Babes in the Woods

Review of the film Restrepo, about US soldiers lost in Afghanistan.

Restrepo is perhaps the foremost cultural document of US involvement in Afghanistan, an documentary of platoon assigned to one of the hottest zones in the war. As film-making, it is very good, mixing post-action interviews and perspective with close footage embedded at the front. Restrepo is the name of an outpost in the Korengal valley of Kunar province some ways west of the Pakistani border, which this platoon founded and held against constant attack by the local population, Taliban, et al. The outpost and valley were later given up to the Taliban after further years of futility. (The film's sequel, named Korengal, is a sentimental pastiche of outtakes from the first effort.)

The men are exemplars of our armed forces; extremely young, immature, good-natured, and given enormous fire-power. They are shattered when a fellow soldier is killed, but kill their enemies with light-hearted glee. Their leader comes across as exemplary as well; disciplined, profane, and effective. Yet something seems sorely missing- knowledge about the social and political setting they have helicoptered into.

Much of the film is taken up with firefights, each side taking potshots at the other. The Taliban set occasional ambushes, but the US soldiers seem only to act as fire bait. They never seem to control the terrain. They set up key forts and mini-forts, and patrol on occasion. But the wider landscape is not theirs to control. Physically, the country is mountainous and thus favorable to guerrilla warfare rather than a mechanized army. And for all our space-based intel, it appears that knowing where the enemy is continues to be extremely challenging.

But the social landscape is even worse, completely incomprehensible to youngsters from the US. Sure, they have GPS, maps and doubtless all the intel our government can provide. But not knowing the local language is an enormous block. The soldiers are tongue-tied trying to relate to villagers through interpreters, hardly getting to first base, as it were, in the campaign for hearts and minds while they are busily tramping through the villager's homes and shooting up the countryside. Their lip service about projects and benefits for the villagers in return for cooperation could just as well have been spoken in Klingon.

Each village is manned by a skeleton crew of boys and ancient codgers. The women are sequestered, and all able-bodied men are off shooting at the Americans. Language barrier or not, the degree of possible cooperation could hardly be more clear. The film-makers don't investigate the local terrain either. They are fully embedded in that sense, not stepping beyond the wire of US control. Could they have clarified the degree to which, and reasons why, the local populace acceed to the terror of the devil they know over the foreign devil they had seen once before, in Soviet uniforms? Doubtful, I am sure, but the question virtually answers itself.

If the US were a traditional conquerer, this wouldn't make much difference. The Afghan men would be killed, the women sold off into slavery, and, as Rome did before us, we would call it peace. But we have renounced such wholesale terror and aim to behave by a higher moral code, as well as hoping to gain friends by practicing temperate and targeted warfare.

Were we even a traditional 20th century conquerer, we would have sent in far more more soldiers. The platoon of Restrepo is hopelessly out-gunned, despite their technical resources. If they had been welcomed as friends, a light footprint might have been sufficient. But at it was, near the border to Pakistan where the Taliban was comfortably ensconced as valued allies of the Pakistani government pursuing its bigoted war against all neighbors, in a rural region were the people are even more attached to their guns and religion (and control of their women) than they are in West Virginia, well, the welcome was not friendly at all. It was like being set down as a lonely platoon on the Ho Chi Minh trail and told to stop the traffic. In that case, as we now know, all the bombing in the world wasn't enough.

Our occupation of Europe after World War 2 succeeded largely because of cultural knowledge and affinity. We knew how to be friendly to a population utterly burned out by war, and even in Japan, we made friends in the wake of the nuclear bomb, due to Japan's strong Westernizing project that had been in motion for the preceeding near-century. In the Middle East, we seem to have very little cultural affinity. Islam is at the core of this, I think, as it combines a bigoted attitude towards infidels (and many forms of social and technical progress) with a lack of governing discipline that leads to endless free-lancing, militia formation, and romantic heroism. Why is government by a polygamous royal family in Saudi Arabia acceptable in the modern world, and accepted as the center and heart of the Islamic world? Yes, it resembles the feudal or even tribal orders of the past. But what kind of justification is that? When is the revolution in political theory and social justice going to happen in the Islamic world?

In Afghanistan, we started well ahead, as the population was not, on the whole, pro-Taliban. But social power is not always democratic, and in Afghanistan, it is a traditional and brutal competition between armed gangs, run by natural predators. Some youngsters from the US might have understood this, but not those in this man's army. Gang warfare is particlarly a matter of social knowledge, knowing were invisible lines are drawn, who is big, who is small, how far to push each person, and what each tag and sign signify. The soldiers of Restrepo are almost completely blind in this respect, which in combination with their other shortcomings made them rather unsuccessful.

But this was just a part of the larger policy. Where are we generally in Afghanistan? The country is slowly losing ground to the Taliban. The government is disorganized and corrupt. Without the US to prop it up and feed the maw of corruption, it is not really clear whether the central government is a going proposition. Which is somewhat odd for a culture so obsessed with morality and honor. Unfortunately honor is a very ambiguous sort of virtue, given to competitiveness and winning over all other considerations, causing suicide bombers to wear burkhas and the like. One may even take it as a cautionary tale for our own slow path towards hyper-competition and feudalism in the West.

After almost fifteen years of occupation / assistance, most Afghan's first allegiance still seems to be tribal rather than national. The cultural elite treat the national government as a part-time affair, good while someone else is paying the bills, but not essential to their power centers, which remain local, in the form of tribal structure, militias, local extortion rings, smuggling, and other pursuits that one might call organized crime. The police operate similarly, by bribery and abuse of citizens. We allied ourselves with the existing powers to get things done locally, while at the same time attempting to change the game nationally by setting up a veneer of democracy and modern bureaucracy in association with ostensibly friendly Afghans. It has been a confusing mess, as much to our own soldiers as to the Afghans whose hearts and minds we intended to change.

• Now that the Taliban has it so good, it can have fights among rival gangs.
• Evidently we have to get out of the Middle East because they really are nuts after all, and deserve their caliphate.
• Why the US needs to police the world, and needs more than kids to do it. Some good, some not so good arguments.
• On the other hand...
• A Mormon insurgent politely asks for change.
• What is going on in Asia and Japan, from a left perspective?
• More about the robots and unemployment, using the horse analogy.
• Decoding Republican love of small government.
• Neural oscillations track both speech and music.
• Image of the week- life expectancy across the US. The Red South needs better health care and lifestyle ... why are they so dead-set against it? Another aspect of feudalism.

Where Did My Soul Go?

Exploring the neurocircuitry of loss-of-consciousness seizures.

While the question of a physical basis of consciousness is batted around by armchair philosophers, it is no light or abstract matter for people whose consciousness doesn't work as it should. From coma to narcolepsy, epilepsy and schizophrenia, there are many ways that consciousness can be disturbed for organic reasons (not even to mention pharmacologic and recreational interventions). One type of epilepsy, absence seizure, is a particularly interesting example, characterized by brief (10 seconds) loss of consciousness with no other symptom, typically. The subject just stares into space, or lets the current action such as speaking slow to a crawl. Memory of this time is absent, and the subject is not conscious. Then everything picks up again as though nothing had happened. It sort of resembles a reboot of a machine or computer.

