the consuming power of society.  So Marx quickly established the inherent contradiction in capitalism and deemed this the precondition for crises."

Introspection... happens in the brain!

Neuroscientists find some anatomical correlates of accurate self-knowledge.

One of the few remaining bastions of theism is the mystery of the mind. That, and the fundamental nature & origin of the universe, comprise the only serious mysteries from which theistic world views take more-or-less justified comfort. With respect to the latter, a recent scientific American article (& book) by Stephen Hawking and Leonard Mlodinow takes a decidedly non-theistic view, while also claiming that there may be no final theory of everything, only a set of partially compatible theories. This would be like settling for the conflict between quantum mechanics and relativity+gravitation and saying "we're done now". I'm not sure how much sense that makes, since reality is unquestionably unitary and happily doing its intrinsic computations all the time at all scales. So they have to be compatible, and it is only our conceptual apparatus that has failed (so far) to devise a model that is as unified as that reality.

The ultimate problem is likely to be our complete inability to devise empirical tests for such ultimate models of reality, since we can't attain the energies of the early big bang, let alone the putatively timeless, space-less conditions that might have preceded it. Thus we might ironically find ourselves back in an intellectual world reminiscent of theology, another scholarly pursuit which imagines what could be without the benefit of experimental backing.

Sorry to digress, but these topics are closely tied for those unwilling to find meaning in this mundane disenchanted world, and among their fellow bio-people. And for whom mystery (i.e. lack of understanding) is the essential ingredient for meaning. Which is to say, provides the space into which can be poured projected meanings.

But back to the mind. That personal, magical place that makes the world appear, and throws in dreams for free. To scientists, it is a problem, but for theists, it is the rock of mystery, the self-evident communication portal to the "other side", and source of untapped magical powers (dianetics, prayer, etc.; see my soul posts.)

Unfortunately, as far as actually known, the mind is confined to the brain- which is exceedingly complicated, but also finite and accessible. Thus it can and is being progressively disenchanted by scientists doing their mundane thing. The current paper is one more tiny step on the long road to figuring out how the mind works, now looking at brain correlates of our ability to know how well we actually know what we think we know.

Introspection is one of those prized aspects of human-ness, developed into a high art/skill by the Buddhists, and generally recognized as a key to a better life, whether self-examined in the mode of Socrates, self-analyzed in the mode of Freud, or self-criticized in the mode of Mao(!). We assume that animals are less introspective. Language may be critical to this level of thought, but of course it is hard to tell.

It seems essential to have a way to gauge one's accuracy in all sorts of actions and thoughts, and on top of that to have that way be conscious, not just a form of unconscious training like learning tennis through physical practice. This paper looks at the question in the simplest terms, measuring accuracy of a simple visual task where people vary both in ability and in the meta-ability to know how good they are, to a significant degree. In part it was motivated by brain damage studies showing that a region called the prefrontal parietal network is necessary for this kind of introspection/metacognition.

"We hypothesized that individual difference in metacognitive ability would be reflected in the anatomy of brain regions responsible for this function, in line with similar associations between brain anatomy and performance in other cognitive domains."

Visual test by dim patches, one of which was made darker than the others. Test subjects were then asked their confidence in calling which set (one or two) and which patch (one to six) was that darker one.

The visual task was to compare two sequentially presented sets of "gabor" patches (Fig 1) and say whether one of the patches in one of the sets was darker than the other  patches. The task could easily be tuned in difficulty to make every subject perform at 70% accuracy. Then they asked the subjects to rate their confidence about each choice, from one to six. The figure below shows the ROC curve for each of the 36 participants, relating false positive rate (confidence level when wrong; horizontal) to the true positive rate (confidence level when right; vertical).

Individual ROC curves for all participants, showing how well (area under the curve) they introspected their own performance in visual identification.

As is customary with ROC curves, the curve bows up as the process is able to pick out signal from noise at a better than random rate. In this case, if all subjects got their confidence completely right at all times, the lines would shoot from zero to one at the origin and stay at one the whole way going right. That would lead to maximal area under the curve, (over the diagonal, which is random performance), which is the typical measure of signal-to-noise accuracy in many fields.

