World-System (2015-2100) US Attempts to Dominate India

 

Reuters is reporting (here) that the Trump II Administration is planning to impose 25% Tariffs on India and, not surprisingly, creating Political Chaos in India. My first question is "What is really going on here?" Trump's Trade War makes little economic sense and is opposed to conventional Republican Right-Wing Free-Market Ideology.

If Trump's Trade War isn't about Economics, what is it about? My best guess (and there might not be a rational explanation) is that the Trade War is about Political Power. Trump is intent on the Economic Domination of every country in the World-System and has decided that a Trade War is the way to do it. And, right now, he seems to be winning--most countries appear anxious to capitulate. How the Trade War helps Trump personally or the US Economy, if at all, remains to be seen.

Another (and maybe more important questions) is what kind of Geopolitical Alignment is best for India (or any other country, for that matter)? In terms of the models I have estimate, the World-System Linkage model (W)** is the best for India [-99.33, AIC=-60.09, -28.39]*** while in terms of predicted performance, the BAU model [-9.571, AIC=26.53, 57.61] is best (graphic above). In the long-run, US domination will lead to collapse of the Indian Economy (I would assume that the Trump II Administration isn't thinking this far ahead).

Russian domination (RU) is another interesting case. Russia is itself a cyclical economy (think of the Collapse of the Soviet Union) and that cyclicality would be transmitted Geopolitically to India. There would be periods of success and periods of failure.

In the end, my guess is that Indian (and any other country, really) would prefer the BAU model, that is, to be left alone to find their own attractor path. 

You can experiment yourself with the IN_LM_BAU model here. You can learn more about how the models were constructed in the Boiler Plate. For more discussion of the Indian Economy, see India as a Small Regional Economy.

Notes

** Other types of Geopolitical Alignments estimated in my models are discussed in the Boiler Plate.

***Akaike Information Criterion (AIC) Smaller is better.

The BRICS (of which India is a member) are actually an intergovernmental organization of ten countries but the name comes from just five: Brazil, Russia, India, China, South Africa. You can experiment with the BRICS BAU state space models on the following sites:

• Brazil (BR_20 Model) An unstable model that leads to collapse (stabilizing the model also leads to collapse). There are strong historical unemployment and environmental Controllers. See if you can find a steady state for this economy!
• Russia (RU_LM Model) An unstable model with strong Export-Employment historical controllers. Becomes cyclical when stabilized.
• India (IN_LM Model) A Malthusian Economy currently in collapse mode. Stabilizing the economy is beneficial.
• China (CN_LM Model) An unstable economy with strong historical Export-Employment controllers. Stabilizing the economy produces a steady state after 2100.
• South Africa (ZA_20 Model) An unstable economy with strong Globalization-Environmental historical controllers. Stabilizing the economy would lead to a steady state in the distant future (well after 2100).

The BRICS are not a uniform set of Semi-Peripheral countries. They have different dynamics and different historical patterns of development. Neoclassical Economics makes a mistake when applying the same Exogenous Growth Model to these countries.

Trump doesn't think much of either the Indian or the Russian economies (here) and calls them "dead economies". Obviously, the Trade War is not meant to help other countries in the World-System but rather to dominate them (read more about Trump's Trade War here from a World-System Perspective).

World-System (1960-2100) Steady State and Collapse

 

Several studies indicate that no country has achieved a true steady-state economy, which is defined as an economy with a stable level of resource use maintained within ecological limits. 

However, some countries demonstrate features that could be considered closer to a steady-state approach:

• Stable resource use: A few countries have shown relatively constant resource use year-to-year, including Denmark, France, Japan, Poland, Romania, and the US.
• Biophysical degrowth: Germany, Guyana, Moldova, and Zimbabwe are experiencing a decrease in resource use in the majority of indicators.
• Balancing stability and degrowth: Some countries like Lithuania, Slovakia, Sweden, Ukraine, and the UK demonstrate characteristics that lie between degrowth and stable resource use.
• Holistic stability: Japan stands out as the only country achieving relative stability across all seven indicators of the Biophysical Stability Index. 