Epilepsy, of which there are dozens of kinds, generally is a syndrome of electrical/chemical over-activity and over-synchrony somewhere in the brain. Our normal state is a chaotic noise from which a surface EEG captures occasional regularities. Consciousness seems to be the occasional and restricted synchrony of coalitions of neurons reaching the various areas which give it content, whether visual, abstract, tactile, etc. Probably also not just any neurons, but coalitions anchored in the cortical and thalamic areas that are most closely associated with loss of consciousness when they are injured. Beyond this, it is not yet possible to say just what consciousness is in physical, anatomical terms.

Yet there is a good deal known about the electrochemical circuits of epilepsy, which is one route to learning more about consciousness in general. Many patients have been helped by careful investigation of where their seizures begin, and intervening by either removing some portion of that brain tissue, or implanting electrodes that give corrective shocks continuously. In the case of absence seizures, which may be a particularly incisive and minimal disruption of consciousness, the driver seems to be a circuit between the cortex and thalamus.

The thalamus sits atop the midbrain and brainstem, and is the gateway to the cortex, relaying sensory information from outside and motor signals back downwards. In the sensory direction, this is an inter-active process. The cortex sends many connections back, at least in part to direct the spotlight of attention to selected inputs. The thalamus also plays central roles in sleep/wakefulness, as it is the source of the slow wave patterns of deep sleep, and damage to it can cause coma.

But sometimes the cortico-thalamic connections get too strong, and evolve into a positive feedback loop of ~ 3Hz waves that characterize the absence seizure. In susceptible persons, (it is a syndrome of children, typically), brief hyperventilation can cause it routinely. This suggests a possible connection with the sleep circuitry, related to the yawning, dizziness, and other effects of hyperventilation.

EEG waves during an absence seizure, which lasts from a few to 20 seconds.

Obviously, the brain circuitry has been difficult to figure out. Not only is the brain in general, and the human brain in particular, hard to experiment on, but the thalamus is especially central and hard to get to. The authors of a recent paper resort to computational modelling, based on the experimental work of others (and their own prior work). The idea is to get as much of the detailed knowledge into a model as possible, and then ask whether the seizures can be reproduced, and if so, what can be done about them.

The answer is that .. yes they can. The model below describes what is known generally about the network involved. It brings in another key anatomical site, the basal ganglia, which sit right next to the thalamus and conduct signals from the cortex to it, substantially increasing the complexity of the network.

Circuitry diagram of brain elements and connections involved in absence seizures, as used in the current paper's model. Glutamate connections are excitatory, while GABA connections are inhibitory.

One theme is that not all connections in the brain are excitatory, as though neuronal connections were simple wires. The red (glutamate neuro-transmitter) arrows represent activating connections, while the blue (GABA) arrows represent inhibitory connections. Just like in organizational management or artificial circuitry, the careful balancing of positive and negative feedback results in optimal control. Here, after constructing a ~40 parameter model containing everything known about the circuitry, the authors find that an unusual and recently-found inhibitory circuit that points from the basal ganglia (GPe, globus pallidus externa) directly back to the cortex might be critical for damping absence seizures.

Dialing up the inhibitory circuit voltage (-Vcp2) from the globus pallidus externa to the cortex, to a modest degree, reliably shuts down the firing rate (Øe) that is characteristic of absence seizures.

A further example of their data, (below), plotting (A, B) the voltage (Vse) from the thalamus (SRN, specific relay nuclei) to the cortex, versus the delay of action (tau in milliseconds) of the inhibitory circuit between the thalamus internal nuclei, TRN (thalamic reticular nucleus) and SRN. Extending the delay, or increasing the excitatory feedback voltage, moves the graph up and right, towards higher-firing states, as show in the lower individual graphs. The absence-seizure type of firing is in graph D, corresponding to the light blue area of graph A.

The absence seizure oscillation (SWD) happens in a sort of sweet spot of voltage applied between the thalamus (SRN) to the cortex. The vertical axis (tau) describes the lag characteristic of the inhibitory circuit between the TRN and SRN areas within the thalamus, which is also influential over the absence seizure oscillation.

While this kind of modelling is no substitute for empirical investigation, it is tremendously useful to advance scientific theorizing and speculation about the systems at hand. Systems about which our knowledge is increasingly complicated to the point that we may not be able to understand them without the help of computerized models that can keep track of a myriad of details and dynamics. In this case, the hypothesis might be, that if treatment is really necessary, an electrode placed into the basal ganglia / globus pallidus externae, to stimulate its inhibitory action with modest constant voltage, may be one way to go about it.

• What's wrong with the office?
• Cringely on the state of the cloud.
• Upward redistribution, continued. With examples.
• Albuquerque offers a mini job-guarantee, which works very well.
• Jeb! screwed us over once, already.
• Republican deficits are OK, as usual.
• The labor market is still not working for labor.
• Economic mismanagement has permanent effects.
• Stiglitz, cont.
• Cruz, for the rich.
• Whither gun nuts? To civil and official disobedience, with a side of jaundiced constitutional interpretation.
• Isn't lying standard business practice?
• Annals of feudalism: training your H1B replacement.
• Green tip- use rechargeable batteries.

Happiness is a Warm Gun

Rights, schmites. Gun fetishism is a psychological and social disorder.

It would be helpful in our gun debates if those opposing gun controls were named more accurately, not as "defenders of gun rights", or "staunch supporters of second amendment rights", and the like, but as gun fetishists. Reading their works makes it clear how intense their feelings are, and how unmoored from rational public policy, historical context, or constitutional history. Let alone from basic respect for human psychology. They are captivated by an heroic narrative of phallic power conferred by the gun, validating their social position, and enabling their defense, perhaps in a dramatic (not to say climactic) public showdown spraying bullets at dark miscreants, or as a last-ditch defense of the home bunker at the end times.

Unfortunately, while most people are responsible enough to carry that rather intense psychological valance without accident, and without cracking up, the idea that everyone is, and that we would be better off with free-flowing guns for the whole population, is empirically false, and thus a dangerous fantasy. Ironically, one gun blog that I read keeps harping on the idiocy of police gun usage. They use bad muzzle discipline. They barge in on the wrong houses. They shoot the wrong people. They try to hide behind procedure and the blue line. No kidding. But how is this an argument that we can trust the average gun-owning Joe to have better, more disciplined behavior? This line of argument also betrays the anti-state insurrectionism at the core of the gun fetishist's concerns. Which is quite ironic and in direct contradiction to the second amendment's historical roots which support a democratic, local, state, which is of course, what the well-regulated militia serves, and what does the regulation.

Rights are not natural, god-given, or inherent. They are political conventions; gifts we give each other to make society work smoothly and afford maximal happiness. The Bill of Rights had to be written down precisely because the rights it enumerated were not natural or inevitable. They were developed over the preceeding centuries in the English and Colonial traditions as ideals and social accommodations. The first amendment is exemplary, embodying the enlightenment lesson that established religions were good neither for the state nor for religion, and tended to foster civil war and corruption.