Ordered display of the graphs above, relating actual performance (blue) and introspected performance (red).

The researchers found extensive individual variation among their 36 test subjects, both in performance ability and metaperformance- the accuracy of their confidence levels. The graph below gives the latter data, displayed in order. The real question was then... can we correlate this variation with any anatomical aspect of the brain? They used MRI to look all over the brain at the volumes of gray matter, which are the neuronal cell bodies. And they also looked at the white matter connectivity, which uses a new form of MRI that allows users to trace myelinated pathways in the brain. This has been a powerful addition to the functional and anatomical MRI toolchest.

Example of the data available through white matter imaging, using diffusion tensor imaging, or brain "tractography".

Looking first at the gray matter, they see a few spots of correlating variation (red in the pictures below, mapped on inflated brains). It is quite remarkable that such a method could point so specifically to particular areas of the brain, since they just cranked the entire brains of all participants through a complex normalization, inflation, and statistical area comparison method. One would imagine that a more complex picture would emerge, especially in view of the modest nature of the underlying correlation, shown in B. The Aroc graph in B shows the real signal- correlation between test performance and portions of Brodman area 10. For comparison, the right graph (d') shows the correlation of the same areas not with the metacognition performance, but with actual visual performance, which serves as a negative control- no correlation.

Volumetric data, showing islands of grey matter mass correlation (red) and anti-correlation (blue) with introspective ability. Graphs show island correlation (Aroc) and control of actual visual ability (d').

Needless to say, this section of the Brodman area matches that previously suspected to play a role in this form of meta-cognition from other studies, including functional MRI, disturbance with transcranial magnetic fields, and brain lesions.

Lastly, they also probed white matter pathways, (with MRI "tractography"), and found what looks like an slightly more significant correlation between metacognition and an area in the corpus collosum which allows communication between the hemispheres. The identified area is specifically linked via wider brain wiring to the Brodman's area mentioned above. Unfortunately, the graph fails to offer error bars, so the significance of all this is somewhat murky. They do offer very significant P-values for their volumetry in the methods.

Tractography data, showing islands of correlation with introspective ability. Graphs show island correlation (Aroc) and control graph of actual visual ability correlation (d').

The authors conclude that they have found some robust correlation between volume variations in a few brain areas and mental performance variations in this intriguing task of metacognition, or introspection. They further conclude that based on the past studies with other types of alterations and interventions, these correlations amount to causation, indicating that more brain matter and connectivity in Brodman's area 10 generates better self-knowledge in this simple type of visual task. They have no idea whether these variations arise from genes, developmental training, or recent training, the latter of which open some prospect for positive education.

In any case, aside from being another close correlation between brain and mind, the work is one more interesting instance of variation in human mental abilities, which on its own puts me in some awe of our diversity. If humans are each different in their very perceptions and subjectivity, what does it mean to be human? One reason the soul hypothesis is so attractive is that it would validate a sort of species-ist uniformity to the human condition.. that at the core we are all identical in the most important way.

But if we aren't.. if everyone is fundamentally different, then there is no such thing as the human condition and we have to negotiate in the open about our various beings and needs, without being able to assume a lot about inalienable rights, creator-given essences, "natural" behaviors, etc.

• One human variant, with autism.
• The Ur-blogger.
• Skidelsky: "Tax persistent and excessive current account surpluses".
• Mortgage and finance fraud, bigger than ever. Can we dream about resolving it?
• The financial fraud documentary, Inside Job.
• Bill Mitchell quote of the week, from "Why budget deficits drive private profit":

"The point is that when the government runs a surplus it reduces profits via its squeeze on aggregate income. That is why all the business sector should be screaming at the fiscal austerity plans that are rampant at present."

...

"So the fact that the business groups often lead the charge against budget deficits reflects the triumph of ideology over good judgement and the triumph of ignorance over understanding. I just shake my head in wonderment when I see a business person railing against budget deficits."