Axis of Bastards

What is the next cold war?

The US has benefitted in the past from simplified foreign policy frameworks. The Monroe doctrine, Containment, "Making the world safe for Democracy". However crude, they helped define and communicate our basic intentions. In the last decade, we have labored under a welter of much less clearly thought out or coherent policies, from the Axis of evil to "hearts and minds" and the global war against terror. It has not been a good period, either rhetorically or substantively.

Worst of all was the "Axis of evil", George Bush II's lumping together of his motley foes (Iran, North Korea, Iraq) whose only shared characteristic was their imperviousness to US influence. The rhetoric had nothing to do with either Iran or North Korea, it turned out, as Iraq was the target (in January, 2002) for reasons better given over to personal psychology than foreign policy.

We head into an interesting world from here, as Bush's wars die down. The relative influence of the US declines as other countries grow economically. The influence of our European allies is fading even faster as they stumble through the current crisis to ever-deeper economic retrenchment.

On the other hand, we face no mortal enemy of diametrically opposed philosophy or globe-straddling totalitarian ambition. All countries of any consequence are more or less market-based in their economics, and geopolitically stable within the confines of the Pax Americana we have managed since World War II. The jihadis are a nuisance, but hardly a state threat.

What we face on the long term is a third way of quasi-repressive government and "controlled democracy": authoritarianism exemplified by China and Russia, but shared with many other countries, from Pakistan, Belarus, Kazakhstan, Saudi Arabia, Syria (most notoriously ), with new members Hungary and perhaps also Turkey, depending on how things go, and on to old friends Iran and Vietnam, among many others.

The old model of Stalinism is out, aside for the very few holdouts like North Korea. Even Cuba is tiptoeing into market-based reforms. However attractive to the power-mad, Stalinism tends toward complete implosion on the medium term. So the way I see the world developing is as a contest between the truly free world, exemplified by the US, Europe, India, Japan, South Korea, et al., and this other class of repressive countries, which one could call an Axis of Bastards. In truth, the spectrum is very broad. We in the US have an impaired democracy with open political corruption and a legal system that is applied in highly selective, not to say prejudicial, fashion; overly complex, and much mocked and evaded. On the other hand, the state does not routinely kill journalists, rig elections, or own all the major media, either.

I'll note in passing that a third class of country is the failed states, like Somalia and Congo, and perhaps Afghanistan again within a few years, (given that we are standing up a government with little legitimacy and doubful capacity), which pose entirely different problems of humanitarian disaster, extremist infestation, and Hobbesian politics. An Axis of Hobbes, if you will. As uncoordinated an "axis" as the others, one would have to confess, quite unlike the original Axis of World War II.

Just as Stalinist systems break down in the span of a few decades, authoritarian systems are also untenable on longer time scales. Their economics are clearly more productive, as China, Singapore, and post-war South Korea have shown. But there remain economic and social soft-power limits to systems whose closed nature (at least at the top of policy-making) makes them prone to corruption and determinedly unresponsive to wider currents of technological and social change. As long as completely free states / systems show superior levels of economic prosperity along with all their other attractions, the authoritarian system will clearly be second-best. A way to stave off chaos- yes- which post-communist Russia and China are understandably sensitive to, but no way to fully enjoy the fruits of their own economic potential.

What does the future hold? With some apologies to Jean Kirkpatrick, who advanced the idea that authoritarian governments were inherently more likely to open up and evolve into open democracies, (towards the Reaganite policy of befriending all and sundry bastards of her day), the tide does seem to be heading in that direction, following where South Korea and Argentina, among many others, have gone before. Burma is perhaps the latest intriguing example.

China is on a vaguely positive track, experimenting with local democracy and slowly instituting rule of law as ways of combatting the disease of corruption. It seems unlikely that China would face down another Tiananmen square crisis in the same way today, though with the sincere jingo-ism it has stoked in its young, the prospect of needing to do so also seems far off. But the debates within the ruling structure may also become increasingly divisive after the simplest goals of economic development are attained, and break out into the open, forming parties that seek legitimacy from their ultimate source, the people.

Rumblings of freedom have erupted into the open in Russia, Syria, and Iran, with crackdowns of varying brutality. Russia has rushed to Syria's aid, just as Saudi Arabia rushed to Bahrain's aid during the Arab Spring protests. Syria and Iran are close allies, with healthy ties to China and Pakistan. So these repressive countries tend to help each other, knowing that the weight of world opinion is against them, and that cracks in the facade of happy Orwelliansm are damaging to all of them together.

Perhaps the key question is technological. Stalinism was a creature of its technological moment, with the advent of crude mass media and industrial mass-production somewhat amenable to brutal top-down command-and-control. Today, no one would dream of running a command-and-control economy, but command-and-control media are quite a different matter. Russia and China are each, in their own ways, highly sophisticated in controlling their media environments. We have our own FOX news- organ of the plutocracy, for heaven's sake.

So a global arms race is afoot in the new media environment, between freedom, connectedness, transparent openness, and repressive forces (both corporate and state-sponsored) that divert, dilute, drown out, or if needed, destroy dissenting voices and movements. Information is power, as the old saying goes. And along with the repression comes corruption, its natural corollary in abuse of power. Free information is the prerequisite of all other freedoms, as our founders knew very well- the killer app of democracy, if you will.

• More on moral breakdown.
• Supreme court political circus reaches damaging new lows.
• It turns out we don't have to (and don't want to) drive all the time after all.
• Corzine's pilfering.
• A bit of pedagogy in math.
• Medicine- run, don't walk away from your doctor!
• Fed: big banks still clogged with toxic waste. And too big.
• Economics quote, from Randall Wray, on Marvin Minsky:

"Minsky criticized the Kennedy-Johnson War on Poverty, warning that without a significant job creation component it would fail to reduce poverty even as it created a welfare-dependent and marginalized class. He showed that offering one full-time job per low income household instead– even at the minimum wage- would raise two-thirds of all poor families above the poverty line. Further, he estimated that the output created by putting people to work would more than provide for the extra consumption by increasing GDP by a multiple of the extra wages. 

Minsky argued a legislated minimum wage is “effective” only with an “employer of last resort”, for otherwise the true minimum wage is zero for all those who cannot find a job.
...
 The government as employer of last resort serves as a bookend to the central bank as lender of last resort– just as the lender of last resort sets a floor to asset prices (by lending so that banks do not have to engage in firesales), the employer of last resort sets a floor to wages (anyone willing to work can get the minimum wage) and thus also to aggregate demand and consumption."

• Bonus- economics figure. It is the private debt that leads to bubbles and collapses:

The Amish, Apple, and modern community

On the religion of objects, their morals and connection with community.

PBS offered a beautiful documentary of the Amish, asking how and why they have resisted the modernity the rest of us worship. To me, the most interesting observation is that community is the core purpose of Amish life. Anything that tends to weaken community, like cars, phones, women's rights, and domestic conveniences, is negotiated in a way that either is excluded completely, or kept at arm's length such that it doesn't invade the home. Work per se is valued as good, so doing more of it via traditional technologies isn't such a bad thing. Just look what the "English" do with all their free time!

One can call this conservative. The Amish certainly embody true conservatism. But it is conservatism with a point, recognizing that humans must live in community, and are happiest in community. Thus the quality of that community deserves special care. Which sometimes requires renunciation of those temptations the rest of the culture regards as the birthright of individualism, free enterprise, and the American way. Particularly, the ideology of progress is something the Amish apparently deny categorically, content to sweat and toil in this way-station to a better world.

