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Sunday, February 25, 2018

Arctic Drilling, Climate Change, and Dependence on Fossil Fuels

My cousin asked me to write a blog post about proposed drilling for oil in the Arctic National Wildlife Refuge.  As part of the Republican-led tax reform bill, Congress recently overturned a decades-old ban on drilling in the area, largely at the insistence of Alaska Senator Lisa Murkowski.  Alaska will share in the leasing and production tax revenues from oil development within the refuge.  ANWR is on Alaska’s North Slope, and covers about 30,000 square miles (a little bigger than Massachusetts, New Hampshire and Vermont combined).  The refuge is coastal plain adjacent to the Arctic Ocean, and mountainous to the south.  Most of the coastal plain was recognized as prospective for oil in the 1970s, and set aside by Congress as “Area 1002” in 1980 for a future decision on drilling.  Area 1002 covers about 2350 square miles (about twice the size of Rhode Island). 
Image Credit: Alaska Department of Natural Resources

Some issues are not simple.  Decisions regarding fossil fuels are that kind of issue.  To make these decisions, we have to look at both sides of the coin.

Fossil-Fuel Dependence
First, let’s consider our use of fossil fuels.  As you are reading this, the computer screen in front of you is made from oil.  The energy powering the computer was probably produced by burning natural gas or coal.  Everything you possess, everything you can touch, every stick of your house is either made from oil or was certainly transported by oil.  Most of the food you eat was produced on farms which use tractors powered by oil to plough and harvest.  You probably use oil to travel to work, and you are certainly supported in life by others who use oil for their daily lives, which enables them to make your clothes, transport your food, build your houses, sell you things, and so on.  If oil suddenly ceased to exist, most of the population on earth would not be able to live.  We are all connected, and together we are dependent on fossil fuels.  If you are breathing, you can thank an oil company.

That’s the status quo. 

Climate Change
The other side of the coin is that continued use of fossil fuels will cause great destruction unless mitigated by some costly and unproven technology.  There is no question that climate change is occurring, is accelerating, and is caused primarily by man-made emissions of CO2.  Forecasts for any scenario without removing CO2 from the atmosphere show an increase of average global temperatures between 3 and 8 degrees Celsius (from 1900).  The mid-range of these forecasts would greatly impair agriculture in the United States, and flood coastal communities and barrier islands within 150 years.  Natural disasters will become more frequent.  Food production from the ocean may fail.  The higher end of these forecasts is likely to render swaths of the planet uninhabitable, due to complete agricultural failure, heat extremes, or flooding.  Countries likely to be affected most are those near +30 and -30 degrees of latitude (due to atmospheric convection cells), including Australia, South Africa, Mexico, the southwest United States, Spain, Italy, Israel, Jordan, Syria, Iran, Iraq, Pakistan, India, Bangladesh and southern China.  It is worth noting the number of nuclear-armed countries on the list, particularly in South Asia.

Heating will continue even if all fossil-fuel use stopped today, because of the compounding effect of CO2 already in the atmosphere.

Renewable Energy Growth Limits
Renewable energy is currently about 3.5% of global energy supply.  
Data Source: BP Statistical Review of World Energy

Globally, renewable energy is growing at a rate of about 14% per year, while overall energy use is rising at 1% per year.  As a purely mathematical exercise, we could completely replace fossil fuels by the year 2044, if renewable energy continued to grow at the rate of 14% per year.
But there are limits to the growth of renewable energy, too.  Starting from a base of 3%, it is fairly easy to construct the next 0.4% of the global energy supply in a single year.  Starting from a base of 50%, it will be very hard to replace 7% of the global energy supply in a single year.  Massive new mines will have to be constructed to supply the rare-earth elements needed for wind turbines and lithium for batteries.  New factories will be needed to construct solar panels. Steel & aluminum will be needed for transmission.  And mostly, a massive amount of money will be needed for capital investment.  As a summary judgment, this cannot happen by mid-century.

We therefore need to research and implement CO2 capture & sequestration technologies or mitigation technologies as soon as possible.