The second amendment is likewise an historical fossil, though far less relevant to us today than the first amendment. It specifically predicates the right to have guns on the need for a well-ordered militia. Today, we have well-ordered militias, but they are not based on citizen enrollment, let alone on the conscription of personal arms, but on an entirely different principle of professional enlistment and civilian / republican oversight and command. The broader right to keep arms was certainly cherished in the Colonies, as it still is in rural areas of the US that have a light police footprint and plenty of animals to shoot. But the second amendment doesn't address that convention. It is predicated on the specific historical situation the colonists found themselves in, where Britain tried to disarm a populace that was violently hostile to its imposed, foreign, rule. A populace that was happy with its existing local institutions of government.

The idea that guns in the hands of the populace are essential to fending off tyranny should have died with the civil war. No matter how many guns the South had in private hands, they were no match for a full military confrontation. Whatever one's view of the war's conclusion, whether the imposition of tyranny or a righteous victory, private guns made no difference. In the Wild West of the ensuing epoch, the prevalence of guns was not generally a boon to public peace and civil society, and many frontier towns made gun control one of their first orders of business. It would be truly ironic if in deference to people with significant mental health issues, we forgot this common sense legacy and went back to an open or concealed-carry gun free-for-all in the US.

For the focus of the NRA and the gun fetishists in general is frankly pathological. At the drop of a hat, they resort to phenomenal hyperbole, (Over my dead body! From my cold, dead hands!). They shriek about totalitariansm and god's commandment to defend their families from evil. They abominate the "gun grabbers" who would castrate them. So they stockpile guns in a never-enough compensation for whatever else ails them. Power is hard to come by, and it is inexorably ebbing away from the white male god-fearing class. No wonder that the Obama presidency has seen such vitriol and extremism coming from this political class, to its own detriment, really.

What to do about it? The first step would be to call this spade what it is. Not some reasonable, British-empire-resisting group with balanced public policy arguments. Not upholders of ancient and inalienable rights. But people with a screw loose: fetishists for a phallocentric symbol of a political order which is not going to come any closer when Hillary Clinton becomes president.

Speaking practically, is there a place for guns at all? Sure- in hunting, (as personally appalling as that is as some kind of "sport", and however poisonous in its use of lead), in self-protection in rural areas, and in simple collecting and possession. Guns should not be prohibited. But they should be allowed under very stringent conditions, in view of their extreme psychological valence and demonstrated harmfulness. Handguns, for instance, have no use outside of killing people, which makes the fact that there are over 100 million of them in the US somewhat alarming. Owners should be fully registered, and should have to take yearly refresher courses in safety and handling, have a safe to keep them in, legal liability for their control, and a continuously clean criminal and mental health record. There should be no open carry other than for uniformed officers, (or hunting in rural areas), and concealed carry only for specific needs approved and documented on the registration.

Sensible gun control would not get rid of all guns. Yet it is obviously effective in countries (i.e. every developed country other than the US) where it is public policy. While it is perhaps impolite to cast psychological aspersions on our gun nuts, they have brought it on themselves with the antics of the NRA and the broader gun-show, gun-crazy video game, gun-crazy Hollywood movie culture we have to deal with. Such raw, potent, fondle-able power is undeniably attractive, but it also corrupts. Guns keep corrupting impressionable (typically male) minds in very damaging ways, and we really can do better against this menace.

• A little history of English gun laws, militias, etc.
• WSJ: Guns are already so bad and so prevalent, that we can't do anything about them. Win!
• Religious people think it is a spiritual issue.
• True gun nuts hate the GOP.
• Just how expensive is free speech? Too expensive for you, that's for sure.
• Better banking for the poor.
• Yes to carbon pricing / taxing.
• The military can't do it alone in foreign policy, needless to say. One-year attention spans lead to endless conflict.
• A visit to the creation museum.
• Bill Gates: "Since World War II, U.S.-government R&D has defined the state of the art in almost every area."
• State subsidies go to big companies.
• Markets reward lying ... how could we have known?
• Progress in statistics.
• But no progress in economics. WSJ Nobel laureates still dare not speak the words "low aggregate demand", but prefer to blame the Fed for low interest rates, and low interest rates for low corporate borrowing and investment. As though borrowers would borrow more at higher rates.

With a Little Help From My Chaperones

Ribosomes need hundreds of helper proteins during construction.

One of the premier machines of molecular biology is the ribosome. It weighs in at about 3 million daltons, or hydrogen atom-equivalents, and has a huge catalytic core of RNA surrounded by 79 proteins. Due to its ancient origin, mixed composition, and large size, it is also very complicated to produce, yet needs to be made in prodigious amounts. Its manufacture begins in its own organelle, the nucleosome, which is a small compartment within the nucleus where the many copies of genomic DNA that encode ribosomal RNAs get transcribed. Countless events happen thereafter, chemically modifying the RNA, adding proteins, chemically modifying them with various phosphate, acetyl, and methyl groups, and transporting the nascent ribosomal halves out of the nucleus to the cytoplasm. One irony is that the proteins added to the ribosome are all synthesized (by pre-existing ribosomes, naturally) in the cytoplasm and thus have to be transported into the nucleus individually before being re-exported as part of the assembled ribosome halves.

While most proteins and RNAs fold themselves and assemble naturally, based solely on their sequences / composition, the bigger they are and the bigger the complexes they participate in, the more help they tend to need from special proteins called chaperones. The ribosomal RNA uses 76 helper snoRNAs to get itself folded and modified correctly. For assisting the folding of proteins, there are two classes of helpers, general chaperones which help proteins fold by exposing them alternately to hydrophobic and hydrophilic surfaces, and specific chaperones that bind to one or a few target proteins, typically right as they come off the ribosome production line, to prevent them from aggregating with the wrong crowd, and to transport them to the right place for assembly. Assistance for ribosomal RNA folding may have been the original function of some ribosomal proteins which are now essential for function and permanent parts of the mature structure. But now the ribosomal proteins themselves need chaperones, to the tune of about 200, for proper assembly.

A recent paper discussed an example of a specific ribosomal chaperone, Acl4, which ferries the ribosomal protein Rpl4 to its mark. Rpl4 is an average-sized protein, about 50,000 daltons, but its structure is remarkably splayed-out, rather than compact. When assembled, part of its structure reaches into the exit tunnel of the ribosome, where newly synthesized protein chains come out, and seems to help them stay in the straight and narrow, especially hydrophobic segments that would be tempted to stick to themselves or other proteins, clogging the tunnel.

Structure of Rpl4. The blue part sticks into the protein chain exit tunnel, and is evolutionarily conserved, while the red part reads over the surface of the ribosome, touching several other ribosomal proteins, with unknown function.

Position of Rpl4 (red) on the ribosomal large subunit. PTC labels the peptide transferase center, or synthetic core of the ribosome, and the emerging amino acids chained into a protein are black circles. The hydrophobic knee of the nascent protein tunnel is where the key segment of Rpl4 (4) has a role, along with some other ribosomal proteins (17, 39).