While no country fully embodies a steady-state economy, some countries are showcasing promising trends in resource use and stability that could potentially lead towards a more sustainable economic model in the future. 

World-System (1960-2100): Six Forecasts for the EU

 

The Trump II Administration has recently threatened to impose substantial tariffs on the European Union (EU). Economists in the EU have recently downgraded their forecasts for growth (here) and additional tariffs (if enacted) are expected to hurt the EU even further. 

Notes

• Was the EU Wrecked by Austerity? No.
• Is Another EU Recession Likely? Maybe.
• Is the EU Heading for a Steady State Economy? Maybe!

World-System (1960-2100): Is the EU Heading for a Steady State?

 

Google AI says no!

Based on the available information, it's not accurate to say the EU is definitively heading for a steady-state economy in the sense of a non-growing economy with stable population and consumption. While there's a strong emphasis on sustainable development and a shift away from a purely growth-focused model, current policies still project and even aim for economic growth within the EU. 

Here's a breakdown of the EU's approach to the economy and how it relates to the concept of a steady-state economy:

EU economic outlook and growth

• Subdued Growth: The eurozone's economic outlook for 2025 and 2026 is projected to be slow, with expected growth rates of 1% and 0.9% respectively, according to Deloitte. The European Commission forecasts slightly higher growth for the EU as a whole, at 1.1% in 2025 and 1.5% in 2026.
• Factors Affecting Growth: Uncertainty from trade policy and geopolitical conditions are key challenges impacting business sentiment and investment.
• Growth Drivers: Less restrictive monetary policies, increased public spending (including NextGen EU Funds and defense investments), stable labor markets, robust income growth, and lower interest rates are expected to support economic activity and consumer spending. 

Shift towards sustainable development

• 2030 Agenda for Sustainable Development: The EU is committed to implementing the 2030 Agenda and its 17 Sustainable Development Goals (SDGs), both within the EU and globally.
• European Green Deal: This is a key initiative aiming to make the EU climate-neutral by 2050, promoting a modern, resource-efficient, and competitive economy, according to Eurofound. It emphasizes decoupling economic growth from resource use.
• Circular Economy Action Plan: This plan aims to transition to a fully circular economy by 2050, reducing pressure on natural resources and creating sustainable growth and jobs. It includes measures for sustainable product design, waste reduction, improved recycling systems, and fostering innovation in circular business models. 

Connecting to the "Steady State Economy" concept

• Focus on decoupling growth from resource use: The EU's policies, particularly within the framework of the European Green Deal and the circular economy, emphasize decoupling economic growth from resource consumption and environmental impact, according to the European Parliament. This aligns with some principles of a steady-state economy, which seeks to minimize the environmental footprint.
• Promoting sustainable practices: The EU is implementing regulations and incentives to encourage sustainable production and consumption patterns, including stricter rules on product design, waste management, and resource efficiency. These actions are aimed at improving well-being within planetary boundaries.
• Not abandoning growth entirely: While aiming for more responsible growth, the EU is not advocating for a complete cessation of economic growth, but rather a shift towards a more sustainable model. This is distinct from a traditional "steady-state economy" which implies constant levels of capital and population. 

In conclusion, the EU is working towards a more sustainable and resource-efficient economy, actively implementing policies to decouple economic growth from environmental impact and promoting circular economy principles. However, it is not accurately characterized as heading for a steady-state economy in the classic sense of a non-growing economy. Instead, the EU aims to achieve economic growth within ecological limits and in a socially just manner. 

World-System (1950-2000+) Iranian Globalization and Unemployment

 

The IR2 component (Unemployment and Globalization) is the second most important state variable in the IR_LM model and explains about 12% of the variation in the indicators. Unlike the IR3 (Environmental-Globalization feedback controller), IR2 is not a feedback controller but rather a historical component. The White Revolution and the  Foreign Policy of the Kennedy Administration put a high premium on Modernization and Globalization which rapidly brought population into the cities without immediate job availability (see the video on The Iranian Revolution).