The diametric opposite attitude comes from Apple, perhaps the leading purveyor of the narrative of progress and modernity, succeeding on our many previous infatuations with railroads, electrification, atomic power, television, et al. Steve Jobs distilled this ethos into an extremly powerful drug, indeed a "reality distortion field". Each new product is the best ever, the most chic, the most free-ing of creative professionals to destroy the reigning paradigms of dead "past" values and designs in favor of a "think different" future.

Both the Amish and Apple take a moral attitude towards objects and the material environment. One asks that its technologies serve its community and is willing to forego labor-saving and consciousness-extending devices in that service. The other claims that all its technologies make everything better, freeing each individual from historical limitations and collective tyranny, while simultaneously uniting us in new "distributed" social networks with increased artistic, cultural, and political powers. The Amish sincerely doubt the latter proposition, or at least the quality of these new "communities".

A recent review of Steve Jobs and Apple focused interestingly on their deep debt to the Bauhaus design school, and evaluated Apple's position as purveyor of a sort of prophetic design sense. It doesn't so much fulfill its customers needs as show them needs they didn't know they had, wrapped up in designs they hardly deserve. It is a somewhat imperious relationship, breathlessly marketed with revolutionary slogans and peans to creativity, mostly redounding to house of Apple rather than its customers.

Compared to its main competitor, Microsoft, which offers militantly un-designed products of utilitarian, even anti-user ethics, yes, Apple morality does successfully inject a modicum of taste and ease into an otherwise daunting concept- that of advanced computer operation and maintenance. But that just begs the question of whether sitting on our couches staring into ever-more refined screens is what we truly, deeply, want to be doing. (However, thank you for reading this blog in electronic form!)

Here, the morality is of perfection in an aesthetic and functional sense, expressing faith that if we get just what we individually want, it will enhance our human-ness, at least until the next model comes out. Is this free-market individualist conception of human fulfillment working properly? Are our politics, for example, enhanced by the new powers of computers and communication? Have our media become deeper and more informative, or rather shallower? Does the endless procession of newer and better objects through our lives make them better, our thoughts deeper? Is it good for the human and indeed larger biological communities we exist within?

I think it is fair to say that people need to be nudged into community consciousness. We have always had hermits, mountain men, and other loners, but primitive conditions generally force people into communities for subsistance in addition to other needs. This is part of what Marx disparaged as the "idiocy of rural life", and is of course what he tried to replace through his vanguard of worker solidarity. It is the bread and butter of religion, which as the rabbi says, is about love and doing, more than it is about belief. It seems that the US is leading the way, via its prosperity and its absolute dedication to personal emancipation through personal choice and free markets, towards de-community-ization: the shallowing-out and hollowing-out of all forms of non-monetary connection. Not only are corporations people, they are also our reigning community, both in the guise of the workplace as well as the media, the social network, the local coffehouse.

It isn't easy to propose a solution that doesn't go back on some of our cherished freedoms, rights, and usages, while restoring a deeper sense of connectedness. If we need large common tasks, the fight against climate change is certainly one, as are the perennial searches for social and economic justice in the US, and around the world. Our civic religion desperately needs refurbishing, with policies like publicly funded campaigns and media, holidays for voting, and mandatory public service. For me, the community of scholarship has always been the deepest form of communion, expressing faith in progress, human potential, and openness. But knowledge alone doesn't make communities, for all its other virtues. Indeed, it can be rather frosty and exclusive.

Millions of people visit the Amish country each year. One can imagine they feel some unease on the treadmill of modernity and see something attractive in a culture that is sure enough of itself to forego that greatest of American myths- that we can successfully make virtues of avarice and covetousness, towards a future that is always better, where the grass is always greener, if you adjust the screen just right.

• Michael Sandel on the moral and political distortions of market values.
• Public sector job creation- Obama/Bush comparison.
• Official honorifics are for office-holders only, please.
• Absolutely appalling climate denialist series on CBC.
• Matt Taibbi does his best to drive BofA out of business. All I can say is ... Citi is even worse. "By the end of last year, the government reported, more than half of all the crappy loans that Fannie wanted to return came from a single bad bank – Bank of America."
• Lessons in extractive economics.
• Interesting set of graphs on possible post-crisis trajectories.

Ode to Monarchs

Review of "Wings in the meadow", by Jo Brewer.

A friend sent us the classic 1967 book about Monarch butterflies "Wings in the meadow", by Jo Brewer. It is beautifully written, with shameless advocacy for her subject and equally shameless anthropomorphism. As I have noted before, anthropomorphism in biology has more going for it than scientists traditionally allow, since feelings and intuition are the fundamental currency that animals use to guide their lives.

"During these three days, Danaeus the son had doubled in size. In his first twenty-four hours he had chewed four small holes in his leaf and consumed an amount of milkweed equal to his own weight. Parts of his skin had darkened until his body was encircled by nine chocolate-colored bands. Now his skin was stretched so tightly about him that he could eat no more and his black face mask, which had once covered his whole head, had become a tight black glass button pinching his mouth. The time had come to shed his first skin. With his two anal prolegs, he grasped a bit of the silk which he had spun, and summoning all his little stength, pushed his head forwrad until, splitting his skin at the thorax, he was able to wriggle his way out of it. This herculean task, which taxed his every muscle, required nearly three hours of his life."

I found it completely captivating, and ask- why is this book not in print, and read in every school in the land? It would be such a positive answer to Catcher in the rye and other cynical staples of middle school.

"He was free of the earth at last. The long desperate struggle was over, and the long night past. Red of the firebrand and gold of the sun were fused in the fiery wings he presented to the noonday sun, and a delicious fragrance- sweet and spicy and erotic- was diffused across his back. His wings and his body were filled with power and he was free. He leapt high in the air and encircled the field, fliding, dipping, soaring, surveying from his place in the sky a world of leaves which he had already forgotten."

Brewer combines a detailed and dramatic description of the life cycle of Monarchs with copious scenes of other animals around the meadow. Even a human shows up, in the form of Mr. Stevens, whose heart is in the right place, preserving the peace of this meadow that he owns, but only seeing its true magic late in the book as the Monarch life cycle comes back to roost, ever so briefly, in his trees.

"He found the flashlight he kept in his jeep and walked slowly toward the tree. In the beam of light which he cast upon it there was again that same sudden motion- an evanescent flash of golden-bronze: a warning flash that come and went in the fraction of a second, leaving nothing in its wake but the surprise of the beholder- and the congregation of Monarchs which had gathered there for the night become once more invisible. But this time Mr. Stevens had seem them open and close their wings, and he could make them out, hidden and small in the shadows. There were perhaps three or four hundred of them. It was a sight so unexpected and unusual that he looked upon it with a kind of awe. The butterflies were just out of his reach, but he would not have touched them anyway. For the moment, the tree was theirs not his, and he was filled with a sensation of very great pleasure. He did not know that scarcely one person in a thousand ever sees a little butterfly tree like the one in his meadow."

---

"It is in the nature of living creatures to cling to life with the greatest tenacity when the promise life holds is least. When the cup is full, the precious liquid is spilled with reckless joy- when nearly drained, the last few drops become a priceless treasure."

• Wings today... at the Xerces society.
• Haidt on spirituality, religious experience, modernity, and group selection.
• What moral decay do we suffer from especially?
• Pay for failure.. brought to you by the free enterprise, private market!
• What is banking like today- I?
• What is banking like today- II? The management/agency model is deeply flawed.
• Some men seem to suffer from hysteria.
• Programming is ... not so easy.
• Medieval economics- more bleeding, please.
• The Augean stable of MERS ... requires total reworking of property title in the US.
• Economics quote of the week: Bill Mitchell provides the most concise summary of the financial crisis I know of, with a little editing help from me.