But this ability to manage hydrophobic protein segments implies that Rpl4 is itself, in that region, hydrophobic, and thus prone to aggegation. This is in addition to the rest of the structure, which reaches across several other proteins on the ribosomal surface, in snake-like fashion. While researchers know that this latter structure is essential, they do not know yet what it does. This intriguing protein clearly needs help in assembly. The researchers hypothesized such a chaperone helper, and went out to find it using a tagged version of RPL4 with which they could easily co-purify whatever stuck to it, including several of its ribosomal protein colleagues. But there was one more protein, called Acl4. Unfortunately, the researchers didn't come up with this name themselves, but were scooped by others who published similar data only a few months before. So it goes.

Using a series of engineered deletions of the Rpl4 protein, the researchers show that Acl4 binds over the key hydrophobic area of Rpl4, as one would expect. They additionally show that Acl4 binds to Rpl4 even before it is fully synthesized, also as one would expect for a specialized protein chaperone. In yeast cells, neither protein is actually essential. Strains with either or both genes deleted still live, though grow very slowly. They would never survive in the wild.

Knowing the nuts and bolts of how our biological molecules operate, particularly the extraordinary lengths evolution has gone to fix and fine-tune systems that must have been functional enough in their much simpler, early incarnations, fosters an appreciation of the messiness of the molecular world. Sometimes huge size and complexity is a product of endless jury-rigging, not of exquisite design.

Drama of ribosomal synthesis, for a few actors. Rpl4 (green) is synthesized in the cytoplasm, and captured by Acl4 (purple). Then both transport to the nucleus, where they dock to the assembling ribosome, which is then in due time transported back out to its final destination. Acl4 cycles back by itself for another load. A minor pathway also exists in the absence of enough Acl4, where a generic nuclear transport conductor, importin, can bring Rpl4 into the nucleus, since Rpl4 contains the necessary targeting signals in its sequence.

• Investment is better than saving.
• "...  if the corruption persisted, the Taliban would win, no matter how many American troops joined the fight."
• Mice stutter too.
• Are we really that bad? And if so, is the answer to self-destruct? "If Western governments desired to reduce the number of people trying to find safety in Europe, and the suffering that results from such attempts, they would refrain from invading other countries, from impoverishing their peoples, from providing arms to repressive regimes that collaborate with the West, from requiring neoliberal policies that create inequality and poverty, and from destroying the world by their consumption of fossil fuels."
• Krugman on Japan's timidity trap ... it needs 4% inflation, with all available tools.
• Gun nuts packing purple prose: "I have seen many homeschoolers on the trail with parents, reading literature and learning real American history, when men were free, rather than the fabricated crap and lies they learn in public schools that passes for history, taught by the collectivist lemmings."
• Nuns in a pickle.
• Annals of feudalism: Hey, let's make worker's comp optional!
• And then off-load the cost to the taxpayer.
• Up from poverty, around the world.
• Up from draught.. by ending traditional water rights.

Man Does Not Live by Competition Alone

Tuning our way between competition and cooperation; Mankiw, Diamond, et al. on institutions.

I've read a fine book by Jared Diamond, "The world until yesterday", which is filled with analyses about many native cultures, in contrast to the ambient Euro-Western commercial culture we find ourselves in. What are the differences? Can we learn from each other? Indeed we can. The chapters on warfare make one very important point, which is that war is not hard-wired into humans. When conditions are conducive, we make war, and when it does not pay or is not necessary, we do not make war. Traditional societies typically live at some level of constant, if low-level, warefare, which takes a great toll in lives as well as tranquility. It was often an enormous positive when Westerners imposed state-based systems that eliminated free-lance (ouch) warfare, appreciated by all concerned, despite all the other injustices, indignities, and horrors of colonialization.

Institutions matter a great deal, and if we arrange those institutions to foster cooperation, we can have peace. But when they foster competition, honor, winning, and all the other martial values, we should not be surprised at the results. That is sort of the fork in the road we in the US find ourselves at right now, as the GOP doubles down on class war and seeks to enshrine the right of the 1% or 0.1% to screw over the rest of the population. At the same time, we seem to have valorized this war in the form of the culturally dominant NFL, where competing CEOs (either coaches or quarterbacks, take your pick) lead the nameless and abused troops to pummel rival firms and take over their territories. Some sectors of our society seem to have lost sight of the virtues of anything but competition.

A exemplary document in this effort is the recent defense of the 1% by Greg Mankiw, Harvard economist. To summarize, he points out that super-stars like Steve Jobs and Robert Downey Jr. get their money fair and square in a market competition, so they deserve it, as do all the other CEOs and high-earners who command their high incomes by virtue of a competitive market in talent. All fair, right?

There are many things to say about this, particularly about the true nature of the CEO / FIRE executive market. But one is that it lacks perspective on the institutional framing at work, which is not a matter of accident or divine command. Back in the days of the Hollywood studio system, what would Mr. Downey have been paid for his stellar acting? Not $50 million, by a long shot. Back then the institutional setting was different, and while star actors were well paid, they did not take a high fraction of the box for themselves. Did actors of that time *deserve to be paid less? Did the CEOs of those times deserve to be paid less?

This is far more than a question of how much a market in talent should or shouldn't bear. It is a moral question about what everyone's talent and time is worth, as well as the more practical psycho-economic question of how to treat our fellow workers / citizens in ways that extract their maximum talent for the general cultural betterment and prosperity, including their own. If 99% or 25% must be beaten down so that 1% can pillage and then flaunt their wealth, is that desirable, even if it is the natural result of a competitive system that we ourselves construct? Is the market even the proper measure of such values? Does 1% of the population have to go homeless so that another 1% can maintain its market power vs labor?

My point is that competition is a tool that we use in the classic economic sense to run a capitalist economic system, putatively for everyone's benefit (that is, the greatest good for the greatest number, more or less). And in reality, competition is sharply regulated and limited so that we get results we want rather than those we don't. Each firm is internally socialistic to some extent in order to fence out the market and form a team that can get work done without competitive pressure that is otherwise extremely damaging and literally counterproductive. Many results of competition that are judged to be bad, such as pollution, monopolization, organized crime, etc., are regulated for the public good (or not, as the case may be!). Firms do not go into commercial warfare with machine guns blazing.

As they say in business, "everything is negotiable". The system is not pre-ordained. And if a system fosters excessive competition, with winner-take-all economics that destroys its own institutions and empowers a greedy and amoral elite with so much money that it corrupts the entire political and cultural landscape, a rethink is certainly in order. For example, the recent economic crisis was largely caused by FIRE [finance, insurance, real estate] executives making the conscious decision to short their institution's futures, and those of their customers, via liar loans and all the other paraphernalia of banking control fraud, in order to make short-term gains for themselves. They won the competition, (indeed were forced to those practices by competition itself), leaving the rest of us holding the bag. In response, we need (and have not really gotten) better regulation to block such harms, but more deeply, we need to look at the whole competitive culture.

A similar dynamic is short-changing our longer-term future, where short-term gains in using fossil fuels are funding an enormous political / propaganda effort to minimize / deny climate heating and forestall any public policy to address it. We need a little less competition as the metric of all value, and a little more reflection, compassion, foresight, and judgement.