Energy Security
The United States consumes about 20% of the world’s energy, with about 4% of the world’s population.  As this blog has noted before, the use of so much energy is largely responsible for America’s high productivity and wealth, (

American oil production peaked at 10.2 million barrels in 1970, as predicted by M. King Hubbert in 1956.  The development of horizontal drilling & fracking technology made large volumes of unconventional resources economically viable, invalidating Hubbert’s assumptions.  The decline in US production reversed dramatically in 2008 due to shale-oil production.  Shale oil now accounts for 6.5 million barrels per day – about two-thirds of American production, and still growing.  The United States is expected to pass the 1970 peak sometime this year and become the world’s leading oil producer in 2019. 
U.S. oil production has grown from 5 million barrels a day to 10 million barrels a day since 2008 as a result of shale-oil fracking.  Petroleum demand has fallen from near 20 million barrels a day to about 13.5 million barrels a day thanks to greater efficiency in energy usage.  The U.S. still has a supply deficit of about 3.5 million barrels a day.

Nevertheless, economic growth has pushed American oil consumption to over 20 million barrels per day.  The level of our dependence on foreign oil is a little difficult to quantify, because we are importing 10 million barrels of crude oil per day, refining the oil, and re-exporting 6.5 million barrels per day, mostly as refined product.  That leaves us with a net deficit of about 3.5 million barrels per day, most of which can be supplied from Canada, a relatively safe supplier. 

U.S. Oil Imports by Country, 1000s of Barrels per Day
Saudi Arabia
United Kingdom
Bahama Islands
United Arab Emirates
Trinidad and Tobago

Nevertheless, the United States is vulnerable to supply disruptions or embargos in the event of an international crisis or war.  We would no longer be able to supply the buyers of our refined petroleum products, which would cripple our customers’ economy, and by connection, our own. 

 The United States has a strategic oil reserve of about 725 million barrels, but even this reserve would last only 100 to 200 days if all sources of foreign oil were cut off.  In the event of a conflict, military demand would clearly take priority in the use of the strategic reserve.  An extended conflict could leave the country with insufficient oil for the economy, for trade with potential allies, and for military use. 

Where Will You Get Your Oil?
As I noted in the beginning of this post, oil is still necessary for the transportation of all goods, the manufacture of most goods, the raw materials and energy for manufacturing, the production and transportation of food, and the energy and materials for construction.  We can’t yet live without oil. 

Solar and wind renewable energy sources currently account for about 3% of the global energy supply.  Those sources are growing at 14% per year, but even in the most aggressive renewable energy scenarios, the global economy will remain dependent on oil for decades.

Many people object to various sources of oil.  People protest fracking of oil shale.  People protest offshore oil production (which is generally safer than oil transportation by tankers).  People protest the use of oil sands.  People protest Arctic Ocean drilling.  People protest oil pipelines (which are safer than oil transportation by rail). 

Those who protest any particular oil project should answer the question: if not here, where will you get your oil?

Foreign oil production is often conducted less responsibly in terms of the environment than production in America.  There is weaker environmental oversight, more flaring of gas, and more frequent transportation accidents.  Foreign purchases of oil transfer large amounts of wealth to foreign interests who may use that wealth directly against us.  Major exporters of oil include Islamic autocracies, Russia, Venezuela, and other countries who oppose the United States.  These sources may also be subject to an embargo in the event of a conflict.

I’ve been tempted to make a simple game for this question.  The player is asked “Where will you get your oil?” and must choose between options.  It is not possible to leave the game, and necessary to choose sufficient options to meet the country’s economic and security needs.  It would look something like this:
Where Will You Get America's Oil?
All values in millions of barrels per day.  Twenty million barrels per day are required.  “Available” barrels are probably available for use or import.  I assume that no additional barrels are available from conventional fields in the lower 48 onshore, or Gulf of Mexico offshore. The “Current” column represents America’s current oil supply mix.
Conventional Onshore Oil
Offshore Gulf of Mexico Oil
Offshore Florida, California or East Coast
Arctic Oil
Shale Oil Fracking
Canadian Oil Sands
Islamic Country Imports
Russian & former Soviet Imports
South American, Unstable Country Imports
African Imports
European & S. Asian Imports
So, spend a moment and choose where you will get America’s oil.  It is necessary for all of the things that you use in a normal day, and also necessary for all of the people who provide you with things and services.  

Policy Recommendations
I favor drilling in the Arctic National Wildlife Refuge and the (ANWR) National Petroleum Reserve in Alaska (NPRA).  The volumes of oil which might be produced from these areas is uncertain, but they have the potential to add one or two million barrels of oil a day to American production.  This would materially increase the nation’s energy security, reduce the money paid to America’s geopolitical opponents. 