The result was very high levels of Unemployment (a peak of almost 15% in the mid-1980s--see the graphic above). Notice that Globalization peaked in the mid-1970s (first graphic above) while Unemployment peaked about a decade later. 

The two graphics above show the attractor path (dashed red line) for both  Globalization and Unemployment and show that each was above sustainable levels until the early 1990's. The IR2 historical component shows why Islamic Fundamentalism organized wide-spread discontent in Iranian cities before the Iranian Revolution.

Notes

The IR_LM Measurement Model is:

The first state variable (row of the Measurement Matrix, IR1) describes overall growth in the Iranian Economy. The second state variable, IR2, describes  Unemployment and Globalization, (IR2 = 0.9091 SL.UEM.TOTL.ZS + 0.335 KOF) and the third state variable, IR3, is an environmental-globalization feedback controller, (IR3 = 0.827 KOF - 0.3878 SL.UEM.TOTL.ZS - 0.258 EF - 0.217 EG.USE.COM.KT.OE), for unemployment, ecological footprint and energy use.

Further reading:

• Iranian Revolution a series of events that culminated in the overthrow of the Pahlavi dynasty in 1979.

• Strait of Hormuz a strait between the Persian Gulf and the Gulf of Oman. It provides the only sea passage from the Persian Gulf to the open ocean and is one of the world's most strategically important choke points.

• Iran-Contra Affair a political scandal in the United States that centered on arms trafficking to Iran between 1981 and 1986, facilitated by senior officials of the Ronald Reagan administration

• Iran Nuclear Program one of the most scrutinized nuclear programs in the world, has sparked intense international concern.

• Pahlavi Iran the Iranian state under the rule of the Pahlavi dynasty. The Pahlavi dynasty was created in 1925 and lasted until 1979 when it was ousted as part of the Iranian Revolution, which ended the Iranian monarchy and established the Islamic Republic of Iran.

• Iran-Iraq War an armed conflict between Iran and Iraq that lasted from September 1980 to August 1988. Active hostilities began with the Iraqi invasion of Iran and lasted for nearly eight years, until the acceptance of United Nations Security Council Resolution 598 by both sides.

• Iranian Economy a mixed, centrally planned economy with a large public sector. It consists of hydrocarbon, agricultural and service sectors, in addition to manufacturing and financial services, with over 40 industries traded on the Tehran Stock Exchange.

• The White Revolution a far-reaching series of reforms to aggressively modernize the Imperial State of Iran launched on 26 January 1963 by the Shah, Mohammad Reza Pahlavi, and ended with his overthrow in 1979.

• Modernization Theory holds that as societies become more economically modernized, wealthier and more educated, their political institutions become increasingly liberal democratic and rationalist.

• Foreign Policy of the Kennedy Administration The United States foreign policy during the presidency of John F. Kennedy from 1961 to 1963 included diplomatic and military initiatives in Western Europe, Southeast Asia, and Latin America, all conducted amid considerable Cold War tensions with the Soviet Union and its satellite states in Eastern Europe.

• Sharia Law a body of religious law that forms a part of the Islamic tradition based on scriptures of Islam, particularly the Qur'an and hadith.

Blog Roll:

• Stabilizing the Iranian Economy Easy but not easy!
  
• A Deep Dive into the Iranian State Space Cycles vs. Control.
  
• The Iranian Revolution Still being worked out today.
  
• Will Israel and US Attacks Hurt the World-System? Yes!
  
• How Does the Iranian Economy Work? Not like a Neoclassical, free-market economy.
  
• What was the Impact of the Iranian Revolution? Elimination of Cycles!
• Iranian Globalization and Unemployment Created the discontent that led to the Iranian Revolution.

World-System (1950-2100+) Global Temperature Projections

A Recent Paper in Nature Communications: Earth and Environment was titled Warming of +1.5 °C is too high for polar ice sheets.** In terms of projections from my models (above), this would mean that if we reach the 15.5 temperature level, it will be too late for the Polar Ice Caps to maintain their integrity and sea level rise will inundate most countries around the World (to include Mar-a-Lago, President Trumps Empire). Does this mean catastrophe for the World-System? 

The first projection to consider is the Random Walk (RW). If Global Temperature were a  Random Walk it would mean that it cannot be forecast, a result that would please Climate Change Deniers. Given the high variability of the Global Temperature data, it should be no surprise that, in the short-run year-to-year, Global Temperature is a RW given the Akaike Information Criterion [-77.33, AIC=-65.15,-55.0]. However, in the long-run there is a clear trend. The issue is how far into the future can the trend be carried.

In the Stokes (2025) Global Sea Level article the conclusion is that, to prevent destabilizing the Arctic Ice Caps, Global Temperature should return to the levels somewhere around the 1980's. The graphic above plots a forecast of the Temperature BAU model that has no inputs (no radiative forcings). Without forcings from human systems (anthropogenic forcings) the model would say within the "safe" zones. Unfortunately, isolating Global Temperature from human systems seems impossible.

The next one of my models to consider simply uses CO2 emissions to predict global temperature, something similar to the endpoint of the Kaya Impact Model (graphed above) used by the IPCC. The model projects a linear increase in temperature that eventually reaches a steady state (the model is stable). Using the Akaike Information Criterion (smaller is better) [170.2,AIC=198.3 217.1], it is not a strong competitor.

Another important model involves the technical coefficients of the Kaya Impact Model (q, e, c, t in the graphic above). The model is important because improvements in Kaya Technology (efficiency) such as renewable energy, etc. should ultimately reduce Global Temperature. The model shows continuing increases in Global Temperature, but because the model is stable, a steady state will eventually be reached but at a higher Global Temperature than 15.5 degrees (dotted red line in first graphic). In other words, even though technological change can moderate temperatures, it will not be enough to prevent melting of the Polar Ice Caps. Still, the model is a good competitor using the Akaike Information Criterion [-47.94, AIC=14.95, 67.81].*** 

Finally, driving Global Temperature with the state of the World System using two different models (the dashed blue line and the pink line in the graphic at the beginning of this post), produce growth-and-collapse modes and keep global temperature below 15.5 degrees. The WL203 model (dashed blue line) is the best model (beyond the RW) using the Akaike Information Criterion  [-70.95, AC=-10.41, 34.52] compared to the WL20W model [-4.007, AIC=64.63, 107.9].

You can experiment with the stable WL203 model (here) or the unstable WL20W model (here).

Notes

The measurement model for the World System has three historical environmental controllers: W1=(Growth-LivingPlanet), W2=(LivingPlanet-TEMP) and W3=(P.Oil.-TotalFootprint).  Information about the indicators (LivingPlanet index, TEMP, TotalFootprint), etc. can be found in the Boiler Plate.

** Recent data from NASA's CRES (Clouds and Earth’s Radiant Energy System) satellite data also indicates that Earth's Albedo (ability to reflect sunlight and reduce warming) is decreasing!

*** There is another type of Technological change that involves productivity (the dashed black line in the graphic at the beginning of this article). It shows a similar, if somewhat worse, time path than Kaya Technology and reaches 15.5 degrees earlier in time.

World-System (2000-2150) Seven Futures for Iran

The Trump II Administration in the US has just attacked Iran and claims to have seriously damaged Iran's Nuclear Sites (here). Iran claims it will retaliate, but the future after the unprecedented attack using B2 Stealth Bombers and Bunker Buster Bombs remains unclear both for Iran, the US and Israel (who started the attacks on Iran). The future is unknowable and there is a lot of current speculation. I can use the IR_LM (Iran, Late Modern) model to project seven possible future scenarios for Iran (graphic above).

