"What intrigues us as a problem, and what will satisfy us as a solution, will depend upon the line we draw between what is already clear and what needs to be clarified," Nelson Goodman.
State Space Models
All state space models are written and estimated in the R programming language. The models are available here with instructions and R procedures for manipulating the models here here.
The Kondratiev Wave is an important element of World-Systems Theory. The graphic above is taken from Andreas Goldschmidt and gives historical specifics for technological cycles. Goldschmidt's formulation allows for the idea to be tested (one of the models I always test), is partially consistent with economic Growth theory (particularly if we do not assume a functional form for exogenous disembodied technological change in the Solow-Swan Model) and I can present some examples.
The IPCC has accumulated a mountain of scientific results around CO2 Emission forecasts and produced a number of alternative Emission Scenarios for the future (see the Boiler Plate). Climate Change Deniers can pick at the underlying models and the Emission Scenarios, but the underlying Kaya Identity (directed graph above) is true by definition. An increase in population (N) or any of the other extensive variables (L=Labor Q=Production and E=Energy Use) will increase CO2 Emissions unless the intensive variables (coefficients n=N/L, q=Q/L, e=E/Q, and c=CO2/E) are reduced (you can calculate the coefficients yourself from available historical data or use R-code here).
It can also be argued that the Kaya Identity has no feedback effects. As conditions in the World System deteriorate due to increasing Global Temperature (T), it should feedback to reduce all the extensive variables. For example, population growth should be reduced by heat waves, crop failures, sea level rise, famines, production and employment declines, etc. This is where state space DCM models (see the Boiler Plate) directly estimate feedback effects in the World System (see the WL20 model here and the Measurement Matrix in the Notes below). The feedback effects are from Environmental Controllers (W2=0.7705 LP - 0.235 T) and World Markets (W3 = 0.712 P.Oil. - 0.241 OIL - EF 0.293) on Overall Growth, W1.
The feedback effects are not strong enough to limit the Kaya Dynamic, that is, change the intensive coefficients. The forecast graphic at the beginning of this post, whether CO2 is driven by Carbon Emissions or driven by the World System, predicts continued exponential growth.
One way to change the Kaya Dynamic is to reduce the growth rate of Carbon Emissions in the Kaya Coefficient model (see the Notes below, change the System matrix fromF[1,1]=1.07917 to F[1,1]=1.07916--a very small change that produces the graphic above). In other words, very small changes in Carbon growth rates, when linked to the World System, produce large reductions in Emissions.
Since the World System is cyclical, emissions start to grow again around 2100. I would expect that if Carbon emissions hit zero before the 22nd Century, the World System itself would be subject to changes that are only wildly speculative in 2025.
According to the NY Times article (here), China, the US, India and Europe are the Major CO2 emitters. I have produced a forecast for US CO2 Emissions (here). I will do the same for China, India and Europe in Future Posts.
Notes
More posts on the World System:
Global Temperature Projections Using the World System model, Global Temperature will peak below +1.5 degrees Centigrade. Using the Kaya Model, it will not (goodbye Polar Ice Caps).
Peak Oil and Global Warming Peak Oil Production, at some time in the Future, seems reasonable but "when" is hard to predict.
World Population Collapse Both the UN and my WL20 model predict that World Population will start to collapse after 2050. If that really happens, there will be ripple effects throughout the Kaya Identity!
A New Axis of Evil Looks scary but they might be no better at running the World-System than the US.
World System Steady State and Collapse The only stable, steady state future for the World System is dominance by Europe. Right now, competition between the major Hegemonic contenders (the US, Russia and China) might not produce a steady-state Future.
Hegemonic Dominance Forecasts Dominance of the World System by Russia would lead to (1) unending exponential growth and (2) a Dystopian Nightmare.
US CO2 Forecasts Emissions are declining in the US but the best way to reinforce the trend is to let gasoline prices increase, a political non-starter.
Coal will make Reducing Energy Intensity Difficult Reducing the mining and burning of coal will be difficult and the Trump II Administration is trying to "Greenwash" the problem by rebranding it "Clean Coal," which it isn't.
World Impact Forecasts More on Impact Models, if you are interested. Impact models do not have feedback effects but they are easy to calculate by hand and maybe feedback effects are weak in the World-System.
This page is UNDER CONSTRUCTION but you can study the graphic, the State Space model outputs and the Wikipedia links below.
The best model (using the AIC Statistics) is driven by the EU index but the best model, in terms of reducing Inequality (GINI coefficient) is input from the World System.
This page is UNDER CONSTRUCTION but you can study the graphic above and the State Space Model outputs below.
The best model (using the AIC Statistics) is driven by the RW (Random Walk) model, in terms of increasing Growth is input from the EU (European Union).
Measurable Hardship in the US (graphic above), is increasing and projected to increase until 2025. If US economic performance is so great, why is this happening? And, why does Hardship decrease after 2025 in the estimated model (see the Boiler Plate) above?
Quantitative Counterfactual Analysis indicates that impacts from growth in the World System are driving Hardship in the US. Decline in Hardship after 2025 is the effect of slowing growth in the World System. In other words, Growth in the World System has increased Hardship in the US even though the US is the Hegemonic leader of the World-System.
Part of the reason is that the current US Administration (Trump II) is cutting benefits for SNAP (Food Stamps) and other US Welfare programs. Why "millions of Americans" have to be on food assistance in the first place is a question that bothers me and the answer has to do with World-System forces.
The graphic at the beginning of this post is a forecast driven by outputs from the WL20 model. To determine the effect of World System forces, we can rerun the forecast with the BAU model (no input from the World System).
The BAU model shows Hardship reaching a high-level plateau after 2100. The Trump IIAdministration's actions to withdraw from the World-System and their attempts to cut US Welfare programs is an attempt to bring this Hardship Future into being. Increasing Hardship in the US was one of the prices of Hegemonic Leadership.
The peak and decline of the World System would benefit the US if it still stays connected to the World-System. High levels of Hardship and World-System isolation are possibly a benefit to some elements of the US Right-Wing elite, but not most of the US Public. The Hardship Future will likely also be one of Conflict and Chaos--another potential benefit to the Right-Wing.
You can experiment yourself with the USL20 Hardship model here. For comparison, the System Matrices for the the USL20 Hardship model with World Input are presented in the Notes. Bootstrap 98% Confidence intervals for coefficients in the Systems Matrix (F) are provided in the code. Both models are stable.
Is there anything in the US Economy that controls Hardship or is it primarily driven by World System conditions? Economic theory doesn't have much (or anything) to say about Hardship. Controlling Hardship is essentially a Political Systems problem (among a lot of there things here), but current Neoliberal Ideology seems to rely on Economic growth to resolve all problems. In a future post, I'll investigate the topic of what (if anything) controls Hardship.
Notes
Video
President Trump thinks we have the "...best Poverty numbers ever" (video above).
In addition to HARD1, two other indexes were constructed, HARD2 (dominated by Unemployment) and HARD3 (dominated by Inflation). Each index explained another 10% (0.841% and 0.933%, respectively) in the indicators. So, indeed, Unemployment and Inflation were important components of US Hardship, but the other indicators also played a role. Whether the US Electorate made a good choice in electing the TRUMP II administration to resolve their issues with hardship will have to wait and be seen over the next four years.
The Measurement Models for the WL20 Index and the US_HARD index are presented above. The time series forecast plots are presented below. The WL20 index first:
Growth in the World System (W1) peaks in 2040 and is forecast to decline after that. The Food-Market Index (W2=(LP+P.Wheat.-TEMP) declines throughout the period because Global Temperature is increasing and the Oil- Market-Environmental Index (W3=(P.OIL+P.WHEAT-OIL-EF-Earths) increases to a plateau in 2075.
And the the WL20 HARD index:
Overall Hardship (W1) increases through the period while W2 (Unemployment) and W3 (Poverty) are cyclical.
The basic theoretical model underlying the possible impact of Population Decline is the Kaya Identity (above) used by the IPCC to help understand Global Temperature Change. The Kaya Identity is true by definition (see the Boiler Plate) so any decrease in Population will not only decrease economic growth (Q) but also decrease CO2 emissions and moderate Global Temperature (T).
My models are also predicting that growth in the World System will peak before 2100 (here) as will Global Temperature (here). The reasons are that there are powerful negative feedback loops from environmental and market controllers that eventuallylimit growth of the World System.
Exercises
You can experiment yourself with one of my World System models here. The models are written in the R programming language and can be run on line. Suggestions in the code, to include bootstrap confidence intervals for choosing reasonable counterfactuals, can be found in the code. The model is stable and cyclical.
Another one of my World Systems models is unstable and produces exponential growth forever (here). When it is stabilized (instructions in the code) the World System reaches a steady state after 2100.
The future could be any one of these models or something else entirely (see the Boiler Platefor IPCC Emission Scenarios). You have to ask yourself which one of the models (if any) seem reasonable.