Putting this in investment terms, there is always a balance between public investment and private investment. An advanced economy always needs some of each- streets to drive on, and cars to drive in. No economy can run without a large array of public goods. We have been under-investing in public goods for a very long time, not only in the critically important area of future climate change, but in the totally here-and-now issues of bridges, education, and perhaps most of all in our political system which provides all these goods, keeping it safe from corruption and capture by the most amoral (and highly competitive!) minority elements of society.

Basically, the whole tenor of competition in the US is vastly overdone. Other cultures (Scandinavia) work extremely well with a much lower level of competitive vainglory and economic elitism, not to mention its concomitant existential destruction of the underclass. And in large part, they do this through redistribution, since what the 1% gather is far from just deserts. It is the product of luck, of public investment, of the work of others, of unanticipated aspects of institutional settings, rent, plus, at times, talent. And where did this talent come from? Even that is only partly their own responsibility, having been largely conferred by birth. We all built it. Collectively, we want everyone's talent to be nurtured and expressed, but isn't the prospect of having a great and fulfilling job or life's work a sufficient spur to develop one's talents? What more does money provide in life satisfaction? And what happens when the flagrant reward of a few people's talents retards everyone else's chances to develop theirs?

Converse examples come from regions like the Middle East and Africa. Where is no shortage of competition, yet for some reason, progress is limited, if not retrogressive. Is it possible that competition is not enough, and that for progress to occur, that competition needs to be heavily channeled and regulated by both strong states with explicit laws, and by implicit cultural practices and norms that favor creation and service over destruction? (For comparison, consider the extended debates on governance that took place in the pre-revolutionary American Colonies.) Looking at the Middle East in particular, Islam has a special problem with violence. It is outstanding at fostering (small) institutions of worship and charity. But it is miserable at fostering instutitions of governance, and through its doctrine of jihad encourages destruction, at least by some readings, particularly those that take its earliest scriptures and history most seriously.

• A WSJ author gives some numbers on what full redistribution would look like. "To recap: Current federal tax-and-spending policies combine to redistribute $1.5 trillion each year from the top 40% of Americans to the bottom 60%. To close the income gap to zero would require $4 trillion. The questions to those who say we should do more to narrow the income gap are: Where on that continuum should we aim, and what policies would achieve these goals without bringing the economy to its knees?"
• Tax havens are bad.
• Netherlands is the Delaware/Cayman Islands of the EU.
• Conventional lunacy ... central bankers plead for interest rate increases.
• The invisible hand needs visible public works.
• Leadership means building cooperation.
• Sociopaths in the 1%- rule or exception? Are companies themselves sociopathic (i.e. amoral) by definition?
• Competition for thee, but not for me.
• Iraqis have been misgoverned for some time.

For Whom Shall the Robots Work?

When robots do everything, will we have work? Will we have income? A review of Martin Ford's "Rise of the Robots".

No one knows when it is coming, but eventually, machines will do everything we regard as work. Already some very advanced activities like driving cars and translating languages are done by machine, sometimes quite well. Manufacturing is increasingly automated, and computers have been coming for white collar jobs as well. Indeed, by Martin Ford's telling, technological displacement has already had a dramatic effect on the US labor market, slowing job growth, concentrating economic power in a few relatively small high-tech companies, and de-skilling many other jobs. His book is about the future, when artificial intelligence becomes realistic, and machines can do it all.

Leaving aside the question of whether we will be able to control these armies of robots once they reach AI, sentience, the singularity ... whatever one wishes to call it, a more immediate question is how the economic system should be (re-)organized. Up till now, humans have had to earn their bread by the sweat of their brow. No economic system has successfully decoupled effort in work (or predation / warfare / ideological parasitism) from income and sustainance. The communists tried, and what a hell that turned out to be. But Marx may only have been premature, not wrong, in predicting that the capitalist system would eventually lead to both incredible prosperity and incredible concentration of wealth.

Ford offers an interesting aside about capitalism, (and he should know, having run a software company), that capitalists hate employees. For all the HR happy talk and team this and relationship that, every employee is an enormous cost drain. Salary is just the start- there are benefits, office space, liability for all sorts of personal problems, and the unpredictability of their quitting and taking all their training and knowledge with them. They are hateful, and tolerated only because, and insofar as, they are absolutely necessary.

At any rate, the incentives, whether personal or cooly economic, are clear. And the trends in wealth and income are likewise clear, that employment is more precarious and less well paid (at the median), while income and wealth have concentrated strongly upward, due to all sorts of reasons, including rightward politics, off-shoring, and dramatic technological invasion of many forms of work. (Indeed, off-shoring is but a prelude to automation, for the typical low-skill form of work.) There is little doubt that, left to its own devices(!), our capitalist system will become ever more concentrated, with fewer companies running more technology and fewer employees to produce everything we need.

What happens then? The macroeconomic problem is that if everyone is unemployed, no one (except the 0.00001%) will be able to buy anything. While the provision of all our necessities by way of hopefully docile machines is not a bad thing, indeed the fulfillment of a much-imagined dream of humanity, some technical problems do arise; of which we can already see the glimmerings in our current society. Without the mass production lines and other requirements for armies of labor that democratized the US economy in the mid-20th century, we may be heading in the direction, not only of Thomas Piketty's relatively wealth-heavy unequal society of financial capital, but towards a degree of concentration we have not seen lately outside of the most fabulous African kleptocracies.

What we need is a fundamental rethinking of the connection between income and work, and the role of capital and capitalists. The real wealth of our society is an ever-accumulating inheritance of technology and knowledge that was built in common by many people. Whether some clever entrepreneur can leverage that inheritance into a ripping business model while employing virtually no actual humans should not entirely dictate the distribution of wealth. As Ford puts it:

"Today's computer technology exists in some measure because millions of middle-class taxpayers supported federal funding for basic research in the decades following World War II. We can be reasonably certain that those taxpayers offered their support in the expectation that the fruits of that research would create a more prosperous future for their children and grandchildren. Yet, the trends we looked at in the last chapter suggest we are headed toward a very different outcome. Beyond the basic moral question of whether a tiny elite should be able to, in effect, capture ownership of society's accumulated technological capital, there are also practical issues regarding the overall health of an economy in which income inequality becomes too extreme."

As a solution, Ford suggests the provision of a basic income for all citizens. This would start very minimally, at perhaps $10,000 per year, and perhaps be raised as the policy develops and the available wealth increase. He states that this could be funded relatively easily from existing poverty programs, and would at a stroke eliminate poverty. It is a very libertarian idea, beloved by Milton Freidman, (in the form of negative income tax), and also emphasizes freedom for all citizens to do as they like with this money. Ford also beings up the quite basic principle that in a new, capital-intensive regime, we should be prepared to tax labor less and tax capital more. But he makes no specific suggestions in this direction ... one gets the impression that it cuts a little too close to home.