"In the past, the dilemma of capitalism was that the firms had to keep real wages growing in line with productivity to ensure that the consumptions goods produced were sold. But in the recent period, capital found a new way to accomplish this which allowed for the suppression of real wages and increasing shares of the national income produced to emerge as profits.
...
The trick was found in the rise of “financial engineering” which pushed ever increasing debt onto the household sector. The capitalists found that they could sustain purchasing power and receive a bonus along the way in the form of interest payments. This seemed to be a much better strategy than paying higher real wages.
...
The combination of a hollowing out of the state, an out of control deregulated financial sector, and the rising fragility of non-government balance sheets thus set up the world economy for the crisis.
...
The crisis represents a fundamental rejection of the neo-liberal vision that self-regulating markets will operate to advance the best interests of all of us. The neo-liberal paradigm fails on every dimension."

• Bonus quote, also from Bill Mitchell:

"Most people do not consider the irretrievable nature of these losses. Every day that unemployment remains above the full employment level (allowing for a small unemployment rate arising from frictions – people moving in-between jobs) the economy is foregoing billions in lost output and national income that is never recovered.

The magnitude of these losses and the fact that most commentators and policy makers prefer unemployment to direct job creation, shows the powerful hold that neo-liberal thinking has had on policy makers. How is it rational to tolerate these massive losses which span generations?

As noted, to some extent these losses are a mystery to society in general. While the unemployed and their families are certainly aware of them, the remainder of the society are less aware. For example, we might notice rising crime rates in our neighbourhoods but do not associate it with unemployment."

Notes on savings and wealth

What happens when grasshoppers turn into ants?

One theme that seems underemphasized in our economic debate is the importance of desires for saving in structuring the economy and generating the swings of economic activity. It sounds so nebulous, even touchy-feely, but has very real effects.

As the fable goes, the ant diligently stores up its little grains and other food for the winter, while the prodigal grasshopper fiddles and sings its summer away, then has nothing to eat come winter. The grasshopper asks the ant for a morsel, but the ant says no, and that is the bitter end of the tale. (Though a biologist adds that in reality, grasshoppers lay eggs that hibernate just fine, so not to worry!)

But in macroeconomics, a better metaphor might be that of a river as the normal course of economic activity, and a dam, which stores a reservoir of money saved in arbitrary amounts. To complete the analogy, the river would feature a prepetual motion system where outflows magically return as inflows to the system, completing the cycle. While the savings of ants are limited to their own insurance needs over relatively short periods of time, (however long those seeds keep), and are to that degree an unquestioned virtue, the advent of money allows unlimited stores of wealth to be accumulated, with dangerous consequences.

If everyone suddenly decides to save all their money, the stream down from the dam runs dry, no money is spent / returned, everyone is fired from their jobs, and the economy grinds to a halt. This is of course an extreme thought experiment. Most people have necessities that require ongoing spending, whether they like it or not. And there are always people being born and getting old, evening out the demographic savings cycle.

Additionally, the financial industry mediates the transformation of savings into new spending, via loans, stocks, bonds, and other investments. But when investors / gamblers head for safety, like in our current downturn, making fewer loans, fewer investments, and bidding down yields on the safest bonds, then a similar effect takes place- lots of inert money storage, and economic seizure.

There are also distributional issues. Is the stored money used to insure everyone's prosperity in lean times in equitable fashion? Or is it, by other rules, captured and used by a minority with military, political, or ideological power? Is it inherited by people with no claim to such wealth other than being born lucky? Or is it recognized as the patrimony of our forebears in common who painstakingly built our current wealth over generations in forms large and small? Should wealth and power be transmutable into each other? Who decides when to turn the spigot when times are lean and more flow down the river is needed? Is it the few with great wealth, or the many who have built it up, drop by drop?

Savings by different sectors of the economy have very different characteristics. I will discuss four sectors- individuals, businesses, banks, and the federal government. My discussion will mirror MMT viewpoints, as recapped recently by Bill Mitchell. One could also mention a fifth sector, of ecological savings, which has the biggest, baddest impact of all, but that is quite another topic!

Savings by individuals are removed from their consumption and may go to consumption by others depending on how they are invested. They could go to a personal loan to a relative, who founds a business and promises to make more money to repay in the future. Net spending hasn't been affected, and future economic growth may have been increased. If the money goes to the stock market, it increases that liquid store of wealth, with unclear future ramifications, but no immediate spending is implied.

If the savings are deposited at a bank, they may or may not be put to further use and spent as loans, depending on the mood of the bankers and the demand of their clients. Lastly, if the money buys government bonds, government spending is not affected in the least, as will be explained below. So individual saving definitely reduces the saver's own consumption, which may be replaced by other consumption or not, depending on how the saving is done.

Businesses save much like individuals. After Apple's near-death experience sixteen years ago, they were clearly eager to maintain a cushion to fall back on in their dotage, and by now have $80 billion lying around, which investors are eager to see as dividends. Other companies in the US are also sitting on very large piles of cash, adding their measure of pro-cyclical non-investment to our problems of economic growth.

Banks, on the other hand, are an entirely different beast. To them, loans are assets and savings, liabilities. All they need is capital, not savings from individuals. If a bank has $100 of capital, and no depositors at all, it can make $1000 of loans, which then instantly become deposits when the loan is "funded" (for retail banks, funding typically comes from borrowing in turn from other institutions, [the interbank market], whose rate is ultimately based on government bond rates, and which ultimately involves someone up the line creating money by leverage). This power of literally making money means that individual savings play an optional role for a bank, despite its historical importance from when money was not so easily conjured. In the dam analogy, banks might require a foray into science fiction, being able to produce water by the magical means of writing some words on paper, which matches each conjured drop of water with an anti-water debt certificate, the two of which mutually anihilate when brought together again.

But banks don't have to make loans, and can get by in today's environment where the Fed pays them to take a couple trillion in reserves, and where the spread between government bond rates and deposit rates remains positive. They can make do during a downturn with little loan activity.

As other businesses do, however, banks would like to have savings for one thing- to insure themselves against calamity. But since their business is leverage and their loans are always in the hands of others, it is impossible to do so significantly. Their safety revolves around their capital ratio. It is their appetite for risk, and their regulators, which decide whether 1:1, 10:1, 30:1, or 50:1 leverage is a prudent cushion of capital. Fluctuating opinions about this risk insure that banks will create the least amount of water just when it is needed most.

Last is the government, which is typically supposed to go into debt by deficit spending and to save by accumulating surpluses. When looked at from the perspective of the larger economy, however, the exact opposite is the case. The currency-issuing government can't run out of money, so to it, saving money has no meaning. It could just as well burn whatever comes in as tax receipts and print anew whatever it spends.

To the rest of us, federal deficit spending adds to the flow of income. (The associated bond sales have little net effect, transferring private savings from one to another form). Conversely, federal surpluses directly subtract money from the economy, reducing incomes and wealth. In the dam analogy, government is the sky which either rains down water or takes it back from the parched earth, limited by nothing other than its wisdom.

Putting all this together, economic conditions (or less tangible "mood", when considering future prospects) dictate whether individuals and businesses increase their savings, or whether they invest and demand loans. Our recent "little depression", where loss of wealth and unwise lending & borrowing created an enormous "debt overhang", requires excess saving for long periods of time, can depress this mood for years, even decades, as in the case of Japan. A population may be very savings-minded, again as in the case of Japan.

All this means that, even without economic bubbles, bank fraud, and complete regulatory breakdown as we saw over the last decade, swings in the economic system can result from changes in savings behavior. The government is in the position to address those swings, accommodating higher savings desires with higher deficit spending, allowing the inert pool of savings to grow while maintaining stable economic activity.

It is also worth noting that the government's capacity for deficit spending expresses implicit wealth, since such a practice can only avoid causing inflation when other balances are positive, such as population growth, people producing more than they consume, or other countries saving our dollars and giving us goods in return.

