Here is a link to my 11th column on Quartz: “Why the US Needs Its Own Sovereign Wealth Fund.

Steven Pinker, in The Stuff of Thought, pp. 435, writes:

We can also be diverted from the brightly lit world of reality by the emotions infusing our language. The automatic punch of emotionally laced words can fool us into thinking that the words have magical powers rather than being arbitrary conventions. And the taboos on thinking and speaking that shield our personal relationships from the mutual knowledge that might break their spell can leave us incapacitated as we try to deal with problems at the unprecedented scale of a modern society. Scientific findings that seem to challenge authority or threaten social solidarity, from Copernican astronomy to evolutionary biology, have been shushed as if they were social faux pas, or condemned as if they were personal betrayals. And problems screaming for technical fixes, such as the American Social Security system, remain third rails that would electrocute any politician who touched them. Opponents can frame any solution as “putting a price on the welfare of our elderly citizens” (or our children, or our veterans), activating a taboo mentality that has a place in our dealings with family and friends but not in making policy for a nation of three hundred million people.  

Mind machine interface

In his recent post “Rise of the Cyborgs,” Noah Smith discusses emerging technologies for the integration of human brains with computers. For example, he writes:

If we can store human memories in artificial brain structures, the implications are enormous. First of all, it would vastly expand the knowledge base and expertise of a human knowledge worker; if we could store vastly expanded amounts of knowledge, we would no longer be constrained to specialize in one incredibly narrow field. This might unlock huge innovative potential, as individual humans could do the kind of creative work that now require teams of humans.

If these artificial brain structures can be exchanged between people (a nontrivial task, obviously!), then we get human memory transfer, and the possibilities are even more enormous. Instant education, as expertise is copied and transferred from human to human. Functional immortality, as full sets of memories are transferred to cloned brains. Etc.

The image I get of human memory transfer from this passage is one similar to the downloads we do from the web to our personal computers. I think that kind of technology is actually a long, long way off. I want to argue that an intermediate technology that will be attained much sooner could give us immortality. And considering that intermediate technology will allow me to make an important philosophical point.  

Suppose that at some point in the future, we are

1. technologically unable to directly read the connections in the brain and so cannot directly read someone’s memories,
2. but able to construct brain prostheses that function like the brain structures of infants.  

Now, suppose that Mike receives one of these artificial brain prostheses, and that over time, interactions between the biological part of the brain and this artificial brain prosthesis create connections in the prosthesis and between the prosthesis and the biological part of the brain that reflect many memories and skills. Over time, the prosthesis (which I am assuming has a large capacity) gradually reflects more and more of the knowledge in the rest of the brain. Also, the aging of the biological part of the brain gradually causes it to do less and less, so that for this reason also, the artificial brain prosthesis gradually carries on a larger and larger fraction of all brain activity. For a long period of time Mike has in his cranium a substantial mass of biological brain matter that is doing very little compared to the small mass of the powerful artificial brain prosthesis. At some point, areas of the biological brain matter become diseased (as opposed to just idle) and have to be removed. For a while, Mike has a token amount of biological brain matter left—which is doing essentially nothing.

Then one day, the last bit of biological brain matter needs to be removed. After the operation, the individual wakes up and isn’t different in any important way than the day before, since that bit of biological brain matter wasn’t doing anything on the day before the operation. But after the operation, Mike has a 100% artificial brain. But the identity that artificial brain as Mike is clear. Mike had a brain prosthesis added to a fully biological brain some years back. As the biological part of the brain did less and less, and the artificial brain prosthesis did more and more, the change was so gradual that no one ever doubted that they were talking to Mike. No one even knew on which day the biological bits of the brain ceased to function in any significant way. By the time an operation removes the last bit of biological brain matter, it is only a formality. Mike knows he is Mike. And Mike still has his mind intact.  

In this story, it is the inefficiency of the memory transfer technology that avoids issues of identity. Once the technology improves, the usual problems of identity surrounding mind-clones begin to arise. But the intermediate technology I am envisioning would by then  already have led society to treat artificial brains as real brains.       

Fiske’s taxonomy also accomodates a fourth relationship type [in addition to Communal Sharing, Authority Ranking, and Exchange], which he calls Market Pricing. It embraces the entire apparatus of modern market economies: currency, prices, salaries, benefits, rents, interest, credit, options, derivatives, and so on. The medium of communication is symbolic numerals, mathematical operations, digital accounting and transfers, and the language of formal contracts. Unlike the other three relationship types, Market Pricing is nowhere near as universal. A culture with no written language and with a number system that peters out at “3” cannot handle even the rudiments of Market Pricing. And the logic of the market remains cognitively unnatural as well. People all over the world think that every object has an intrinsic fair price (as opposed to being worth whatever people are willing to pay for it at the time), that middlemen are parasites (despite the service they render in gathering goods from distant places and making them conveniently available to buyers), and that charging interest is immoral (despite the fact that money is more valuable to people at some times than at others).[See Thomas Sowell: Knowledge and Decisions.] These fallacies come naturally to an Exchange mindset in which distributions are fair only when equivalent quantities of stuff change hands. The mental model of face-to-face, tit-for-tat exchanges is ill equipped to handle the abstruse apparatus of a market economy, which makes diverse goods and services fungible among a vast number of people over great distances of time and space. 

As far as I can see, this takes Market Pricing out of the realm of human nature, and there seem to be no naturally developing thoughts or emotions tailored to it.

Most of the popular discussion about tax fairness focuses on how much money people make. But it has always seemed to me that it is when people spend money on themselves that they incur whatever debt to society the principles of taxation ought to imply.