This is the part of the book where I part company, for several reasons. Firstly, I think work is a fundamental human good and even right. It is important for us to have larger purposes and organize ourselves corporately (in a broad sense) to carry them out. It is also highly beneficial for people to be paid for positive contributions they make to society. In contrast, the pathology surrounding lives spent on unearned public support are well-known. Secondly, the decline of employment in the capitalist economy has the perverse effect of weakening the labor market and dis-empowering workers, who must scramble for the fewer remaining jobs, accepting lower pay and worse conditions. Setting up a new system to compete at a frankly miserable sub-poverty level does little to correct this dynamic. Thirdly, I think there is plenty of work to be done, even if robots do everything we dislike doing. The scope for non-profit work, for environmental beautification, for social betterment, elder care, education, and entertainment is simply infinite. The only question is whether we can devise a social mechanism to carry it out.

This leads to the concept of a job guarantee. The government would provide paying work to anyone willing to participate in socially beneficial tasks. These would be real, well-paying jobs, geared to pay less than private market rates, (or whatever we deem appropriate as the floor for a middle class existence), but quite a bit more than basic support levels for those who do not work at all. Under this mechanism, basic income is not wasted on those who have better paying jobs. Nor are the truly needy left to fend for themselves on sub-poverty incomes and no other programs of practical support. While the private market pays for any kind of profitable work no matter how socially negative, guaranteed jobs would be collectively devised to have a positive social impact- that would be their only rationale. And most importantly, they would harness and cultivate the human work ethic towards social goals, which I think is a more socially and spiritually sustainable economic system, in a post industrial, even post-work, age.

The problem with a job guarantee, obviously, is the opportunity for corruption and mismanagement, when the market discipline is lifted in favor of state-based decision making. Communist states have not provided the best track record of public interest employment, though there have been bright spots. In the US, a vast sub-economy of nonprofit enterprises and volunteering organizations provides one basis of hope and perhaps a mechanism of expansion. The government could take a set of new taxes on wealth, high incomes, fossil fuels, and financial transactions, and distribute such funds to public interest non-profit organizations, including ones that operate internationally. It is a sector of our economy that merits growth and has the organizational capacity to absorb both money and workers that are otherwise slack.

Additionally, of course, many wholly public projects deserve resources, from infrastructure to health care to combatting climate change. We have enormous public good needs that are going unaddressed. The governmental sector has shown good management in many instances, such as in the research sector, medicare, and social security. Competitive grant systems are a model of efficient resource allocation, and could put some of the resources of a full job guarantee to good use, perhaps using layperson as well as expert review panels. Improving public management is itself a field for development as part of the expanded public sector that a job guarantee would create.

In an interesting digression, Ford remarks on the curious case of Japan. Japan has undergone a demographic shift to an aged society. It has been predicted that the number of jobs in health care and elder care would boom, and that the society would have to import workers to do all the work. But that hasn't happened. In fact, Japan has been in a decades-long deflationary recession featuring, if anything, under-employment as the rule, exemplified by "freeters" who stay at home with their parents far into adulthood. What happened? It is another Keynesian parable, since the elderly are poor consumers. For all the needs that one could imagine, few of them materialize because the income of the elderly, and their propensity to spend, are both low.

The labor participation rate in the US.

Our deflationary decade, with declining labor participation rates, indicates that we are heading in the same direction. We need to find a way to both mitigate the phenomenal concentration of wealth that is destroying our political system and economy, and to create a mechanism that puts money into the hands of a sustainable middle class- one that does not rely on the diminishing capitalist notions of employment and continue down the road of techno-feudalism, but which enhances our lives individually and collectively.

• For instance, we can afford a post office.
• Poverty is permanently damaging.
• Welfare and public goods feed economic growth.
• Do we have a perpetual savings glut?
• Bill Mitchell on labor-capital relations. Such as they are.
• Panopticon and the modern office.
• Bernanke: I was pwned. Krugman: ... and anyway, the deficits were more important than the Fed bailouts.
• We are, typically, fools.
• ... to believe that CEO pay relates to performance.
• Bill Mitchell on why banks are pushing for higher interest rates. Hint: it is not to help the rest of us.
• Further map of Taliban control in Afghanistan. The long-term institutional failure of short-term engagement.

Hunting the Muse

Review of "This is Your Brain on Music", by Daniel Levitin.

Music is an odd intersection of math, science, and emotion. The notes are starky digital, as laid out in their logarithmic sequence on a keyboard, or on other instruments. Our hearing of them is likewise mapped with pitch-precision up the windings of the cochlea. But once in the brain, all hell breaks loose, as we map a linear sound input into many dimensions, from source location, source identification, speech interpretation, and emotional understanding. It becomes a rich sound-scape.

Dan Levitin's book is subtitled: "The science of a human obsession." He is clearly obsessed himself, going into an academic study of sound cognition after a lengthy career as a music producer. And he writes an excellent story about what is currently known about music in a scientific sense, along with a very effective primer in music theory. But one question still, in my mind, eluded him, which is perhaps the most basic- why does music carry such a strong emotional impact?

Scholars of music make a great deal out of a theory of expectations- how musicians play with our expectations in all aspects of music- rhythm, pitch, timbre, etc., to retain our interest, tell stories, move our bodies, paint a picture in soundscapes. This is an important area of work, but I think leaves out some very basic aspects of musical communication. What is the difference between a major chord and a blues chord? Just one note, but it makes a vast and instant difference in feeling. I think a major question in music theory has to be.. what is that difference? Cultural and personal expectations may have a role, but the effect is so immediate that I think something deeper is going on.

While Levitin's book mentions to the use of music and sound by other animals, it still seems to suffer a bit from species-ism, the idea that human music is of a different kind than that of other organisms like a bird's song or a whale's call. He argues against the extreme theory of Steven Pinker's, that music is "cheesecake" in the sense of being an intense, possibly even dangerous, derivative of some other, perhaps vestigial, evolutionary function (that function being language, which Pinker studies!). Levitin points out that rock stars have the kind of reproductive success, at least in potential terms, to put that theory to the lie in short order. Music is not vestigial at all.

But he does not seem to go the rest of the way, which would be to plumb the depths of the emotional code that music in the wide sense has been for animals from a rather early stage. While mammals have brought hearing to the highest possible pitch (sorry!), as exemplified by bats and dolphins, even insects involve song in the most momentous and doubtless emotional aspects of their lives. Who hasn't heard crickets chirping, or cicadas singing, or fruit flies courting? It may not sound like much to us, but to them it is the way to fulfill their most cherished hope, the fulfillment of which must stir whatever emotion they are capable of. And while anthropomorphization has its dangers, it seems fair to me to understand emotion as a virtually universal system of evaluation and expression of needs, little different in less complicated species than in ourselves. After all, the youngest human infant has towering emotions, despite virtually non-existent cognition. We should not confuse richness with intensity.

And it isn't just love. Hearing the Blue Jays and Hummingbirds fight it out in the yard, with terroristic screeches, shows that a wide-spread tone-language covers the emotional gamut. Human music is clearly a refinement and elaboration, and perhaps this is what Steven Pinker had in mind with his cheesecake analogy, but the underlying tonal language is not confined to humans at all. It also clearly preceeds all kinds of explicit language, even though birds are known to have small languages as well. Think of cats purring, and mice chirping in their ultrasonic language, to their pups and to others. Such sounds express strong pleasure, just as our music can.

