Sunday, May 19, 2013

The boundaries of Neurology


Andrew D Atkin

What neurologists can't see:

Science is based on what can be observed and measured. The problem with neuroscience today is that it can't see and measure far enough. More specifically, not far enough to show us the relationship between mental information (the data) and neurological processes.

This needs to be clear: Let's say I placed you in a chair, and then hooked you up to an EEG machine to examine your brainwaves, and in response to a stimulant to be introduced later. As the stimulant, I shoot your spouse dead in front of you. From here, your brainwaves would function differently as shown on the EEG scan, as a result of the trauma.

So the changes we see in your brains activity would be a response to information: The raw information from seeing your spouse killed goes to your visual and acoustic centers, and then the meaning of the event is understood and processed emotionally, which translates to trauma, which in turn drives a neurobiological response in your brain.

So this is what I mean by information driving neurological processes. Though the relationship is obviously real, from a clinical perspective it is invisible. We can't, from an external viewpoint, see the information - we can only see the brain's reaction to it.

The only person who can "see" information is the subject themselves. So we need the subject to tell the neurologist: "Hey, the reason why your EEG scan went crazy is because I just watched my wife get killed".

Now here comes the interesting bit. In practice, if I blew your wife's brains out, the trauma might be so severe that your brain totally gates the event from your conscious mind. So, the information driving your brains reaction is not just invisible to the neurologist (who can only see what's going on within his scans) it is invisible to you as well.

From here on in, your brains hyper-inflated amygdala, panic attacks, chemical imbalances, depression and post-traumatic stress-disorder, etc, become a great mystery to both the neurologist and yourself. You don't know where your symptoms are coming from and neither does he.

And from here, you and your neurologist make what might be a great (though understandable) mistake. You both assume that the problem is with your brain itself, and not the unconscious information driving it.

The nature of trauma:

But then in comes empirical research, kindly provided by those who observe and quantify human behaviour (at its surface). They notice a striking correlation between childhood trauma and later mental disturbance. So we know from this research that information really does damage the brain, or at least damages the way it functions.

That's all very well, but there's still a problem with our lack of understanding leading to false, or possibly false, assumptions. There are basically two assumptions:

One idea is that trauma hits the brain like a missile hits a ship. The trauma hits, does its damage, but once the trauma has happened it has nonetheless been and gone. You have the breakage but the traumatic event, in itself, is gone.

Ok, now if it really did work like that then the current focus of neurologists would be about right. They see a broken brain on their EEG's and MRI's, and so their focus is to try and fix the brain. They try to 'plug the holes' with either drugs or surgery, to correct the imbalances that they see.

But this approach is riding on an assumption that is ultimately questionable. It's especially questionable considering that interventions based on this "broken ship" assumption have been delivering mixed results at best. Enduring drug dependency (with harsh side-effects) is hardly a cure, and this is what the mental health industry has been largely resorting to.

Now the other assumption relates to trauma-imprint theory. The idea is that the trauma is not a been-and-gone reality, like a missile strike, and the brain is not broken as such, but that the observed distortions within the brain are actually a normal reaction to an abnormal input. So the trauma, as it occurs, becomes imprinted information that later acts as an enduring (albeit unconscious) force on the brain. So the 'event' of the trauma is there...doing its damage from the unconscious, where it has been internalised and repressed.

In turn, the focus of those who sign-up to trauma-imprint theory has been to remove the traumatic imprint itself. They claim that if you do this, the imbalances within the brain will take care of themselves. Think of a good loudspeaker producing a distorted sound due to a bad electrical input. Don't touch the speaker - get to the input.

Dr Arthur Janov, who has been the central leader in the development of trauma-based therapy, claims to have had success with this approach for over 40 years. Though Janov has induced notable opposition from competitors, his work, or more importantly his theory, have yet to be discredited.

Conclusion:

Regardless of who is right or wrong, what we can see is a theoretical black hole. I don't ask neurologists to sign up to trauma-imprint theory (which is not, I believe, the current assumption they operate on) but I do ask them to respect it as a substantial possibility. Because the truth is we don't and can't yet know which theory is correct (from a strictly objective measure), because our tools simply can't penetrate that far to tell us, today.

No-one can argue that information is not a real force on the brain. It is. What we need to do is clarify the nature of that force, or at least clarify our assumptions and likewise what we do and do not know about it.

The relationship between information and the brain, especially traumatic information, should be a hot topic for study in the world of brain science. I do respect that this is a difficult territory to navigate, due to its nature. We will need to see a close marriage between theoretical thinking and clinical observation, because this is how we penetrate past what is directly observable. We should not accept direct observations leading to only cheap and undisciplined assumptions.

Note: Though I have a lot of confidence in trauma-imprint theory and for many reasons, in this piece I am writing with respect to what I can and cannot prove. My argument is for neurologists to investigate trauma-imprint theory. Or more specifically, the impact of unconscious information on the brain. At the very least, this focus can be respected as credible and important.

Monday, May 13, 2013

New Zealand: Short and Long term threats to the value of your home

Andrew D Atkin.



If you're thinking of buying a home as an investment nest-egg, then you might want to consider the following.

Firstly, please don't ever believe the myth that property prices can't fall. I don't know who invented that idea, but it's nonsense. They can and do fall. Your house is a product like any other, and it's answerable to the central question like any other: What else can my buyer get for his money? 

If your buyer can do much better for themselves with a deal down the road, then the sale-value of your home will have to answer to the fact of it. Of course you can't sell your house for $400,000 when the buyer can build a new and better house a couple of hundred meters down the road, and for half that money.

And that is the crux of the issue: What, in the future, will your buyer be able to get for his money? What are the short and long-term threats to the value of your home?

1. The removal of artificial new-build costs:

Already, existing house values in New Zealand are terribly insecure. This is because they're based on scarcity values via the artificial restriction of land supply. "Artificial" is the word to concern you, because any cost artificially imposed can also be easily removed.

Local councils need new revenue to keep their bloated bureaucracies afloat, for when their costs get out of control (as seems to be the case in much of New Zealand). But because major rate increases are politically difficult, councils can and do achieve new revenue by restricting land supply with Metropolitan Urban Limits (MUL).

MUL's serve to drive up the cost of land to the point where housing inflates to the maximum of what the market can afford. The council then invents new fees (taxes, really) to cream much of that inflated land value from the new-builds for themselves, which is of course the idea. Though they generally hide the taxation motive behind anti-sprawl mantra, of which has long been a demonstrated nonsense.

But how long can this go on? When will the public penny drop, considering the long-demonstrated effects of housing unaffordability of which have been socially and economically devastating?

In New Zealand the game is starting to crack, and the national government is already threatening to override Auckland council so as to "demolish" their MUL's.

Ok. But how serious is the intent our national government? How much of this is show rather than conviction? And to what degree will they do such a thing? This is ultimately unknown because the cause-to-effect of property-policy spans the political term, but the fact is that the market value of your home would collapse to about half its value of today, from the removal of MUL's alone.

19-5-13: A recent talk from the NZ deputy Prime Minister, and finance minister, Bill English.

All that has to be done is for our government/s to allow people to build new houses for what they're really worth, like we have done in the past, and it's game-over for New Zealand's radically inflated housing stock. Though it would take a few years, at least, for the supply-response to kick-in as induced by the liberated land supply.

It's important to note that we are ultimately in competition with the Australian property markets as well. The Australian markets are beginning to confront the same problems of affordability that New Zealand has. If Sydney, for example, allows affordable homes to be built on their fringes (which they indeed say they have plans to do) then New Zealand will have no choice but to follow suit to avoid a gale-force exodus from turning into a hurricane, and depressing real New Zealand property values that way (along with the entire national economy).

2. Credit:

If you build a million-dollar mansion in some economically depressed nation in Africa, then it's market value would, maybe, be more like $100,000...because "market value" means "what you can sell it for", and if your market is poor people then you will never be able to sell your mansion for what it cost you to build in the first place.

Hence, your markets access-to-credit is a critical factor. If interest rates go up, or your banks demand high deposit-down on loans, or your local economy becomes economically depressed, then the value of your home will go down with it insofar as house prices are prior-set at the peak of what the market can afford.

The function of access-to-credit in driving house price inflation is mostly only relevant for where sale prices are detached from (real) new-build costs, like they are in New Zealand today. Hence, house prices are particularly vulnerable to changes to interest rates, today, because houses are already set to the maximum of what the market can afford. (See here to understand the principle clearly).

If prices inflate much further from where they are now, it will not be from "real" buyers but from wealthy speculators whose only goal is to ride out the bubble, and then flick off the house at a best-guess projected peak, for a quick buck. And once you have a true bubble market (ie. values based on projected capital gains, not just scarcity values) it's 100% guaranteed that the market will collapse. It's just a matter of time.

My ultimate point, is that excluding the development of a massive (non-scarcity based) housing bubble (which, importantly, our Reserve Bank will fight with higher interest rates. They understand too well the massive damage these bubbles cause), the only way the value of your home can go, from here on in, is down.

The real market doesn't have the money to pay more for houses than what they're already paying today, and I doubt that the banks would give them more. The lending is already very high risk. Again, only rich speculators can drive the price higher from where it is right now, and it's not likely that that will be allowed to happen in practice.

3. Transport technology:

The under-sung transport revolution, right on our doorstep, is driverless cars. They will be with us in 5-10 years or so. The technology has already been successfully demonstrated by Google, and the race is on among car-makers to bring them to market.

They will be a taxi service for the most part, so you will not have to own one (which equates to rapid deployment of the auto-taxi system). And most importantly there will be the option of commuting in very small cars, or even enclosed motorcycles, which can reduce transport costs to about 10% of what they are today, while leaving you with the option of working/eating/sleeping etc, on your commute.

There will also be "micro-cars" about the size of vacuum-cleaners coming along soon, which can deliver any odd item from and to your home...or wherever.

So how will this affect property development, and likewise the value of your home?

It can do it in two key ways. Firstly, many people already escape massively inflated house prices by commuting beyond the MUL's, into distant areas outside the councils regulatory control. (Indeed, there has been an explosion of this kind of  hyper-sprawl in New Zealand). This market basically swaps expensive housing for expensive (very long distance) commuting.

When people can travel long-distance for cheap, and do things in their cars other than drive, then the appeal of MUL "boundary-hopping" will increase further, maybe dramatically, allowing new-builds well beyond the city fringes to compete heavily with housing within a given city, driving down prices further.

In short, driverless car technology can weaken the functional power of the MUL's. The market value of your home will have to answer to that. And believe me reader, in spite of our media's typically weak technology coverage, you can be sure that driverless cars are coming.

The other effect of driverless technology is that it allows for new property developments based on driverless technology. In short, this means silent townships with cheap, discreet roading, and developments heavy with trees and gardens. This is especially the case in New Zealand with its exotic topography and ease of natural growth.

Likewise, the potential for an enhanced lifestyle with new-builds can greatly increase their appeal as a place to live, and again established properties will have to answer to the status of those new-builds in the competition for sales. Speaking personally, I believe that new-builds based on driverless technology could devastate the market value of traditional suburbia, over the long-term. Your $400k home could drop to more like $100k.

4. Telecommunications technology:

Though telecommuting is still a minor player in the professional world, it's growing rapidly nonetheless.

If there is no operational need for an individual to be at work, in person, then over time I think telecommuting can only grow further. With ultra high-speed internet, cheap flat-screen displays (as a second "phone terminal" that shows body language, not just the face), and refinement in the culture and techniques associated with telecommuting, I think telecommuting will become ever more dominant and its growth will probably accelerate.

We also have a robotics revolution coming down the pike (not as close as driverless cars, but it's certainly coming) which will allow even manual labourers to telecommute, via remote-controlled robotics.

Over time, we will see the progressive development of a mixed-working style, where people are based at home yet still come in to work for the odd times when it makes sense. Staff will probably move into telecommuting but only once a relationship has developed with their employer, first. Remote communications are most efficient with people who first "understand" each other.

This telecommuting progression can of course only reinforce the appeal of boundary-hopping past the cities MUL's.

5. Housing construction technology:

In my current view, the cheapest way to build a good home is with concrete and steel reinforced styrofoam.  Basically, make a giant chilli-bin and implant minor reinforcing where required, and only where required. The result can be a huge reduction in materials and labour costs in housing construction. But, of course, this is only one idea and better ideas might be developed further down the line. (3D Printing: Here is an interesting development).

Regardless, the march of technology is endless and there is huge room for development in both materials and construction processes. Big cost-cutting advances can happen relatively quickly, and at any time.

Costs won't be significantly cut from manufacturing advances in 5 years time, but in 10-15+ years the impact could well be dramatic. Also, manufacturing advances will have a lot to do with housing accessories and supporting facilities. I can easily imagine the more efficient production of compost toilets, water catchment, shower systems and ground-based heat pumps, etc, reducing the cost of new-builds, and also their need to be serviced with plumbing, etc.

Advances in housing construction will not reduce house values in the context where land supply is artificially restricted. This is because when there's not enough land to go around, by legal force, reduced construction costs will only subsidise even higher land prices. But, when people can escape costly land via technology or MUL-breaking political pressure, the impact of reduced construction costs will then become an additional driver making new-builds ever more competitive with existing housing stock.

Conclusion:

The value of your home probably won't fall, or fall too drastically, in the short-term - within the next 5 years or so. So don't freak out. But when you look at all the factors, existing and developing, that could impact your homes value in the long term, you can see that you would be mistaken to believe that your home will be some kind of sure financial nest-egg for the future. It won't be. Far too much can and almost certainly will happen over the next 5-30 years or so.

If you're thinking long-term, then you want to think about the things I have talked about, and consider how these dynamics might affect you. From here you can make an intelligent decision on when and if to buy, and whether to sell, etc.

I believe there are 3 key variables you want to watch for, for a long-term focus. Changes in local politics around Metropolitan Urban Limits, movements in the Australian property markets, and the implementation of driverless transport technology. These are the really big game changers.

Personally, I wouldn't touch an Auckland home right now with a 200-foot barge pole. But that's just me. Your situation might be different of course. It would take me about 20+ years to pay off a house, at least, and with unacceptable expense to my current living standard, and huge risk, financial stress, and with probably nothing more to show for at the end of it other than a dingy shack corrected to its real (low...or even near-worthless) value. No thank you. I'll keep on renting and saving - for now.

It's a real shame that I have to donate hundreds every week to a landlord as opposed to acquiring my own asset, and frankly it's corrupt and unfair, but it's a lesser of two evils nonetheless.

Recommendation:

The best place to go to follow the politics behind New Zealand's housing market, is here: Cantabrians UNITE facebook. I promise you, you will not hear what you need to know, as time goes on, from a mainstream media that doesn't (usually) want to upset its property advertisers. Cantabrians UNITE is objective and expert, with informed commentary by Hugh Pavletich. It's focus is intensely anti-housing inflation (and too right), but it will keep you informed regardless.