The bigger the reservoir of money gets, the better managed it needs to be, protecting us in common both from inflationary excess (dam breaks, monsoons of rain), and from deflationary evaporation. Nor is saving always a virtue. We eat bread, not money, so tending the systems of real production is what will sustain us in the long term. By this time in developed countries, we have far more money than we know what to do with. Yet it is so unevenly distributed that those with money can hardly find enough ways to spend it, let alone invest it, and those without flirt with insurrection and contemplate changes to the rules of acquisition.

• Too much savings .. a crushing setback to the wealthy.
• Are we a totally lawless society when it comes to finance?
• Capitalism and masculinity. Corp for president?
• On the joys, and the veracity, of lucid dreaming.
• "Down where I come from, they think you’re the best president since Jefferson Davis."
• Our housing and deflation trajectory.
• Job programs of the past, vs business neo-feudalism.
• Just who is the NSA protecting?
• Another failure in Afghanistan.
• Economics quote of the week, from Bill Mitchell:

"But fiscal flows – spending and taxation – are accounted for but once they exit the economy – as a surplus (spending less than taxation) then they are gone for good. There is no storage shed in Canberra or Washington or anywhere else where the surpluses are saved up and available for the government to drive a truck down and pick up some dollars to spend.
Surpluses destroy financial assets that were previously in the hands of the non-government sector and these assets are gone forever."

• Bonus economics quote, from Nouriel Roubini:

"The reality is that most of the gains in good times – and until the PSI ['private secotr involvement' in Greece's slow motion default] were privatised while most of the losses have been now socialised. Taxpayers of Greece’s official creditors, not private bondholders, will end up paying for most of the losses deriving from Greece’s past, current and future insolvency."

New monies for public purpose- an economic third way

Why is the same money used to buy toothpaste and political campaigns?

After the decline of the competing ideologies of the 19th & 20th centuries- colonialism, communism and socialism- nationalism and capitalism were left triumphant, alone and without an existential critique, other than the tribal, bitter opposition of Islamism. China is more capitalist than we are in many ways, with a pell-mell no-health-insurance, no-safety-net ethic of ruthless get-rich-ism.

Yet there is a great deal of unease in other quarters. Hatred of the US as the world exemplar of hyper-capitalism is widespread, if not for our wealth directly, then for the lack of taste with which we display it, and abuse it.

What other countries hate most about cultural invasion by the West is materialism .. the crass, amoral wastefulness, hedonism and concomitant lack of human values. The West has been given over to its greediest, basest elements rather than uplifted by their most introspective and spiritually inclined. God is dead, and the Market rules in its place.

These thoughts were sparked by a review of Vaclav Havel's career (incidentally also by a biography of Glenn Gould). Havel knew the stifling hand of totalitarian government, as well as its meaningless, hollow post-totalitarian variant. But for all his yearning to break free, he was quite ambivalent about the boons of the West. He was very much a spiritual atheist, an absurdist seeking meaning while leading the cultural evolution of Czechoslovakia; indeed to some extent, the entire West.

Many have dreamed of transcending the market, which mediates many of the brute realities of mundane existence. The Marxists drew on Hegel and some rather cracked economics to simply assert the historical inevitability of its end, replaced by a worker's paradise, then proceeded to make a royal mess of it. Other dreamers have sought to separate more circumscribed human values from the market, with mixed success. The enlightenement brought democracy and the novel currency of votes- one per person. We are still grappling with the question of whether votes can be bought with money (not terribly successfully, judging by the current political season).

The wealth of the West, established through the slow accumulation of technical mastery over the environment, (as well as supple modes of political organization), now enables a dramatically different relationship with markets and materialism in general. Food makes up only 7% of US household spending. Many of our other goods come from overseas, at far less cost than it would take us to make them. They are, in large part, free. With increasing mechanization / robotization, this trend will only increase, making necessities ever less significant shares of our budgets.

Yet GDP is ever-increasing, as we dollar-ize more of our lives, from birth to death and every interaction in between. On top of that, the more luxury-based our economic system becomes, the more unstable it is, prone to enormous diversion by financial gamblers, rentiers, and misappropriating agents like CEOs.

One of the dark comedies of our economic system is the quest for a "business model". Innovators who create phenomenal public services like Twitter are forced to the corrupting rack of advertising in order to "monetize" their users. Great reporters and news organizations dissolve before our eyes in the face of free media, bloggers, and the shameless propagandists of FOX news and the rest of the cable universe. The public interest goes begging because participation in the dollar economy requires making one's service precisely antithetical to the public interest in some critical way that generates ... the business model.

Thus I see a great need to carve out more spheres of non-monetary interaction- more currencies like that of the vote. Today, finance accounts for roughly 10% of GDP- to what end? So that we can gamble with our savings and pad the pockets of those entrusted with them? CEOs serve on each other's boards and compete in paying each other ever more ... because they can. Money increasingly reflects social relations and status rather than fundamental measures of productivity, let alone of personal worth. The mantra of "free markets" has blinded us to the their enormous defects, even in an ideal state. And blinded us to the essential nature of public goods and our rising capability to provide them.

Does our political system need to run on dollars and its attendant corruption? Does the media that conducts our public debates need to be owned by corporations and paid by advertising? Not really. One could imagine currencies like Facebook's "like" system replacing dollars to fund these and many other public services. Citizens would get equal amounts of them just like they get votes ... for being citizens. They would send them to media services or candidates they favor, perhaps electronically. This would resemble a school voucher system, only instead of being used to destroy an existing public service, it would be used to enhance a public service by insulating it from corruption and dramatically broadening its support base. Just imagine what public broadcasters could do if their funding reflected their actual listenership / viewership rather than just those guilted into parting with hard-earned salary money. What if the choice to contribute to a political candidate didn't mean going without essentials like food and medicine?

Similar special-purpose currencies could be used to support the arts, direct selected areas of public spending such as infrastructure, parks, and foreign aid, and support a full range of charities and non-profits. Substantial areas of our public lives could be more democratically directed by getting away from the current binary system of system of dollar-rule or legislative sausage-making. Some corporations could even remake themselves into public interest entities or utilities (such as software makers, perhaps), and tap into such forms of funding. The new currencies would be convertable at the point of use by the receiving organizations into dollars to pay their expenses, or in the case of political candidates, into the new media currency with which in turn to buy exposure.

Ideally, enough resources would be budgeted in each of these areas to render the use of actual dollars superfluous, while still permissible. Actual dollars would be (progressively) taxed out of the remaining economy sufficiently to make room for all this new democratically-directed spending. Such a "new economics" offers a way to foster high personal freedom and democratic principle while reforming corrupt practices, and furthering the public interest in many areas where it is badly or under-served today. It addresses some of the goals of the Occupy movement whose overriding critique is the reality of economic and especially political control / corruption by the 1%, which so starkly contrasts with the democratic principles we supposedly follow. It would represent an important step in our travels towards a truly democratic and public spirited national community.

• Economic transitions, from feudalism to capitalism, and on to post-capitalism.
• What do we perceive as fair?
• How do the 1% get there? It isn't pretty.
• What class warfare really looks like. Bloodless edition with chart.
• Introverts are OK ... better than OK!
• "Because, in my mind, that’s what addiction really is — people trying to blot out the pain of being human with chemicals that inevitably just make the pain even worse."
• The oceans are in miserable condition. Please don't eat seafood. Incidentally, the Earth is full.
• Mumbai is also full.
• Another problem with corporations- they support war.
• A small critique of finance and Krugman.
• Economics quote of the week, Ben Bernanke, testifying before Ron Paul:

"Nice to see you again, Dr. Paul."