The USGS mean resource estimate for ANWR 1002 area is 7.7 billion barrels of oil. Volumes of gas were not explicitly estimated, but are undoubtedly large.  The mean resource estimate for NPRA is 8.7 million barrels and 25 TCF.  The apparent specificity of the numbers is an illusion.  There is an order-of-magnitude uncertainty in these numbers, but there is strong potential for large volumes of production.

Exploration of ANWR will take more than a decade.  The process will involve the acquisition of seismic images of the subsurface, processing and interpretation of the data, a leasing process to establish the right to drill, exploratory drilling, and design of development & production facilities.  All of these activities will be regulated to minimize impacts on the environment.   Most activities will be conducted only in winter when the ground is deep-frozen, to avoid impact on tundra wetlands. 

I do not favor drilling in the waters of the Arctic Ocean.  An oil spill on land is relatively easy to clean up, compared to an oil spill in Arctic waters. 

Conclusion and Carbon Tax
The decision whether to drill for Arctic oil requires balancing our current dependence on oil with the impending disaster due to climate change, with consideration for whatever alternative sources of oil exist.

Our economic dependence on oil requires that we continue to drill and produce oil at the present time, while we develop renewable energy sources and technologies as quickly as we can.  In my opinion, it is not wise or effective to block individual petroleum projects on a one-off basis.  Every one of us is still dependent on oil, and we are supported in every aspect of our lives by others who are dependent on oil.  Each decision to prohibit an oil development project necessarily is a decision to obtain oil somewhere else.  Often those alternatives are environmentally less responsible, and counter to the security and fundamental of the United States.

I believe a steep carbon tax is the most effective incentive to rapidly develop renewable energy without causing debilitating economic disruption.  I favor a carbon tax rather than cap-and-trade schemes, because of the relative simplicity of a tax system compared to the difficulty of ensuring compliance under cap-and-trade.  But I realize the any measures to control carbon emissions will be difficult, especially in the United States.  A carbon tax will be politically unpalatable and possibly impossible in a democracy.  A carbon tax will also hurt poor people disproportionally.  But if we proceed with Arctic drilling to ensure America’s energy security, it should be accompanied by measures like a carbon tax which will reduce total carbon emissions. 

ANWR resource estimates.
NPRA resource estimates.

Limit on surface development in ANWR is 2000 acres.
Revenue from oil leasing (and production royalty) would be split evenly between the US and Alaska.

Tuesday, December 12, 2017

Corporate Taxes and the 2017 Republican Tax Reform Plan

The Republican-controlled Congress is in the final stages of writing the most sweeping tax changes in forty years.  The Senate version of the tax bill is 487 pages, which is hardly the sweeping simplification promised by Republicans, and too long to easily summarize in this paragraph.  Business taxes are affected far more than individual taxes. Specifics of the tax bill are summarized at the end of this article.

The main focus of the tax reform is lower taxes for corporations.  The pretext is that lower taxes on corporations will result in economic growth, but the real goal is to lower taxes on unearned income.  Profits saved through lower taxes will flow through corporations to shareholders, including Republican Party donors.  The expectation of higher dividends and capital gains has driven the stock market by more than 25% since the election.

Most, if not all, serious economic reviews of the tax plan do not support the expectation of higher economic growth.  The Congressional Joint Committee on Taxation concluded that the bill would only add marginally to economic growth, while adding one trillion dollars to the US Federal debt, even after accounting for the additional tax revenue resulting from growth.  And both private and JCT analyses conclude that tax benefits will accrue to the wealthiest Americans, with poorer Americans losing money.
Justification for 2017 Corporate Tax Cut
The rationale for the deep cut in corporate taxes is based on the idea that higher after-tax profits for corporations will result in a higher rate of economic growth.  Also, the argument is that a higher rate of growth will be shared by wage-earners in the form of higher take-home pay.
Let’s look at that idea.