The Business-as-Usual (BAU) model is clearly the best and it forecasts unending exponential growth for the Iranian Economic System. The worst scenario is Geopolitical Alignment with China (CN) which leads to collapse. The scenario for alignment with Russia (RU), (light-blue dashed line) is quite cyclical and unstable. Alignment with the US produces stable growth out to 2100. The World System (W) and the EU Alignment models are not much better than a Random Walk (RW).

These seven scenarios suggest that Iran would prefer to be left alone to pursue its own future, but that seems unlikely to happen. Geopolitical Alignment with the US  would also produce a desirable future, but that also seems unlikely to happen. Russia (RU) might be attractive in the very short run but that alignment will prove to be unstable. This leaves Iran with no desirable futures within the IR_LM BAU model.

You can experiment yourself with the IR_LM BAU model here. The period prior to the Iranian Revolution of 1979 sowed possibilities of alignment with the West, but after the Revolution the economy was converted into strong central planning aimed at Autarky (see the Economic History of Iran). In these circumstances, the IR_LM BAU model could be stabilized at any time by reducing growth rates (a counterfactual you can run here). Notice in the IR_LM BAU Model that the feedback controllers are dominated by Globalization, Unemployment, Ecological Footprint and Energy Use.

ChatGPT reports the following:

For more information about how the statistical models were constructed and estimated see the Boiler Plate.

The Axis of Evil

Russia, China, North Korea and Iran: A new Axis of Evil? No.

Further reading:

• Iranian Revolution a series of events that culminated in the overthrow of the Pahlavi dynasty in 1979.

• Strait of Hormuz a strait between the Persian Gulf and the Gulf of Oman. It provides the only sea passage from the Persian Gulf to the open ocean and is one of the world's most strategically important choke points.

• Iran-Contra Affair a political scandal in the United States that centered on arms trafficking to Iran between 1981 and 1986, facilitated by senior officials of the Ronald Reagan administration

• Iran Nuclear Program one of the most scrutinized nuclear programs in the world, has sparked intense international concern.

• Pahlavi Iran the Iranian state under the rule of the Pahlavi dynasty. The Pahlavi dynasty was created in 1925 and lasted until 1979 when it was ousted as part of the Iranian Revolution, which ended the Iranian monarchy and established the Islamic Republic of Iran.

• Iran-Iraq War an armed conflict between Iran and Iraq that lasted from September 1980 to August 1988. Active hostilities began with the Iraqi invasion of Iran and lasted for nearly eight years, until the acceptance of United Nations Security Council Resolution 598 by both sides.

• Iranian Economy a mixed, centrally planned economy with a large public sector. It consists of hydrocarbon, agricultural and service sectors, in addition to manufacturing and financial services, with over 40 industries traded on the Tehran Stock Exchange.

• The White Revolution a far-reaching series of reforms to aggressively modernize the Imperial State of Iran launched on 26 January 1963 by the Shah, Mohammad Reza Pahlavi, and ended with his overthrow in 1979.

• Modernization Theory holds that as societies become more economically modernized, wealthier and more educated, their political institutions become increasingly liberal democratic and rationalist.

• Foreign Policy of the Kennedy Administration The United States foreign policy during the presidency of John F. Kennedy from 1961 to 1963 included diplomatic and military initiatives in Western Europe, Southeast Asia, and Latin America, all conducted amid considerable Cold War tensions with the Soviet Union and its satellite states in Eastern Europe.

Blog Roll:

• Stabilizing the Iranian Economy Easy but not easy!
  
• A Deep Dive into the Iranian State Space Cycles vs. Control
  
• The Iranian Revolution Still being worked out today.
  
• Will Israel and US Attacks Hurt the World-System? Yes
  
• How Does the Iranian Economy Work? Not like a Neoclassical, free-market economy.
  
• What was the Impact of the Iranian Revolution? Elimination of Cycles!
• Iranian Globalization and Unemployment Created the discontent that led to the Iranian Revolution.