Thermodynamic depth is an appealing but flawed structural complexity measure. It depends on a set of macroscopic states for a system, but neither its original introduction by Lloyd and Pagels nor any follow-up work has considered how to select these states. Depth, therefore, is at root arbitrary. Computational mechanics, an alternative approach to structural complexity, provides a definition for a system's minimal, necessary causal states and a procedure for finding them. We show that the rate of increase in thermodynamic depth, or {\it dive}, is the system's reverse-time Shannon entropy rate, and so depth only measures degrees of macroscopic randomness, not structure. To fix this we redefine the depth in terms of the causal state representation---$\epsilon$-machines---and show that this representation gives the minimum dive consistent with accurate prediction. Thus, $\epsilon$-machines are optimally shallow.

We present a new algorithm for discovering patterns in time series and other sequential data. We exhibit a reliable procedure for building the minimal set of hidden, Markovian states that is statistically capable of producing the behavior exhibited in the data -- the underlying process's causal states. Unlike conventional methods for fitting hidden Markov models (HMMs) to data, our algorithm makes no assumptions about the process's causal architecture (the number of hidden states and their transition structure), but rather infers it from the data. It starts with assumptions of minimal structure and introduces complexity only when the data demand it. Moreover, the causal states it infers have important predictive optimality properties that conventional HMM states lack. We introduce the algorithm, review the theory behind it, prove its asymptotic reliability, use large deviation theory to estimate its rate of convergence, and compare it to other algorithms which also construct HMMs from data. We also illustrate its behavior on an example process, and report selected numerical results from an implementation.

We critique the measure of complexity introduced by Shiner, Davison, and Landsberg [Phys. Rev. E 59, 1459 (1999)]. In particular, we point out that it is over universal, in the sense that it has the same dependence on disorder for structurally distinct systems. We then give counterexamples to the claim that complexity is synonymous with being out of equilibrium: equilibrium systems can be structurally complex and nonequilibrium systems can be structurally simple. We also correct a misinterpretation of a result given by two of the present authors [J. P. Crutchfield and D. P. Feldman, Phys. Rev. E 55, R1239 (1997)].