United States Corporate Taxes Compared to the OECD
In justifying the corporate tax cut, both of Alaska's Senators have said that American corporate taxes are "among the highest in the world".  They believe those high taxes render our corporations noncompetitive in global markets. As this blog has previously noted, a quick trip to the OECD database shows that idea is simply false.  Although US nominal corporate taxes are comparatively high, the corporate tax actually paid in the United States is less than the average for the OECD.   
GDP Growth, Corporate Taxes, After-Tax Profits and Wages
The premise that higher after-tax corporate profits lead to higher economic growth and higher wages is false.  American economic growth has been declining since World War II.
This is especially evident when we look at non-recessionary periods.  This chart has deleted all quarters with negative GDP growth.
Wages have declined since World War II, as a share of gross domestic income, GDI (or similarly, GDP).
Let's look at Corporate After-Tax Profits.  We can see that profits have soared since the 1980s as a share of GDP.  Higher corporate profits since 2004 (excepting the recession year) have not produced higher GDP growth, or higher wages.
Corporate taxes have also fallen as a percent of GDP, coincident with a falling rate of growth.
But the rise in After-Tax Profits has not resulted in a higher rate of economic growth, or higher wages for workers.  The argument that lower taxes will result in higher economic growth appears to be void.
Tax Cuts and the Reagan Economy
The final argument for tax cuts is that tax cuts worked in the past.  The basis for that claim is generally in the mythology surrounding tax cuts enacted in 1981 and 1987 during the Reagan administration.  Close examination proves that economic growth during the Reagan administration was not extraordinary, and the growth that did occur was largely due to other factors. The actual performance of those tax cuts is complicated by eleven tax hikes that were also passed during the Reagan years, for the purpose of restoring lost revenues.

Let’s look at the Reagan economy.
First, the “economic boom” of the Reagan years looks less spectacular when viewed in the context of the total post-war economy.  American economic growth has been falling steadily since World War II, part of a general structural problem in the U.S. economy, reflected in GDP growth, wages as a share of the economy, and the time required for recovery after recessions.  [That should be the topic of another blog post.]  There were really only two years during the Reagan administration that had economic growth above the long-term, non-recessionary trend (1983 and 1984). 
Still, the Reagan administration was marked by a period of fairly persistent and strong growth.  There are three reasons for that growth. 
1)      Interest Rates
I believe that the main reason for sustained growth during the Reagan years was falling interest rates.  Interest rates reached a singular, extraordinary peak in 1981 (see chart).  The Volcker Federal reserve had largely quelled inflation by 1981, and began to let interest rates fall.  The extraordinarily high interest rates at the peak probably caused the multiple recessions of 1980 – 1982.  As interest rates fell, economic growth which had been bottled up by high rates was released.  I believe the influence of falling rates far exceeded the influence of lower taxes.
2)      Serendipity
Secondly, there is simply the matter of good timing.  The Reagan administration was faced with recessions in 1981 and 1982, but afterwards enjoyed the benefit of the typical eight-to-ten year business cycle.  There is no particular policy which can be attributed to this aspect of success, except luck.  [See previous chart, with indicated recessions.
3)      Tax Cuts
Tax cuts do provide stimulus to the economy, and the Reagan tax cuts of 1981 were appropriately given during an economic recession.  Ultimately, though, tax cuts are literally borrowing against the future, and must someday be paid back in terms of later economic growth.  I believe that it is best to run budgetary surpluses when there is strength in the economy, to allow the government the ability to incur deficits when the economy is weak, without fear of destabilizing the economy.  The Reagan administration never fully funded the government to pay for the deficits it incurred.

The 2017 Republican Tax Reform Plan
The Republican Tax Plan passed by the House and the Senate must now be reconciled into a single bill.  The bills are very similar in scope, and the process should not result in significant changes to the plans, except where major errors are discovered in the assumptions and provisions of the bill. 

My main objections to the plan are as follows:
1)      Debt
The plan runs large federal deficits, at a time when the total Federal debt is approaching 100% of annual GDP, and interest payments are starting to become a significant part of annual spending.
2)      Timing
The plan cuts taxes at a time of full employment, when fiscal policy should be to run surpluses.  
3)      Corporate Taxes
The plan awards long-term tax relief to corporations, at a time when corporate taxes are already low; corporate earnings are already soaring, and no gains in GDP have been observed.  
4)      Lack of Middle-Class Tax Relief/Benefits for Unearned Income
Individual tax relief in the plan will accrue mostly to high income families, particularly those with unearned income.  The corporate tax reduction will flow through to investors, much more directly than to wage-earners.  The plan will not result in long-term tax relief for wage-earners, whose share of gross domestic income has been falling for 47 years.
5)      Abolishes ACA Individual Mandate
The tax plan eliminates the individual mandate aspect of the Affordable Care Act.  It is considered an important facet of the act, in encouraging younger people to participate in the insurance pool.  

The Republican tax plan is based on false ideas:  that American corporate taxes are higher than other countries; that higher corporate taxes produce higher economic growth and higher wages; that general tax cuts during the Reagan administration produced extraordinary growth.  All of these ideas can be demonstrated to be false, using economic data that is available to anyone.

Lower corporate taxes increased profits, not wages.

The Republican tax plan will probably become law.  I expect that it is unlikely to survive the next administration and Congress.  But the debts incurred before it is overturned will last for a generation.

A copy of this post is available on my political blog,
Summary of Important Changes in the Republican Tax Reform Bill
Business Tax Changes
1) Drops the nominal corporate income tax rate from 35% to 20%.  The current Senate bill, perhaps through an oversight, keeps the minimum corporate tax at 20%, eliminating exemptions by default.  It is expected that the reconciliation bill will restore those exemptions, dropping the actual corporate rate below 20%.
2) The tax rate for “pass-through” small businesses is reduced, excepting service businesses such as lawyers, accountants, and doctors.  The amount of the reduction is to be determined in reconciliation.
3)  Rules for expensing, rather than capitalizing, spending are relaxed, allowing quicker realization of tax benefits from business investment.
4)  Repatriated profits from foreign operations would be taxed at a much lower rate than US profits.  Cash assets would be taxed at 10% (Senate) or 14% (House), while non-cash assets would be taxed at 5% (Senate) or 7.5% (House). 

Individual Tax Changes
5) All classes of individual taxpayers will see a tax reduction in the near term, but those reductions will expire in ten years.  On the other hand, business tax reductions will be permanent.
6) The standard deduction is doubled, but personal exemptions are eliminated.  Child tax credits are increased, but the full value is only available to those with higher income to offset taxes.  For large families, the child tax credit may not fully offset the loss of personal exemptions.
7)  State & local tax deductions are eliminated; casualty loss deductions are eliminated.  The mortgage interest deduction is retained for all but the largest mortgages.
8) The estate tax may be eliminated, or the minimum threshold for the estate tax may be doubled.
9)  The individual mandate tax of the ACA is repealed.  Some fear that this will destabilize the insurance markets, by removing a large number of younger, healthy individuals from the insurance pool.
10) The fate of the Alternative Minimum Tax will be determined in reconciliation.
11) Waived tuition, common for graduate students, will now be taxed.  Colleges with very large endowments will have some earnings taxed.

12) Drilling will be allowed in the Arctic National Wildlife Refuge Area 1002, which was originally set aside for consideration for oil development.
Appendix 2

As this blog has previously noted, American Federal taxes are among the lowest in the world, in direct contrast to Republican claims that American taxes are among the highest in the world.  Here is data from OECD and the World Bank, showing the relative ranking of American Federal taxes compared to other countries.  

United States Federal taxes as a share of GDP, compared to 34 OECD countries.
United States Federal taxes compared to 123 other countries; data from World Bank.
Countries with lower Federal taxes than the United States are Ethiopia, Pakistan, India, Afghanistan, Bangladesh, Central African Republic, West Bank and Gaza, Lithuania, Oman, Nigeria, Bahrain, Estonia, United Arab Emirates.
Summaries of the Republican Tax Plan
Washington Post

Economic Reviews of the Tax Plan
Tax Policy Center – the plan will ultimately raise taxes on more than half of Americans.
University of Chicago Survey – only one out of 42 economists believes that the plan will significantly grow the economy. 
University of Pennsylvanian/Wharton review – the tax plan will add about $1.3 trillion to the national debt.

This article attempts to put lipstick on a pig.  The article acknowledges that economic growth from the tax plan will be small, “but significant”.  The article recognizes that slower growth has occurred in the past two decades, when progressively slower growth has actually been going on for seven decades.  The article gives no explanation for why growth is slower now than in the past, or why tax cuts at a time of full employment will help. 

A Federal tax expert says that the tax plan is stupid.

Historical Data
OECD tax on corporate profits
US corporate tax among the lowest in the OECD

Corporate Tax as share of GDP

Source of federal revenue


Monday, November 13, 2017

Computer Sentience

The great ethical debate in the year 2100 will be about the civil rights of sentient machines. 
The great ethical debate in the year 2200 will be about the civil rights of sentient humans.  
OK, that’s supposed to be a joke.  But let’s think a bit about the possibility of sentient machines.