• Suppose first that I made  $10 billion, and gave all but $100,000 of it away to take care of the poor. Should I really be taxed on the $10 billion that I no longer have, but already gave away, or only on the $100,000 that I then actually spend on myself? And with that much of the task of taking care of the poor removed taken off of the shoulders of the government, won’t it have enough money from taxing everyone’s spending to take care of the other necessary tasks of government?
• Next, suppose I save the money. Then it is still indeterminate whether I will eventually spend the money on myself or give it away. Shouldn’t the government wait until it is clear whether I will spend the money or give it away to take care of the poor before the government taxes it?  Here, notice also that in saving the money for later use, I am making resources available for building factories or other places of business, which employ people.  
• Now, suppose I give the money to my children. Then shouldn’t the government wait to see whether the children spend the money on themselves or give it away to take care of the poor before the government taxes it?

The essence of this argument is that it is only at the moment of consumption spending that I appropriate money for myself. Until then, I am only acting as a steward for those resources whose ultimate use has not yet been determined. And if I give money to my children, it is only at the moment of consumption spending that my children actually appropriate money for themselves. 

For the rest of the argument, click through to Steven Landsburg’s essay  “What I Like About Scrooge: In Praise of Misers.” Here is a short excerpt:

If you build a house and refuse to buy a house, the rest of the world is one house richer. If you earn a dollar and refuse to spend a dollar, the rest of the world is one dollar richer—because you produced a dollar’s worth of goods and didn’t consume them.

Postscript. Most of the tricky issues that remain after saying this much fall under the heading of defining “consumption spending.” But I maintain that income is much harder to define than “consumption spending” is.    

There is one more point to be made about aggregate demand. If I am going to spend money on something sooner or later, I am being more helpful to society if I spend the money during a recession than if I spend it during a boom. But it would be even more helpful if during the recession I gave it away to take care of the poor (which would also add to aggregate demand, and alleviate suffering). When the economy is at the natural level of output or above, there is no social value in adding to aggregate demand, since that creates inflationary pressures that need to be counteracted. The benefit to those I employ is balanced out by the harm to those left unemployed because of the measures that will be taken to avoid inflation.  

In “Whose Freedom: The Battle over America’s Most Important Idea,” p. 56, George Lakoff writes: 

But science is about more than mere belief or conjecture. Science is fundamentally a moral enterprise, following the moral imperative to seek truth. Science is fundamentally about freedom, freedom of inquiry into the truth without the bias of initial faith or belief. Within science as an institution, a “scientific theory” is in fact a material explanation of a huge range of data based on experiment and evidence. Within science, it is normal for theories to compete. The basis of competition is clear: amount of evidence, convergence of independent evidence from many areas, coverage of data, crucial experiments, degree and  depth of explanation. The judges of the competition are distinguished scientists who have spent their careers studying the scientific evidence.

In the science of biology, evolution wins the competition, governed by the rules of the scientific method, hands down. There are no other legitimate competitors. Freedom here is freedom of objective inquiry, on the basis of evidence and explanation. Other theories are free to enter the competition, but if they do not follow the rules of the competition, they will be eliminated—fairly and justly.  

As I read in the Wall Street Journal about the failure to come to some agreement to resolve the fiscal cliff, I thought again about these words: 

We can always count on the Americans to do the right thing, after they have exhausted all the other possibilities.

I have often heard these words attributed to Winston Churchill. But a web search for the source took me to the quoteinvestigator.com article on this quotation, which indicates this is a folk quotation. Many people have had a hand in inventing it, but there is no evidence that Winston Churchill participated in that invention. Still, I hope it is true.

For the record, my proposal for dealing with the long-run budget issues that are the heart of the disagreements between Republicans and Democrats is the system of “public contributions” laid out in my post “No Tax Increase Without Recompense.” This public contribution system would help make sure that the poor and afflicted are taken care of while reducing the footprint of the government in society. 

Q: I’m not clear on how electronic money could eliminate inflation. Would you explain this to me? Thanks!

A: Electronic money eliminates the zero lower bound on the nominal interest rate. The reason central banks (Fed, ECB, …) have chosen 2% as their long run inflation target instead of zero is because they are worried about the zero lower bound.

The Twitter version of the answer stimulated some discussion, which you can find storified here. The opening monologue to that discussion is also copied out below:

1. W or w/o depreciating currency, e-money eliminates the zero lower bound…
2. The main reason many central banks (Fed, ECB …) have a long-run inflation target of 2% instead of 0 is b/c they’re worried about the ZLB.
3. So if the zero lower bound is eliminated by electronic money, I predict central banks will choose a long-run inflation target of zero.
4. With electronic money (think reserves, bank accounts, …) as the unit of account, depreciating paper currency makes the ZLB non-binding.
5. Having the same central bank with authority to issue both e-money and currency means the exchange rate between them is fully defensible.
6. So a central bank with the needed legal authority can announce a track for the exchange rate between e-money and paper money.
7. Announcing a track for the e-money/paper money exchange rate that has paper money depreciating gives paper money a rate of return below zero
8. Just choose a rate of depreciation of paper money relative to e-money that makes its ROR less than Fed funds target & interest on reserves.
9. When the Fed funds rate target is positive, paper money can appreciate relative to e-money until it returns to par.
10. If inflation is zero, to be able to continue to return to par, what is needed is for the real interest rate to be positive on average.
11. Or say the health of the banking system required Fed funds rate to be at least 2% above the ROR of currency, avg r > 2% allows return to par