This exchange was a sterling example of what makes a currency active. Ron Paul held up a silver coin that he claimed had held its value far better than our paper money, and was natural money- not a fiat currency that is fake in some way. Bernanke said that Paul was welcome to hold and exchange as much silver as he liked. Then Paul complained that he couldn't use silver to pay taxes and make other relevant transactions. It was an object lesson in what differentiates a state currency (fiat or otherwise, however virtual, paper, or "fake" it seems ) from a natural currency.

Terror Mouse!

Building a better fight-mouse through brain injections of genes.

Much of our economic and political discussions are sublimated social dominance psychology ... who "deserves" to stand higher on the totem pole, who deserves what pay, which class should rule, which cultural myth should guide us into the future. These are not technocratic issues, but questions of value embedded in our social instincts. Up till quite recently, we were under the impression that our lives needed to be run by the nobilities of blood and church. And status archetypes like princess, knight, and king- reflected in popular literature like the Harry Potter series- continue to structure our political and social systems. For example, the king-like office of president.

Obviously, all this is extremly ancient and perhaps unavoidable. All animals with any kind of social system also have a social hierarchy so that most of the time, internal conflict can be avoided and members can get on with the common goals for which the social system exists. This includes mice, which are the subject of a recent paper in Science from a lab which investigated the neurological basis of their dominance hierarchy.

The tests of status were simple. In a tube test, two mice are put into opposite ends of a one-lane tube, and the one who backs out is the dominant mouse. The mice have been trained to run to the end of such tubes to get some food, and apparently were occasionally prodded along with sticks so that they met at the middle before deciding which mouse would back out.

A second test used a natural behavior where in nests, one mouse typically chews down the whiskers of the other mice, becomming the "barber" mouse. Other tests included measurements of weight gain after food was put in a common area in limited amounts, a urine marking assay of territory size, and a sound assay, where dominant males call out ultrasonically to females with more enthusiasm. The tests all correlated with each other, leading to a coherent score of social rank.

Previous clues had directed these researchers to the medial prefrontal cortex (MPFC) as an area that shows hightened activity during dominance-related behavior. So they looked for signs of social rank in their mice in this area of the brain by slicing up their research subjects and looking for electrical activty (live slices) and various molecular signatures (dead slices).

They found that the electrical activity of randomly tested neurons in this brain region, upon chemical stimulation of glutamate receptors, was somewhat higher in dominant mice vs the lowest ranked mice. Likewise, the c-Fos gene, which gets expressed after brain activity and is used as a marker for active brain regions, shows higher mRNA levels in higher-ranking mice (below). One wouldn't necessarily assume that the brains of dominant animals are more active than lower-ranking ones, but in any case, they would have different profiles of activity, so non-dominant mice may have higher activity elsewhere in the brain.

cFos gene expression in MPFC area of brain slices reflects social dominance.

Now for the exciting part. The researchers decided to test this correlation of brain activity with social status by direct action: increasing or decreasing glutamate receptor activity in the brains of living mice by injected gene therapy. Glutamate-sensitive neurons can be "tuned" by expression of proteins Ras or Rap,  which have opposite effects in the signalling cascade involved in recycling the synaptic vesicles that contain neurotransmitters. So the researchers injected the MPFC with a virus expressing either of these proteins. The affected neurons showed strong effects, with 179% of normal activity when infected by Ras-expressing virus, and 71% of normal activity when infected with Rap-expressing virus.

"Mice infected with the Ras virus moved upward in rank, starting a easrly as 12 hours after viral injection. In contrast, mice infected with the Rap virus moved down in rank. Infection of virus expression green fluorescent protein [GFP] alone did not result in any rank shift."

The average rank shift was only one unit, out of three possible units of rank from one end of the status scale to the other. So this treatment alone is not quite sufficient to produce the über-mouse. The treatment is also incredibly crude, perhaps providing an "injection" of confidence or slight craziness.

A small brain injection might do wonders for one's social status, if one wants to go beyond the steroid, testosterone and other injections people use currently. Less facetiously, it is another example of the brain basis of our thoughts, feelings, and behaviors.

• MPFC and the Self.
• Religion, politics, Iran, and cuneiform.
• GOP primary goes completely wingnutty. Exactly who has the "phony theology"?
• More on GOP thought processes ... the awesome power of rationalization.
• Incidentally, the GOP also has sex on the brain.
• Bill Black keeps hammering on fraudulent banking- the elephant in the room.
• Economics, environment, and coal's latest excuses.
• Is hating the Taliban enough to keep it at bay? Sadly, probably not.
• The stimulus should have been 1.8 trillion.
• A fascinating view of our recent debt history.
• Too Big to Fail banks hold $700 trillion gun to each other's heads, in gambling "contracts".
• Discursive overview of modern monetary theory, money, banking, the Euro, and power.
• Our financial system is run by psychopaths.
• Economics quote of the week, by Adam Smith, courtesy Robert Skidelsky.

"The third and last duty of the sovereign....is that of erecting and maintaining those public institutions and those public works, which though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual, or small number of individuals; and which it, therefore, cannot be expected that any individual, or small number of individuals, should erect or maintain."

Nowhere to hide- the megafauna refuge in Tibet

Where did wooly mammoths and wooly rhinoceri hang out in between ice ages?

Earth was host to a magnificent ecosystem thousands of year ago- movingly drawn on the walls of Chauvet and other caves by our artistic ancestors. Wooly mammoths, wooly rhinoceri, aurochs, giant rhinoceri, and cave lions, among others. The ice ages ebbed and flowed, and these animals with them, until humans gave them nowhere to hide and upended the ages-old ecological order. Where did these animals stay during the warm periods? Where would they be now?

Wooly mammoths and rinoceri seem to have evolved in step with this era of ice ages, which began about 2.6 million years ago and rolled in 100,000 year cycles through the last million years. 100,000 years isn't enough time to evolve a wooly rhinocerous, but 3 million years is. A recent paper in Science tells of a new fossil found in Tibet of a proto-wooly rhinocerous from 3.7 million years ago, indicating that Tibet was the birthplace of at least some of the cold-adapted megafauna that was so successful during the ice ages. It notes also that the outer margins of Tibet where part of the known range of wooly rhinos, indicating that this area served as its refuge during warmer interglacial periods as well.

Elasmotherium, the giant rhinocerous.

It is worth noting that the Himalayas are thought to have begun exhibiting alpine conditions due to plate tectonics only from about 3 million years ago, contrary to earlier estimates, and closely consistent with the current paper's estimates. At any rate, once cold-adapted megafauna developed in Tibet, they found huge areas of the northern hemisphere hospitable during the ice ages, and were even able to meander over to North America. For instance, our bison diverged from the Tibeten yak only 2 million years ago.

How wonderful it would be to come upon these animals today. But of course Tibet has also been colonized by humans- the people of Tibet, who themselves became somwhat biologically adapted to the cold and altitude, and doubtless extirpated the rhinos, who with their formidable horns were so well-defended against all other predators.

Of the not-so-mega fauna that remain, do they have a chance? If we are not killing them directly, are we giving them wide landscapes to flourish in? Are we giving them millions of years to adapt to the climate change we are bringing on; even thousands?

• Jobs and redistribution are required.
• On why the unemployed must be made miserable, whoever may be at fault.
• Printing money is indicated.
• Iran, still in ferment.
• Occupy, taking it to the citadels of ... regulation.
• The climate change denial industry- corrupt, corrupting, and paid for by you-know-who.

Star Wars and the hero's quest

The Star Wars mashup as a way to psychological, even spiritual, health.

I found the recent release of a full-length mashup version of Star Wars, composed of countless (actually, 473) clips from fan reenactments and animations, endlessly fascinating. As the Salon article that brought it to my attention mentions, it is a gloriously expressive outpouring of love. But is it healthy?