That lays the groundwork of the universality of sound communication and music-type communication particularly. From there is a small step to recognize that, given the physics of sound, that assonance and dissonance form natural poles of emotional tone language. Blue Jays use dissonance to scare competitors, cats use assonance to express pleasure. Crickets chirp in tune and in rhythm, because that is attractive to female crickets. The assonance/dissonance spectrum seems to have been encoded into emotion very deeply in evolution, sort of like the flavors of sweet and bitter foods, or the attractiveness of pure colors, which are so strikingly encoded on the plumage of birds, versus the drab comouflage at the other extreme. (Or on chameleons.)

The language of chords, then, is rather analogous to that of color mixtures, where shades of dissonance enter as more complex mixtures are made. Why does that mixing evoke particular emotions, and more importantly, why do we value these complex mixtures, over the pure, major chord tones? We seem, in common with whales, mice, and other complex creatures, to need to share our emotional states, which are rarely simple. Sharing emotion creates social coordination and bonding, essential to social species, which we all are. The importance of song in courting is the premier example, of course. James Brown eloquently expressed the virtigenous rollercoaster of pain and pleasure in love, and communicating it to potential partners gives them important messages about how much they are loved and needed, creating the basis of long-term cooperation.

Emotions are complicated, and while we have many modes for communicating them, from smell, to touch, to visual cues / badges, movements and gestures, and among humans now even explicit language, music has evidently been a pre-eminent mode for complex animals. It is there that we can find the reason why Dmaj7 is different from Dmaj5 or an octave. This is not a mechanistic explanation- brain scientists such as Levitin are busy figuring out how the connections among perception and emotion happen in the brain. But we know that it happens and wonder, more crucially, about its evolutionary rationale. And that rationle, to paint it in extremely glib fashion, is to provide animals, humans included, a mode of emotional communication of exquisite expressiveness and sensitivity, which is open to anyone who hums a tune or coos to a child. It is closely related to language, which is typically strongly musical in part or whole, but is far more deeply and directly emotional.

Indeed, Levitin makes an interesting contrast late in the book between people with the genetic disorders autism and Williams syndrome. The former are emotionally impaired and generally perplexed by music, while the latter are notoriously musically gifted and highly social & verbal. Those with Williams syndrome can read emotions well, as they can music- the languages seem closely related on this genetic level as well.

• Why so crazy? Russell Banks brings up the obvious racism of our Republican party. Also Krugman.
• Prices per plate are going up ... how is this a democracy?
• Murder and the corporation.
• All the Republican tax plans are now out. Enough said.
• The airline industry is no longer competitive.
• The impact of low-skill immigration: "The absolute wage of high school dropouts in Miami dropped dramatically, as did the wage of high school dropouts relative to that of either high school graduates or college graduates."
• Justified gun use in self-defense is rare. And gun control (aka gun-grabbing, for all you Freudians) works.
• Image of the week ... the Taliban control maybe 1/4 of Afghanistan.

Who's Driving This Wreck?

How do you find the mutations in a messy cancer sample that actually drove the cancer to exist?

Cancer is a little like a car wreck. A mechanical defect or two may cause an accident, which then causes a lot of other damage to the vehicle and to others. How does the investigator figure out what was the first thing to go wrong? In cancer cells, an accumulation of mutations is part of the mechanism by which a cell escapes normal growth controls and becomes cancerous. Unleashing a slew of mutations makes it much more likely that the cell will find (and naturally select) the two or five more mutations that allow it to transition from pre-cancerous to malignant.

But along with those causal "driver" mutations, the unleashing process usually causes hundreds or thousands of innocent "passenger" mutations, even deleterious ones that kill off some of the cancer cell descendents. Taken as a whole, the mutations are all grist for the selective mill. But for the growing practice of precision medicine, these extra mutations muddy the waters persented by the DNA sequence of a tumor sample. Modern cancer drugs are only helpful when directed against the mutant proteins that caused the cancer, and continue driving its growth.

Sure, there are a few usual suspects to round up; p53, BRCA1, 2, and others. But that is only guessing. A couple of recent papers tried to look more systematically through large sets of tumor sequences to find driver mutations, one using a popularity measure, and the other using a pathway effects measure. Unfortunately, these methods are not applied or applicable to single tumor samples, which is to say the clinical setting, but rather are academically oriented to the hunt for more genes and gene mutations to put into the hopper of possible cancer mutations that can then later be applied to clinical cases.

Simple statistics can tell you to a first approximation which mutations are more common in tumor samples than in control samples. For common mutations, like those in p53 gene, this is fine. But this method has a hard time finding uncommon cancer-causing mutations, which, though individually uncommon, are in sum a large and important class. This quest is of interest both for clinical use in compiling a complete catalog of possible driver  for prognosis and treatment, and also academically as a hunt to find new genes that have roles in causing cancer.

A recent paper takes a step towards super-charging this search by combining DNA mutation data with RNA expression data. The idea is to ask the tumor cells which pathways are particularly active or deranged from a gene expression standpoint, (and associated with cell growth and tumorigenesis), which then helps tremendously in focusing on genes that participate in those pathways as candidate tumor drivers. These would necessarily be a small fraction of the 22,000- odd genes in the whole genome.

Here is where biology starts to look a little like electrical engineering. The first step of the study is to create pathways out of the gene expression data that was drawn from their tumor samples and from other cells. Pathways are circuit diagrams of what gene regulates what other gene, in cascades of control that function everywhere in biology, especially in development, homeostasis, and environmental response, and which go haywire in cancer.

Conceptual molecular pathways that might be relevant to cancer. Misregulation of/by any gene can be detected by reading out the altered expression of targets at the bottom.

Specific example pathway, cartooning interrelations among some of the greatest hits (common driver genes mutated) in cancer biology.

An example pathway is labelled as cellular component organization, shown above. Genes like RB1, TP53, BRCA2, MYC are all well-known regulators involved in cancer. The point here is not that common cancer genes show up in such networks, but that elucidating a regulatory network should bring up all the actors in a process, including other lesser-known genes that might also play a role. Mutations in those genes are the target of this work that seeks to create a more complete catalog of known relevant genes and mutations in them that contribute to cancer. But ultimately, everything is connected with everything else, so a lot depends on how one calculates these networks. The authors seem to be relatively conservative in their scope, and cross-check their networks with those from a commercial source, Ingenuity, with which they largely agree. They also validated their final results, in terms of cancer genes and their driver mutations, using the same commercial source, rather than going into the lab to test another large batch of tumor samples, for instance, or generating transgenic mice or cell lines to evaluate the effect of each mutation.

Incidentally, even if the full set of cancer genes is known, identifying a relevant mutation, for cases like that of AURKA whose overexpression contributes to cancer, can be extremely difficult, since overexpression can be due to point mutations many thousands of bases away from the gene, in regulatory regions which are not well mapped or understood anyway. The researchers are interested, however, in simple correlation, taking many tumor samples and asking which mutations are correlated with the changes in pathway perturbation that are seen in the gene expression data. That simplifes the search somewhat.