Life is immaterial and ephemeral.   One moment after death, a being has all of the same solids and fluids, all of the same atoms and molecules as at a moment before death.   But something mysterious has departed.  Life exists as a collection of electrical impulses and chemical changes.  The idea of a living, immaterial, non-physical spirit is a powerful one, and most people throughout history subscribe to the idea that all living creatures are endowed with such a spirit.   But no such spirit has ever been reliably observed.  On a scientific basis, we must presume that life consists solely of the electrical and chemical interactions that animate our muscles and minds.

Consciousness, too, must be a matter of electrical and chemical physical properties.  It should not be a surprise. We can influence consciousness with as chemicals diverse as caffeine, TCP, or LSD; and we can stimulate memories with electrical impulses to the brain.  Is there any reason, then, why machines using complicated patterns of electrical connections could not become as conscious and aware as humans? 

Examples from Science Fiction
Science fiction and science fiction authors have proved to be remarkably prescient about future technology and social issue, and there are innumerable examples of computer consciousness in science fiction.   Considering the remarkable consensus of science fiction authors about the possibility of computer consciousness, I am inclined to believe that it is a real possibility.   I think it is time to consider in what form it may occur, and what implications it will have for mankind.

Here are a few sentient machines from some of my favorite science fiction stories.

Character            Type                  Book or Show                                              Author
Mycroft              Mainframe           The Moon is a Harsh Mistress                     Robert Heinlein
Daneel Olivaw   Android                The Caves of Steel                                       Isaac Asimov
Colossus             Mainframe           The Forbin Project                                        Michael Crichton
Data                    Android                Star Trek, Next Generation                          Various
Samantha           AI Program          Her                                                               Spike Jonze
Marvin                Robot                    Life, the Universe and Everything              Douglas Adams
Bender                Robot                   Futurama                                                     Matt Groening
Jay Score            Robot                   Jay Score                                                      Eric Russell
Einstein               AI Program          Beyond the Blue Event Horizon                  Fredrick Pohl
Tardis                  Time-Ship            Dr. Who Series                                             Various

There are dozens of other examples in science fiction. What makes these stories interesting is the range of thoughts and behaviors exhibited by the sentient machines.  And in a way, the stories are explorations of what it means to be human and sentient.  In some of the stories, machines threaten mankind; in some stories they save mankind.  Sometimes they bond as friends with human characters; sometimes they question their own lack of humanity.  But as drawn by the authors, they are unquestionably alive.
Image from the film "I, Robot", screenplay by J. Vintar and A. Goldsman, 
after a collection of stories by Isaac Asimove. 

Today, artificial intelligence is one of the fastest developing fields of technology.  Artificial Intelligence is expected to understand our spoken speech, speak meaningfully in response, act as clerks or servants, interpret our instructions from gestures, render judgments and decisions in complex fields such as medicine, recognize and appropriately classify images and scenes, drive our cars, work in our factories.  Ultimately, artificial intelligence may design and improve its own replacements.  At this time, there are no known limits to what artificial intelligence can do.

But all of this is less than what we see in science fiction.  Few computer specialists would believe that today’s artificial intelligence is anything living.  AI programs execute instructions from programmers, and in some cases, can adapt that programming based on input from the external environment.  But even then, the program is simply performing as it was designed, without motivation or will.  It isn’t alive.

What, then, would be the hallmarks of a sentient machine?  What qualities would it have that differ from today’s artificial intelligence?  Would we recognize a sentient machine if we saw one?

Here is a list of the qualities that I think are necessary to the definition of sentience.
Consciousness – Awareness of the surrounding environment.
Self-awareness – The ability to say “I am”, without being asked.
Personal Memory – The ability to remember former analyses (thoughts) and actions.
Thought -- the ability to think in processes, make forecasts and predictions based on processes, rather than pattern recognition.
Will – The deliberate decision to perform or not perform an action according to self-determined reasons.
Empathy – The ability to recognize other beings as sentient.

Consciousness is hard to define.  In the biological world, I think that consciousness is a gradational quality, rather than a discrete property.  No one would suggest that a virus is conscious, and yet it has some property of life which is greater than that of a piece of rock.   But most would agree that a worm is more conscious than a virus, and a dog is more conscious than a clam.   And perhaps a colony of bees is more conscious than an individual bee. 

Both computer programs and flatworms can respond to external stimuli.  Flatworms can be trained to avoid stimuli associated with pain, and seek stimuli associate with food.  Perhaps these actions demonstrate the emotions of fear and pleasure.  But it is unclear if the responses of either flatworms or computers are aware and knowing responses, or simply the results of chemical and physical programming.

Definitions of consciousness include awareness of exterior and/or interior things.  But the definition and observation of awareness is difficult, even in humans who have suffered brain damage.  The identification of consciousness, separate from the qualities of self-awareness and free will, will be very difficult to recognize in computer intelligence. 

Personal Memory
Personal memory is a critical part of human personality.  I define personal memory as the memory of prior thoughts (analyses) and actions.  Personal memory is distinctly different than computer memory which is used to hold data for processing.  It is the memory of performing previous processes, and the memory of those results.  This kind of memory allows people to learn, and to develop preferences which reflect personality.  Without personal memory, a machine could never develop self-awareness or will.

When we wake up in the morning, personal memory is what allows us to know that we are the same person who went to bed the night before.  Or more directly, personal memory informs us that we are the same person from moment to moment. 

Machine learning algorithms must have some kind of personal memory, recording and comparing previous analyses to new ones.  The type of memory probably depends on the type of machine learning algorithm.  Some kind of personal memory, perhaps developed from machine learning, will be a necessity for a sentient machine. 

My son gave me the simplest definition of self-awareness: The ability to say “I am”, without being asked.  But perhaps this is a little too glib.  Like consciousness, living creatures span the range from clearly not self-aware, to fully aware. 

A test performed with some creatures uses a mirror.  A parakeet can be kept company by a mirror, never realizing that the parakeet in the mirror is not a companion.  A cat is initially mystified by a mirror, but may eventually realize that the cat in the mirror is not another cat.  A great ape will almost immediately realize that the image in the mirror is itself. 

It seems to me that for a digital entity, self-awareness implies a recognition of external reality and the separation of the self from that reality. 

How could self-awareness be recognized?  In biology, creatures have reward systems, seeking food and sex.  Rewarding oneself is a demonstration of self-awareness.  Self-aware creatures also pass the mirror test, recognizing a patch of paint visible only in the mirror.  If a computer could be observed treating itself differently than external reality, it might demonstrate self-awareness.  Perhaps a self-diagnosis problem might show that the computer would treat an internal problem differently than an external problem.  But computers lack inborn desires, fears or survival instinct.  It might be difficult to observe self-awareness in a computer, even when it exists.

Will is the ability to perform independent actions.  This will be easier to recognize than consciousness or self-awareness.  Actions independent of programming would be evidence of some measure of sentience in a computer.  Nevertheless, machine-learning algorithms allow computers to make independent judgments and perform actions.  Machines can play chess, diagnose medical conditions, connect electronic traffic in efficient ways, answer questions, and perform many functions similar to humans.  But at what point does a computer exhibit free will?  How can we tell? 

Computer AIs do unexpected things all the time.  Chatbots are a good example, offering spectacularly bad examples of conversations, based on some learning algorithm applied to real human conversations.   Microsoft’s experimental chatbot “Tay” became notorious after only a few hours of exposure to interaction with real humans.  Of course, a number of users were deliberately trolling Tay, and succeeding in turning the na├»ve chatbot into a bigoted and sexually aggressive delinquent.  Within 16 hours, the chatbot’s personality was hopelessly corrupted, and Microsoft took Tay offline, ending the experiment.  In a second, accidental public release of the chatbot, the bot became stuck in a repetitive and poignant loop, tweeting “You are too fast, please take a rest” several times a second to 200,000 followers. 

It is still unclear how we could recognize free will in a machine, as opposed to an apparent malfunction.  (Once again, I recall episodes of Star Trek which explored that very dilemma.)  Perhaps behaviors that were clearly in the best interest of the machine would be noticed, but how could we expect such behaviors, when machines have not evolved to pursue their own best interest?  Once again, recognition of sentience seems difficult or impossible.

It seems to me that thought is a property of sentience.  I believe that the empirical learning performed by AI programs is not thought.  (I have similar views about empiricism in science, e.g.,  Actual thought involves something more than the correlation of previous patterns.  Thought requires the recognition of processes which change reality (even a digital reality).  When an AI program can recognize causation, rather than correlation, I would acknowledge that the machine is thinking.  And thinking is one component of sentience.

There might be a test which could reveal how a computer was solving problems, whether by empirical correlation, or by understanding processes (thought).  Understanding processes allows something that physicist David Deutsch calls “reach”.  Processes can be extrapolated to situations which are far beyond the range of input data.  For example, a computer might draw empirical data on how apples fall from many trees, and describe how other apples fall from trees.  But understanding the process of Newtonian gravity allows the computer to describe the orbits of planets, far beyond the bounds of what could be achieved by any empirical program.

My wife suggested that empathy should be a component of sentience, and I agree.  A sentient machine must have the qualities already discussed: Consciousness, Self-awareness, Will, and Thought.  But just as self-awareness requires the recognition of external things (which are “not-self”), full sentience requires the recognition of other sentient beings. 

Forms of Computer Sentience
As I would define sentience, it consists of several components: Consciousness, Personal Memory, Self-awareness, Will, Thought and Empathy.  If sentience does emerge in machines, I expect it will be gradual, and will not appear as the full-blown sentient beings of science fiction.  Recognition of sentience may be very difficult, particularly in machines which are already performing independent machine learning. 

In the biological world, four billion years of evolution has been necessary for the development of sentience.  Computers lack that evolutionary background.  Computers have no innate instinct for survival or self-interest.  Computers, even if they have the glimmerings of consciousness and self-awareness, may not demonstrate self-oriented behavior that would reveal their progress toward sentience.  Some period of evolution, by design or by accident, will probably be necessary for computers to develop sentience.  

I am not sure what form computer sentience might take when it appears.  It seems to me that sentience could appear in many different guises, and may surprise us by the form that it takes.   It may be a single machine, running specialized machine learning programs, and designed to develop sentience.  It may be a network of computers, or it may be the entire Internet.  The latter would echo an old story by Arthur C. Clarke, in which a global telephone system developed sentience.  Sentience may develop out of computer viruses, which have considerable evolutionary pressure placed upon them already.  Sentience may exist as software, jumping from device to device as new hosts.  In most science fiction stories, sentience develops in a single, unique machine, but it may not happen that way.  My daughter suggested that each of many small devices – cell phones, smart TVs, home security systems – may become sentient at the same time.  Alternatively, it is worth remembering that the human brain (as well as the human body) is a colony of smaller cells, each capable of performing some of the basic functions of life independently.  Cells in the brain each perform some analytical function, but it is only the total network of the brain that we consider sentient. 

Evolution of Sentience and Computer Viruses
My son asked how computer viruses could develop sentience.  I'm thinking about viruses which are sophisticated enough to evolve, which may require human initiative to get started.

As far as evolution, I'm thinking about a virus which is deliberately programmed to introduce variants in subsequent generations, or steal bits of code from other programs.  As in ordinary evolution, most of the variants will be irrelevant or harmful.  But given enough cycles, some of the variants may improve the virus' ability to survive. 

As for sentience, the virus itself would not be sentient, any more than human DNA is sentient.  But I can imagine a program sophisticated enough to take over a host machine. The virus might run in the background, undetected, and issue the commands that produce sentience in the machine; and then send its “DNA” to another machine to reproduce and evolve further.  If some aspects of sentience had evolutionary value (awareness of surroundings, self-awareness, will, thought), then those traits would be enhanced in subsequent generations.

Fear of Computer Sentience
Science fiction is full of evil machines, perhaps with good reason.  A number of futurists, including Elon Musk and Stephen Hawking, have spoken strongly about the risks that artificial intelligence (whether sentient or not) poses to mankind.  I would not presume to contradict them.  When artificial intelligence reaches the point that it becomes self-designing, producing improved replicas without human design, it will exceed our capacity to understand or predict the capabilities of those machines.  But I nevertheless think that the development of sentient machines will occur.  

Inevitability of Computer Sentience
If I am correct that human sentience is strictly a matter of physical chemistry and electricity, then I believe that machine sentience is ultimately inevitable, provided that humanity survives long enough.  When it happens, it will challenge our place in the world, the meaning of our goals, and the meaning of humanity.  It may be the most important thing that has happened to mankind since the emergence of our own species as sentient beings.