From the very first, Star Wars was an extraordinarily cheesy Hero tale. A journey by the fair-haired Luke from Potter-esque anonymity to savior of the galaxy, with a bit of magic (force) tossed in at highly convenient plot points, with luck and coincidence playing starring roles. Then the franchise went steadily downhill, but I won't go there!

As a fan of Jung, I respect the intricacies of the archetypal theory that surrounds this sort of tale, which goes into enormous detail about the typical hero, the helpers in the quest, the father-figure, the role of the underworld and its tests, the initiation ritual, the magic tools, and so forth. All this has its role. But one thing missing in the theory is its point ... why are these hero tales so gripping and perennial? Why do they emerge in every time and cuture? Joseph Campbell tries to explain it in his classic, the Hero with 1000 faces:

"The passage of the mythological hero ... fundamentally it is inward- into depths where obscure resistances are overcome, and long lost, forgotten powers are revivified, to be made available for the transfiguration of the world. This deed accomplished, life no longer suffers hopelessly under the terrible mutilations of ubiquitous disaster, battered by time, hideous throughout space, but with its horror visible still, its cries of anguish still tumultuous, it becomes penetrated by an all-suffusing love, and a knowledge of its own unconquered power." ...

"What, now, is the result of the miraculous passage and return? 

The battlefield is symbolic of the field of life, where every creature lives on the death of another. A realization of the inevitable guilt of life may so sicken the heart that, like Hamlet or Arjuna, one may refuse to go on with it. On the other hand, like most of the rest of us, one may invent a false, finally unjustified, image of oneself as an exceptional phenomenon in the world, not guilty as the others are, but justified in one's inevitable sinning because one represents the good. Such self-righteousness leads to a misunderstanding, not only of oneself but of the nature of both man and the cosmos. The goal of the myth is to dispel the need for such life ignorance by effecting a reconciliation of the individual consciousness with the universal will. And this is effected through a realization of the true relationship of the passing phenomena of time to the imperishable life that lives and dies in all."

In the spirit of simplification, what I would focus on is that the Hero tale, simply and plainly, is a way to model success. As Reagan said, nothing succeeds like success, and the psychological enactment of success- of reading the happy fairy tale, of cheering for a winning team, of watching the murder being solved on CSI, reading the superman comic book, and yes, wielding one's tin-foil light-saber, is more powerful than any Tony Robbins motivational pablum. Sure, actual success is the sweetest of all, but that is a rare experience, and anyway, we only know what to do with it and how to value it through the strenuous modelling of a childhood steeped in the hero tale (including Cindarella tales).

We are all by the nature of reality and life bound by countless fetters. Biological, physical, environmental, and above all social conditions hem us in on all sides. Life is an endless series of problems to be solved and desires to be satisfied in the teeth of implacable reality- even quite active competition & opposition. The mantra of "freedom" that rings through our political discourse is far from an existential promise, but a woefully limited proposition, relative only to our ur-political condition of total Hobbesian depotism. Now, we face, in political terms merely a tyranny of the majority, (or a majority of the money), moderated by a few constitutional rights, more or less observed.

Thus the sweetness and rarity of true success, where some magical tool or insight arises, perhaps spontaneously from the same place that is so insistent on the enactment of hero tales ... the unconscious, allowing us to cut an existential Gordian knot. While obedience to the ambient social norms may suffice for a "normal", discontented slave-like existence, we all aspire higher. Perhaps tragically, but also inevitably. The hero tale is the spur, the offering of hope, and the psychological preparation for that real quest.

How best to experience it? Clearly one gets out what one puts into it, psychologically speaking. Worst of all is the passive viewing experience, supine in front of a TV or theater screen. Next perhaps is the radio format, demanding substantially more mental attention and imagination. On par would be a live reading by a friend or parent, even if there are a few pictures involved. Somewhere in there would also come the solitary reading experience, which makes some imaginative demands, but is also a bit slow and dry. How about actual re-enactment and play? Here we get to some serious interactivity, intensity, mental involvement, and imagination. Indeed, the more crude the props and implements, the higher the imaginative involvement.

Lastly of course is actually carrying out a heroic experience, engaging in the hard work involved, the practice, the training, the schooling needed to be a professional musician, or join seal team 6, or cure cancer. But that takes forever!

One can easily imagine religion arising out of this process of devising and telling heroic tales. Adults and children alike thrive on such sagas. Perhaps one saga (Homer's, the Ramayana, the Mosaic tale, etc.) captures the mood and vitality of a culture particularly well, with close scrapes, awesome enemies, deep poetry, and triumphant successes. Perhaps, in its customary recognition of the overwhelming importance of the hero's unique inner resources (i.e. the unconscious), its heroes gain magical assistance or are themselves gods under mundane cover.

Perhaps this story becomes so psychologically compelling or ritualized in re-enactment that it turns from story into fact- a "believed" religious narrative. Some other ingredients may be added, such as a back-story about how the world is created, and some more or less rationalized doctrines about how the "super" powers and "super"-beings relate to each other to satisfy the more cerebral believers. But all these things can be added later on rather easily, as George Lucas has labored voluminously (if relatively vainly) to show. (L. Ron Hubbard had a great deal more success!)

And what about humor? In striking contrast to a story that evolves into religion, the Star Wars mashup is as much spoof as homage, yet is none the less loving for that. The original film used plenty of humor, particularly from C3PO, and the comically over-drawn villains. There are fine lines between modelling success and being successful, delicious in their plasticity. Also, fine lines between profundity and platitude, between bathos and tragedy, between meaningful myth and camp. Humor seems to signify our knowledge of those lines, our mutual conspiracy to experience greatness while wearing collanders on our heads. It also, in its better tenors, affirms existential hope over the various tragic means and ends of human life.

In this connection, Campbell tried to resurrect an ancient sense of comedy, far different from what is customary today:

"We are not disposed to assign to comedy the high rank of tragedy. Comedy as satire is acceptable, as fun it is a pleasant haven of escape, but the fairy tale of happiness ever after can not be taken seriously; it belongs to the never-never land of childhood, which is protected from the realities that will become terribly known soon enough; just as the myth of heaven ever after is for the old, whose lives are behind them and whose hearts have to be readied for the last portal of the transit into night - which sober, modern, Occidental judgement is founded on a total misunderstanding of the realities depicted in the fairy tale, the myth, and the divine comedies of redemption. These, in the ancient world, were regarded as of a higher rank than tragedy, of a deeper truth, of a more difficult realization, of a sounder structure, and of a revelation more complete. 

The happy ending of the fairy tale, the myth, and the divine comedy of the soul, is to be read, not as a contradiction, but as a transcendence of the universal tragedy of man. The objective world remains what it was, but, because of a shift of emphasis within the subject, is beheld as though transformed. ... Tragedy is the shattering of the forms and of our attachment to the forms; comedy, the wild and careless, inexhaustible joy of life invincible.
...
It is the business of mythology proper, and of the fairy tale, to reveal the specific dangers and techniques of the dark interior way from tragedy to comedy. Hence the incidents are fantastic and 'unreal': they represent psychological, not physical, triumphs."