Getting the data required for this combined analysis is not easy, yet technical advances make it possible. And the result is evidently quite powerful. The researchers claim many orders of magnitude improvement in (apparent) driver mutation detection, compared with prior algorithms, and compared with any algorithm run without pre-grouping the candidate genes by this empirical pathway-based method. Unfortunately, neither the text nor figures are very clear on this point, so I have to leave the data discussion there.

It is critically important to generate increasingly comprehensive models of cancer as part of mastering molecular biology in general. Each of our three billion DNA nucleotides is doing something, some much more than others. We have only cartoon pictures so far of a smattering of our molecular circuitry. Thankfully, nature is not coming up the new models every year, but understanding the current model of human, and the molecular accidents that befall it, is an enormous task that will keep us occupied for decades.

• Inequality, economic sclerosis, and rent.
• Rent in wage negotiations, by way of artificial austerity.
• There is no sign that the Fed should be raising rates.
• And why do bankers want higher rates anyway?
• Ben Carson ... expertise in one area does not confer authority in all. Each case has to be made on its own terms.
• The animated empire of Walt Disney.
• Does the medical market work? Not for consumers.
• Dune ... on the Afghan-Pakistani border.
• Cringely on the cyber-arms race. All is lost.

The Federal Budget Should Never Balance

Honest ... the deficits are OK. The sovereign government has a critical role in economic stabilization and prosperity.

The household analogy is a very durable one: the idea that, since taxpayers and households need to balance their budgets, that the government should as well. Politicians across the spectrum enunciate this mantra / analogy as though it were self-evident. The irony is that although liberal politicians may speak such lines with less formal conviction, it is Republican office-holders who have shown time and again over recent decades the most willingness to throw such balance out the window, in pursuit of tax cuts, with their ensuing deficits. Nothing personal, of course, just class war as usual!

The recent British debacle of liberalism kowtowing to a Tory narrative of austerity and budget-cutting is one more example of the false consciousness that is damaging particularly to liberalism, but also to everyone else who participates in modern economies. Because, in truth, the federal budget should never balance. Its imbalance is the most powerful tool we have to keep the economy stable and growing.

For households, and for dependent government entities like cities and states, the budget constraint is absolute ... there is no free money, and no use to a deficit. They may have capital accounts, with bonded debt for capital needs, like houses and roads. But every such debt has to be paid off eventually. Banks occupy a special place in this system, since they can create money, via the loans they fund. But every cent of these deposits (though not the interest ... where does that come from?) is matched by the loan note on the bank's books. Banks also have a zero-sum balance sheet.

A federal government with a sovereign, floating currency is an entirely different beast. It is the entity that creates the (high-powered) money that everyone else uses. It is not constrained by a zero-sum balance sheet. Therefore the propaganda of a federal government "running out of money" or being broke, or having to live within its means ... are all meaningless. The federal treasury (in combination with the central bank) can spend money at will on whatever it likes. The idea that it has to issue bonds to "fund" spending not matched by tax receipts (i.e. deficits) is an economic fiction. Such policies are legal fossils from another age, where money was not printed by fiat, but was backed by gold / silver. The fact of the matter is that federal spending provides the money to those who buy such bonds, and the bonds do little but replace one form of low-risk saving with another, rather than altering the buyer's behavior, affecting inflation, etc. Plus give a stream of income to the wealthy.

But obviously, there is a constraint on federal spending and money creation. That is the overall level of economic growth and monetary inflation. Since the government is free to create money, it assumes the risk of fostering inflation and the responsibility to manage monetary growth to keep pace with the various forms of economic growth: population growth, productivity growth, and trade deficits, if any. Additionally, economics has found that modest inflation, on the order of 2%, is beneficial to encourage productive investment over inert savings (such as gold). Add all these categories of monetary growth together, and you get a virtually constant need for federal deficits. This is why, as a matter of fact, we in the US do have perpetual deficits, why making the federal budget go into surplus creates highly unstable economic conditions, and why politicians seeking to balance the federal budget are charlatans.

Taxation is part of this scheme as well, of course. While deficits may be required in perpetuity, they are not typically enough on their own to fund the whole government. Additionally, the central role of the fiat currency has to be established at the outset. Taxation fills both roles, creating a need for the "legal tender for all debts, public and private" which is demanded by the government for taxes, and which it uses to commandeer a large share of the private economy, above and beyond the annual growth it funds with new money.

So much for normal economic times and methods. It is in crisis when the powers of the federal monetary system become most important and evident. Where in the old gold standard days, a government could do nothing during the frequent business collapses, busts, depressions, etc., a modern federal government can spend exactly as much as is needed to make up for the evaporation of bank credit and the money that bank credit represents. The government can resolve deflation in a matter of a few pen strokes. Properly handled, there is no need for economic slowdown or unemployment at all, since the full gap of private credit-based money (which characterizes a depression) can be made up as needed by federal spending of new money.

Note, however, that such a gap can not be made up by the central bank alone. As currently constituted, central banks can lower short-term interest rates and can lower long-term rates by way of "quantitative easing", but they can not inject money directly into the economy. If banks do not want to lend, or borrowers do not want to borrow, no interest rate is going to induce them to do so. And they will be particularly shy of lending after having just lost their shirts in a credit-destroying debacle. Thus it is critical for the rest of the government to not sit on its hands, but spend as needed to cover the monetary shortfall created by declining economic conditions, or a credit crisis in the private banking system.

Of course, it isn't all spending and free money. When boom times come, (as measured by very low unemployment and rising inflation), the federal government needs to have the discipline to take away the punch bowl, using its tools of fiscal retrenchment, taxation, and higher interest rates to restrict inflation. Past governments have shown some laxity in this department, as is tempting and unfortunate. We spent the seventies perplexed by the connection between high government spending and inflation, before Paul Volker pulled the plug with a high interest rate-induced recession. But the fact is that the current atmosphere permeating central banking and conservative politics is far too scared of inflation, fighting a war that was won decades ago. The focus on austerity and budget constraints is not really about inflation anymore, but about keeping workers powerless and underpaid in a perpetually under-performing and under-employing economy.

Tom Tomorrow, on markets.

• For more on MMT & Keynesian economics, see a blog by Bill Mitchell.
• Brad Delong on Fed structure, mandate, and policy.
• Surowiecky on Stieglitz and inequality. 
• Krugman/Thoma on Keynesian policy.
• Robert Schiller on the idiocy of conservative economics: "But adhering to an approach that overlooks these factors is akin to doing away with fire departments, on the grounds that without them people would be more careful – and so there would then be no fires."
• Why do governments love banks so much?
• The bureaucrats knew a thing or two about Vietnam.
• What lack of competition and regulation is costing us in internet service.
• Buying the feudal political system you want ...
•  ... Leads to weakness in the Western (and antipodean) political class.
• The curse of year-around plenty in the tropics.
• Is complexity in scientific data opening the door to obfuscation and worse?
• Economic graph of the week ... median income: