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.

World-System (2000-2150) China and the Global South

 

In a prior post (here), I looked at China's possible Geopolitical Alignments, first with the World-System and then with Russia. In this post, I look at China's possible Geopolitical Alignments with the Global South. In the long-run, alignment with Latin America (LA) would clearly be in LA's interest; Africa (AF), not so much.

World-System (2000-2100) Six Futures for China, One Scary

 

Most Geopolitical Alignments are mildly beneficial, except for alignment with the World System which is not. The order of benefits (in terms of comparison to a Random Walk, RW) are Asia Region (AXJ), Business as Usual (BAU, no alignment) and United States (US). 

One forecast missing from my standard forecasts (and the most concerning) is the one involving Geopolitical Alignment between Russia and China. Although the alignment has been publicly proclaimed by each country, there is increasing concern about CN intelligence activities in Russia (here). For more information about China-Russia relations, see the Wikipedia page (here).

I will investigate Global South alignments for China in a another post here. For more information about how the statistical models were constructed and estimated see the Boiler Plate.

Notes

Excerpts from ChatGPT:

The ChatGPT conclusions are personifications not Systems Analysis. 

The Axis of Evil

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

World-System (1950-2150) India as a Small Regional Country

 

A recent article in the New York Times (here) about the evident decline of US Hegemonic Power suggests that India (IN) might be one of the countries competing for world leadership once US dominance has passed. India might well try to resurrect the "... Indosphere, a zone of Indian cultural and linguistic influence that stretched far beyond the subcontinent in the period roughly between 250 B.C. and A.D. 1200..." Another article (here) suggests that India is in a difficult position, closer to the US than to Russia but unwilling to alienate other BRIC countries (see below in the Notes).

The question not being asked here is what would be the best Geopolitical Alignment for a country such as India and does that alignment involve Hegemonic domination of the World-System. This post investigates the question by estimating a state space model for India in the period (1950-2000) and then testing various Geopolitical Inputs to see the effect on the Indian Economy.

The graphic above shows the two state variables, IN1=(Growth) and IN2=(Q-N), with forecasts out to 2150. The best model (in terms of the AIC statistic, AIC=-6272.714 when compared to the BAU model AIC=-385.2805, smaller is better) to produce those forecasts (see the Boiler Plate for a description of the state space model and the data sources used) is the IN_LM_SC model (a Small Open Country) model. It shows that India would be approaching a steady state around 2150 with part of the Asia Region.

In another post (here), I look at alternative forecasts for World-System Hegemonic Dominance. India is one of the also-ran countries (in fact, the worst performer), not providing large growth stimulus to the World-System. In the upcoming period of Environmental Crisis and Hegemonic Chaos, maximum growth might not be the best choice for the World-System but it will be a Dynamic Attractor.

Notes

In term of Systems Theory, a Small Open Country is one that has no state variables. The state of the system is driven by the dominant Input Economy (the Asia Region in this case).  Here are the System Matrix (F) and the Input Matrix (G) for the IN_LM_SC model:

The small values for the coefficients in the System Matrix (e.g., -2.605049e-23) are effectively zero to within machine precision.

You can run the IN_LM_SC model yourself at the following Google Sites (here). You can also run the other BRIC country models:

• Brazil BR20 Model
• China CNLM Model
• Russia RULM Model
• South Africa ZA20 Model

World-System (1950-2150) Hegemonic Dominance Forecasts

A few new books have been written and reviewed in the New York Times (here) about the evident decline of US Hegemonic Power in the Trump II Administration. From what I can tell, all of the discussions are qualitative and speculative. Since the Future is unknown, there is plenty of space for conjecture.

What has not seemed to have been done is to make multi-model forecasts for the World System given inputs for different countries that are competing for Hegemonic Dominance. Since I have state space models for the World System and for all of the Hegemonic contenders (you can inspect and run the models here), I might as well see what the forecasts say.

The graphic at the beginning of this post shows alternative forecasts for overall growth in the World System. There are three exponential growth contenders: Japan (JP), the US (US) and Russia (RU, see below). The "also rans" are the United Kingdom (UK), Business-As-Usual (BAU), China (CN), India (IN) and a Random Walk (RW) to find a stable, sustainable attractor path.

The surprise forecasts is that Russia dominance of the World System (RU) would create unending, unstable exponential growth. Dominance by other countries have uniformly more modest impacts.

Aside from the fact that living in a Russian-dominated World-System would be an unpleasant authoritarian nightmare, the reason for unending exponential growth is that Russia would supply a rich natural resource base to be exploited by the World-System. Maybe from some perspectives, unending exponential growth is a positive thing, but from a Environmental perspective, it would be a disaster. We have to find a way to limit growth rates and, evidently, linking the World System to Russia is not the way to do it.

You can experiment with the World System model here. You can run the individual countries on the following sites:

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.

Japan (JP_LM Model) The Japanese economy has an unstable, sensitive relationship to the Export-Employment (X-HOURS) historical controller. Stabilizing the economy produces an immediate steady state without further growth. Prior to the Great Recession and the 2008 financial crisis, Japan practiced Shūshin koyō (employment for life). Adjustment to market conditions were based on modifying hours. In 1979, Ezra Vogel published Japan as Number One: Lessons for America. The Great Recession and the 2008 financial crisis put an end to fears of Japanese domination of the World-System.

US (US_LM Model) The US is the current Hegemonic Leader of the World-System, but it's leadership is collapsing in the Trump II Administration. The US Economy is an unstable, cyclical model with unstable Export-Employment historical controllers. Stabilizing the model produces a cyclical steady state with wide swings.

UK (UK_LM Model) The UK model is also unstable and cyclical but the cycles are mild until well into the 22nd Century. There is no historical controller for HOURS and both HOURS and the (X-N) population controller follow cycles in the overall economy. The UK withdrawal from the EU (Brexit) can be viewed as an attempt to shield the economy from European shocks.

Some other countries you might investigate are:

• 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! 
• 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).

One thing to keep in mind when exploring potential hegemonic leaders is that the countries being dominated will to some extent (depending on the strength of their historical feedback controllers) take on the historical patterns of the hegemonic leader (India being an extreme Small Country example). Cyclical patterns that may be good for a decade, might not be so desirable during the first downturn.

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.

World-System (1980-2080) Alternative Forecasts for US CG Debt

The US Congress is currently debating a Spending Bill being advanced by the Trump II Administration that will add $2.4 Trillion to the Deficit. In a prior post (here), my model for the US Economy forecasts that Central Government (CG) Debt will decline (the forecast was made after the Trump I Administration). I have also suggested that the outcomes of the Trump Administrations cannot be forecast because they are essentially a random walk (here).

In the graphic above I give four forecasts for US CG Debt (data taken from the World Development Indicators, see the Boiler Plate). The Random Walk (RW) line is meant to show that Debt Shocks (see the Trump I Administration) can happen at anytime in the future and are unpredictable. The prediction driven by the USL20 Model (US, dashed green line) shows the decreasing path of US CB Debt. The prediction driven by the WL20 Model (W, dashed blue line) shows debt peaking around 2050. The Business as Usual Line (BAU) shows debt growing linearly (it actually levels off in 2500).

One point to make is that all these models are stable (largest eigenvalue < 1.0)**. This means that none of my models predict that US CG DEBT is out of control or will grow forever (uncontrolled exponential growth). However, other Econometric models (for example, the Penn-Wharton Budget Model, PWBM) forecast that the US has about 20 years before Debt levels become unsustainable.

My best guess? Given that my forecasting models are stable and that the Trump Shocks will eventually be history, it seems reasonable to project that US CG Debt will keep pace with growth in the US Economy and will eventually stabilize when economic growth is over (see my forecasts for US  Economic growth here).

NOTES

** All my models are estimated from historical data and are not assumed, prior to estimation, as either stable or unstable (as are most Economic Models). For more information about the models I use and data sources, see the Boiler Plate.

I analyze the causes of the US CG Debt Bubble in another post.