• Hope, confidence, and togetherness- also the currency of mega-religion.
• Inside the new hate.. or is it the same old hate?
• Our government is corrupt.
• Our media is corrupt too.
• What we need in a new political/economic narrative.
• Brief talk on place cells in the brain.
• Could it be that banks are really getting cut down to size?
• On the other hand, the Greek crisis generates even more financial innovation.
• The CBC's look at Occupy concludes, with a rousing call to democratize capital and downsize the FIRE sector (segment 3, minute 47 to end).
• Economics quote, from Robert Solow, via Bill Mitchell, speaking of conventional micro-based macroeconomic modeling approaches (dynamic stochastic general equilibrium, or DSGE):

"An obvious example is that the DSGE story has no real room for unemployment of the kind we see most of the time, and especially now: unemployment that is pure waste. There are competent workers, willing to work at the prevailing wage or even a bit less, but the potential job is stymied by a market failure. The economy is unable to organize a win-win situation that is apparently there for the taking. This sort of outcome is incompatible with the notion that the economy is in rational pursuit of an intelligible goal. The only way that DSGE and related models can cope with unemployment is to make it somehow voluntary, a choice of current leisure or a desire to retain some kind of flexibility for the future or something like that. But this is exactly the sort of explanation that does not pass the smell test."

Neurons poised in meditation

Cortical neurons show exquisite balance between inhibitory and excitatory inputs, typically summing to zero.


Life wouldn't be quite as sweet without homeostatic mechanisms. From blood chemistry to the hedonic treadmill, our biology keeps things stable so we can sail through life on an even keel. As yet we have only a glimmer of appreciation for the many homeostatic mechanisms in the brain- for mood, activity, weight, temperature, introversion, sleep, and many more. While people differ in their settings for many of these systems, those settings tend to be extremely stable through life.

It's gradually become apparent that the basic workings of the brain rely on another homeostatic mechanism on the level of neurons and neural networks. The ability to shift attention, superimposed on a baseline brain rhythm / hum, indicates that the baseline condition of much of the brain is quasi-stability. Such shifts are detected in functional brain scanning as metabolic variations, (higher blood flow, among other signs), so there is real physiological change that follows what subjectively seems like effortless shifts of mental state.

So, most of the brain operates on a knife's edge / default / zero state which can be roped into active, attentive, ever-changing coalitions of neurons from all over the cortex to bring us the many and various conditions of thought, sensation, vision, emotional engagement, planning, etc. that are well-known to engage various specific parts of the brain.

For this important property of nerve cells in the brain, a recent paper provides a cellular rationale, which is that all information-carrying neurons in the brain typically get automatically balanced inhibitory and excitatory inputs through a feedback mechanism to inhibitory synapses. The idea is that each neuron connects as much to inhibitory interneurons as to excitatory information-carrying neurons, and those inhibitory neurons adjust their outputs over time in response to what is going on in the target cell so that its activity stays mostly quiescent. Most neurons thus spend most of their time in a calm, meditative state.

The paper leads with simulation experiments, and follows with supporting evidence from actual cells and networks. The hypothesis appears to go substantially beyond current knowledge, where inhibitory neurons are a well known component, but not a functionally well-understood part of the neural / cognitive landscape. The hypothesis provides a rationale, based on a relatively mindless cellular mechanism, for why the brain doesn't explode with activity, but rather keeps humming within relatively tight bounds, and as noted above, with the sort of knife-edge stability that lets us think with some degree of both focus and roving attention.

The story starts with Donald Hebb, who came up with perhaps the key insight to how neurons can learn as a network. The rule is commonly expressed as "cells that fire together wire together". Which is to say that in a neural network of cells, those that fire coincidently (one to the next) within some window of time (say <10 milliseconds), engage in a molecular process that strengthens their synaptic connections so that in the future, the downstream cell responds more strongly to firing of that upstream cell.

This basically mechanical process is the soul of associative learning, where a bell, say, is associated with the appearance of food. But lest everything become associated with everything else, countervailing mechanisms are needed to inhibit those connections that are not active, and keep overall activity at a low baseline so that only unusual occurences create signals. In this general respect, the role of inhibitory neurons (which generally use the neurotransmitter GABA in their synapses, in contrast to excitatory neurons that typically use glutamate) has been appreciated for some time.

The present authors take the extra step of simulating in detail specific rules of Hebbian learning and inhibition that seem to accurately account not only for the actual sensitivity of cortical neurons but, on a larger scale, for the operation of memory as an example of how all this adds up to collective neuronal & brain function.

The secret is a rule that generates detailed balance of excitatory and inhibitory inputs over time to each cell, leading the downstream (target) neuron to be mostly quiescent (also called by the authors asynchronous irregular activity, or AI). This rule operates on inhibitory interneurons that get the same upstream signals as excitatory neurons, adjusting their synaptic strengths towards the common downstream neuron.

A: Diagram of the inhibitory neuron (light gray), getting excitatory inputs and acting in parallel with excitatory stimulation to a balanced target (green). B: Diagram of simulations, where 25 inhibitory and 100 excitatory neurons with distinct signal trains, feed into a target neuron. C: Relation of the learning rule with time. Only coincident firing (inhibitory and target neurons) within ~20 milliseconds is supposed to strengthen synapses.

What's the rule?

∆w = µ( (pre * post) - (p0 * pre) )

w is synaptic efficiency, pre is the presynaptic activity, post is postsynaptic activity, p0 is a constant that targets the postsynaptic neuron to low average activity (zero most of the time), and µ is the learning rate: the key factor for how quickly coincident firing strengthens inhibitory synapses.

Course of simulations, where the net membrane current on the target neuron is green, the excitatory current is black, and inhibitory current on the target cell (from the inhibitory synaptic firing) is gray. Note that the target ends up (after) at zero most of the time.

Clearly this is a flexible rule, where constants can be plugged in to approximate what is empirically observed. Yet its simplicity, once set up, is very impressive. A time course of simulation samples is shown above. The inhibitory activity starts at zero, (before), and due to frequent co-firing of the inhibitory and target neurons, (due to their common excitatory input), their connections progressively strengthen to the point that net firing of the target cell goes down close to zero (after) for all but unusual excitatory inputs that vary faster than the rule-based learning rate.

Different values for µ, or the learning rate, (apologies.. I use greek mu in the text in place of eta) make relatively little difference to system behavior, after perturbing the excitatory input (red line), compared to the background activity (black line).

As the authors put it: "In the detailed balanced state, the response of the cell was sparse and reminiscent of experimental observations across many sensory systems. Spikes were caused primarily by transients in the input signals, during which the faster dynamics of the excitatory synapses momentarily overcame inhibition." Thus from a very simple cellular structure is born a sophisticated information processing system.

Comparison of simulation (lines) to experiments (blocks) cited from other researchers on rat auditory cortex single-neuron learning curves in response to a shift in sensory (sound) signal frequency. The X-axis is in minutes, and the Y axis is excitatory : inhibitory current ratio, taken from two different cells- a cell tuned to the prior frequency (blue) or a cell tuned to a newly introduced frequency (red).

Lastly, the researchers turn to what this kind of circuit / rule can do in a larger scale neural system, using memory as an example. They simulate a matrix of 100 X 100 cells made up of mostly excitatory cells (Ex in the figure below) and 25% inhibitory cells (In). Unlike the determined circuits simulated above, here the cells randomly connect to 2% of the other cells in the population. The researchers assumed that enough inhibitory connections would be sprinkled throughout so that, given enough learning time, the network as a whole would behave in the balanced way they expect.

The graphs above follow the evolution of this system in time, with A showing the initial state where all the excitatory cells fire at full blast, and the inhibitory cells fire randomly. After a simulated hour of internal learning, (B), the network has indeed settled down to a baseline balanced, or AI state of very low output activity, shown by the dark snowy pattern, despite the excitatory cells still firing at the original rate.

At time C, the researchers introduced a permanent five-fold increased excitatory synapse strength within two patches of the matrix (red and blue squares in A; the unaffected control patch is black). The graphs underneath sample a few random cells from either the red or black (control) areas of the matrix. The transient activation / recognition of the introduced signal is clearly apparent (C). Yet after another simulated hour, (D), the inhibitory circuits have adjusted and the overall network is back to a baseline, quiescent state. The patches of prior high activity are completely invisible.

No measure of ambient neural activity would detect a memory engram here. Yet when a quarter of the red patch excitatory neurons were driven with extra activity, the full red patch lit up again, (E), showing that a full memory could be re-activated from a partial input. The cleanliness of this process, not overlapping the blue patch at all, indeed forming a slight negative image over it, is astonishing. This constitutes an extremely interesting and promising model for how information can be tucked away and later retrieved out of our brains.. a loosely constructed tangle of neurons and their ~100 trillion synapses.

What can I add? Perhaps that simulation is an increasingly essential element in biology, as in so many other fields. We are dealing with such complexity that it is hopeless to formulate comprehendable representations of this reality in prose form, or even graphs, charts, or other tools of presentation. To get at the dynamics of complex systems, critical and simple insights like that of Hebbs and the inhibitory neuron balancing rule promoted here remain essential. But to demonstrate what such insights really mean for complex systems, mental extrapolation is not enough- computer simulation is needed.

• What really counts? Love counts.
• On objective morals & sin.
• The new Islamism.. a nuanced view.
• Beware of elites blaming education for joblessness.
• What's our beef with Iran?
• Obama administration, still shilling for the banks.
• Canada's CBC looks at Occupy. (Excellent book cited: The Spirit Level.)

Redistribution is required

Remember playing monopoly- how the rich get richer, and then the game ends?

Remember Monopoly? How one person with either luck or foresight bought all the railroads, milked the other players, and, towards the end, extended loans or gifts to keep their fun going a few more rounds? The end, however, was always the same- the game died because its mini economic system could not keep going if one person has all the money.

This seems an apt portrayal of our current economic seizure. An economy depends on the continual flow of money around, from one person's pocket to another's, and around again. The last two decades of rising income and wealth inequality meant that the mass of people have less money to spend, (and much of that money illusory, being debt), and the wealthy more. Since the wealthy tend to save their money, particularly as future prospects dim, we have the basic conditions for an economic heart attack- reduced circulation of money, and an even greater entrenching of the wealth divide.

Left to its own devices, and as we have seen over the last couple of decades, laissez-faire concentrates wealth upwards. A zealous and amoral focus on the rights of property and the fruits of economic success, however gained (think Bain) lead to a winner-take all system. Coupled with a political system beholden to money, it generates a spiral of entrenched interests and corruption. Only very rare crises of labor shortage (historically due to plagues) have historically reversed this flow within laissez-faire rules. The ultimate example is Rome, where the Senatorial class had massive land holdings, armies of slaves, and eventually exempted itself from any public duties, starving Rome of resources. It was a system that, for all its glories, was far less prosperous than our own, prone to revolt and ultimately, to rot.

What does laissez-faire accomplish by its concentration of wealth? For one, it forms the basic motivation to work..  whether to become wealthy or to keep body and soul together. For another, it is thought to put money into the hands of those best able to invest it productively (the vaunted "job creators" of GOP parlance).

Are those who have made a mint in our economic system the best investors for our common future prosperity? I think that logic has a few holes in it. Firstly, many of the wealthy are inheritors of wealth, and have no more economic accumen than a squirrel. I have proposed making the inheritance tax 100% to address this problem. Second, much wealth has been gained in the most amoral and unethical venues, (cf. Wall Street, board rooms elsewhere, and again Bain), full of self-dealing and cronyism. This hardly creates the forward-thinking, entrepreneurial venture creation and especially technical innovation we need to encourage.

And what are the harms of this concentration? Economically, as alluded to above, the wealthy may just sit on their hands and not invest their money, in which case the whole system grinds to a halt. On the other end, are the poor enlightened by their poverty, or have their character improved? Does this Darwinian system make them less likely to reproduce, in deference to their more successful betters? No, and no again. The immiseration of the mass of people serves no purpose beyond motivating them to engage in work- a point which we are obviously far, far, beyond. And of course keeping people persistently unemployed- the fruit we are currently harvesting from financial instability and unequality- is the exact opposite of what the whole mechanism was supposed to accomplish, which is employing everyone's talents to the best effect and for the general prosperity.

Politically, economic concentration leads to the very opposite of public good, as entrenched interests, (exemplified currently by the fossil fuel and financial industries, among many others), turn their wealth into corruption, buying legislators, elections, indeed burrowing into our very minds via the corporatized media.

So a modern economy needs some mechanism to counteract the natural course of laissez-faire. As a result, we engage in all the mechanisms of taxation, regulation, and redistrubution that now exist, from income taxes to welfare, Social Security, the military-industrial complex, and unemployment benefits. While the GOP harp about how evil these programs are and how they need to be "privatized", i.e. terminated, the last decades of rising inequality and, finally, economic breakdown, clearly show that stronger methods of redistribution are needed.

History provides countless mechanisms of economic redistribution, from the systematic to the catastrophic:

• Extended families
• Public works
• Philanthropy
• Circuses, staple food distribution
• Educational programs
• Dissollute gambling by the rich
• Taxation
• Old age pensions
• Inheritance taxes, divided estates
• Inflation, devaluation
• Begging, alms, charities
• Church donations, tithes
• Markets and trade
• Debt cancellation
• Corruption, patronage
• Land reform
• Expropriation
• Robbery, crime
• War, plunder
• Revolution

So the idea that "redistribution" is somehow inherently wrong couldn't be more misguided. It is why we have a society and culture in the first place. Better to arrange it systematically and productively than anarchically, but somehow, some way, a society's resources need to be and will be distributed to all members in some degree, by some method. The problem is really how to make flows of money through the economy optimally stable and equitable, while maintaining incentives that generate the original productivity.

The goals should be fairness, uniformity, legitimacy, and effectiveness. Markets have many of these characteristics, especially broad effectiveness, though we shouldn't kid ourselves that any market is truly "free". All are afflicted with unequal information, power, and other problems requiring ongoing regulation by entities superior to the market.

These desired attributes are present with a great deal more justice and redistributive power in a well-run democratic government and its universal programs of taxation, pensions, education, etc. These are far more fair and effective than relying on charity, gambling, crime, luxury spending, philanthropy, or other such miscellaneous methods of redistribution. They are also more macroeconomically useful, i.e. adjustable on a very large scale. When it comes to problems of common action, which describes this issue of regulating and counterbalancing the laissez-faire system, government is not only not the problem, it is the only solution, though dependent on its institutional quality.

Thus our moment of economic crisis, while temporarily strengthening the very forces that caused it, demands a conscious, long-term, and organized corrective response. Responses like taxation that is actually progressive in practice, not just in principle, strong estate taxation, increased outlays for education, a sustainable energy future, and a job guarantee for everyone willing to work.

Image of Andrew Jackson, the first president to do serious battle with the emerging corporate monster, here in the form of the specially chartered Second Bank of the United States, which he destroyed. "Biddle, thou monster, Avaunt!"

• Martin Wolf on the critical and rising importance of public goods.
• Martin Wolf gives his succinct economic prescriptions.
• On the foolishness of low capital gains taxes.
• More on the shady money behind Bain.
• The status of the "corporations are people" movement.
• Speaking of fights against the evil empire, an endlessly funny / loving homage to Star Wars.
• Apple uses on quasi-slave labor in China.
• At the same time, it doesn't care very much about its investors, either.
• Leakers get screwed. Killers and torturers, not so much.
• Warren Buffet as an object lesson in MMT economics.
• Economic quote of the week, by Winston Churchill, via Bill Mitchell

"I should like to see the State embark on various novel and adventurous experiments … I am of opinion that the State should increasingly assume the position of the reserve employer of labour. I am very sorry we have not got the railways of this country in our hands."

• Show of the week: Alabama shakes.