Thursday, November 27, 2025

Blog Roll: The United Kingdom (1950-2000+)


 


After Leaving the European Union on on 31 January 2020 (Brexit), Britain's future remains murky. ChatGPT reports that:

If you are interested in forming your own opinions about the Economy of the United Kingdom, here is a Blog Roll of results from various historical Systems models:

  • The UKL19D Model Collapsing Economy, unstable Export-Urban Population controller.
  • The UKE20 Model During the Great Depression, the UK had doubly unstable Growth-Export and Export-Employment Controllers.
  • The UKL19 Model During the Late 19th Century, the British economy was unstable and collapsing due to an unstable Urban-Export controller.
  • The UK18 Model During the 18th Century, the British Economy was also unstable and collapsing due to an unstable Growth-Export Controller and an Unstable Export-Population Controller. Historically, the UK Economy was saved by the Industrial Revolution.
  • The UK17 Model During the 17th Century, the British Economy had an unstable Growth-Exports controller and an unstable Malthusian-Export controller (Exports allowing the economy to growth exponentially.
  • The UK16 Model During the 16th Century, the British Economy had an unstable Growth-Export controller and an unstable Urban-Population-Export controller, allowing the economy to growth exponentially.

Wednesday, November 26, 2025

Technology Long Waves

  


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.

Thursday, November 20, 2025

Back-of-the-envelope Calculations: Global Warming



It was from [G. P.] Kuiper that I first got a feeling for what is called a back-of--the-envelope calculation: A possible explanation to a problem occurs to you, you pull out an old envelope, appeal to your knowledge of fundamental physics, scribble a few approximate equations on the envelope, substitute in likely numerical values, and see if your answer comes anywhere near explaining your problem. If not, you look for a different explanation, It cut through nonsense like a knife through butter.

Given the controversies that are currently swirling around Climate change (the President of the United States has called it a "hoax"), it would be useful for the non-scientists to have a back-of-the-envelope calculation to "cut through nonsense". There is a simple equation, called the Kaya Identity that would be very useful to understand.


I first became aware of the Kaya Identity on one of the first IPCC reports. The Kaya Identity proves a back-of-the-envelope way to calculate global temperature increase, T, from population growth. The current IPPC report, AR15, doesn't mention it in the introduction but it should. AR15 claims that it is already too late to limit anthropogenic (human caused) climate change. It is  dire warning but how can the non-scientists check the assertion. Let's work through he Kaya identity slowly and see what the calculations tell us.

The first step in the causal chain is the effect of population growth, N,  on economic production, Q. The Kaya equation is Q = qN where q is output per capita. In the Kaya framework, q is called an intensive variable while N and Q are extensive variables.


Blog Roll: The World System (1950-2000+)

 


The World System, typically used by the IPCC to model Global Climate Change, means one system explaining environmental and economic trends of the World. The World-System (notice the hyphen), a term used by World-Systems Theory, refers to a "World of Systems" in which nation states and regions form hierarchical Geopolitical relationships.

Here are some postings I have done from the perspective of both the World System and the World-System:

Some of the State Space Dynamic Components models (see the Boiler Plate) for the period 1950-2000+ are available as R-code and can be run here.

Monday, November 17, 2025

Blog Roll: Argentina


 Wikipedia notes (here) that:

Argentina's economy has swung from one of the world's richest in the early 20th century to repeated cycles of boom, bust, and hyperinflation, driven by commodity dependence, political instability, and policy shifts.

The newest shock to the economy has come from president Javier Milei's  Economic Austerity policies which have, evidently, failed and required a $20 Bailout from the Trump II Administration

I have a systems model (ARL20) of the Argentine Economy which can be used to investigate (1) the Late 20th and early 21st century Economic History of Argentina and (2) alternative Geopolitical Futures for Argentina and the resulting economic impacts.

Friday, October 10, 2025

Blog Roll: Venezuela



Venezuela is currently in the News because the US appears to be planning an invasion of the country. Wikipedia notes (here) that "With the turn of the 21st century, the Venezuelan economy has been in a state of total collapse since 2013."

Here are some background forecasts from my VEL20 model and a model of the Latin American Region
Activities within Latin American and within the MAGA movement suggest that events in Venezuela and in the US are changing quickly and cannot be easily predicted. Hopefully, historical models and forecasts will make events that happen in the future somewhat more understandable.

 

Malthusian Crisis in Ethiopia?

 


Wasn't Malthus Wrong?

The PBS NewsHour is reporting (here) that "millions ... [in Ethiopia] ... still face the risk of starvation as a result of drought conditions", even though the Civil War ended in November, 2022. The last time Ethiopia faced famine was in 1984. Last March, the World Food Program and the USAID suspended food deliveries because grain was being stolen, sold on the black market and not getting to those in need.

Why should I even bother trying to apply a Malthusian model to Ethiopia (ETH) when Nobel Laureate William Nordhaus and most of the Economics profession argue that a Neoclassical General Equilibrium model (the DICE model) apples to every region of the World-System and, supposedly, to every country in the World-System. Critics will argue that I am just trying to push the conventional Malthusian policy conclusion: Ignore the poor and hungry because feeding them will just increase their birth rate and further increase population pressure.



World-Systems Theory (WST) has an answer to the question of what is the appropriate model to apply to a particular country: It depends on the country's place in the hierarchical structure of the World-System. Is it a Core, Semi-peripheral or Peripheral country? Core countries are mostly Capitalist, Semi-peripheral countries are Mixed with some elements of Capitalism and Peripheral countries are, I would argue, Malthusian-agricultural economies living on the edge of repeated food crisis and domination by core and semi-peripheral countries.* Most readers will understand what a Capitalist or Mixed economy is because they live in one. But what is a Malthusian economy?

Thomas Robert Malthus (1766-1834) was an English economist, cleric and scholar (political economy and demography). He predicted, controversially, that if population growth exceeded the productive capacity (carrying capacity) of the economy, a Malthusian Crisis would result, where "positive checks" such as famine, war, drought, immigration, etc. would reduce population pressure. Only "preventive checks" (birth control, delayed marriage, etc.) would prevent these catastrophes because population growth would, if uncontrolled, always exceed the productive capacity of the economy.

Famines have occurred periodically in the history of Ethiopia according to records dating to the 9th Century. To say why these famines happened and that they are definitely not the result of population pressure would be amazingly arrogant. And, to say that Neoclassical Economic Theory applies to all countries and to all recorded history would be equally arrogant. In fact, none of the modern models can be tested on Ethiopia because, aside from sparse World Bank data after WWII (the WDI or World Development Indicators), data is very weak for Ethiopia (although there is more data for regions in Africa but still not enough to test the regional DICE model).

Still, Karl Marx (1818-1883) called Malthus' population principle a "libel on the human race" and Malthus himself the "reverend scribbler." Indeed, "every schoolboy knows that Malthus was wrong" (Benjamin Higgins, 1968). Julian Simon (1932-1998) has argued that the World's carrying capacity is essentially unlimited. On the other hand, Jared Diamond has documented that the Rwanda Genocide was the result of population pressure. Why is Malthusian Theory so controversial and requires current analysts to keep writing Why Malthus Is Still Wrong. The continuing confusion involves failing to differentiate between the "Malthusian Model," the evidence supporting it, the "Malthusian Policy Recommendations" and the World-System. This particular Model-Evidence-Policy-System confusion, however, is true of every mental or formal model and is worth understanding for the well-documented and simple Malthusian Model.

The Malthusian Model (MM) is the model on which all other models are implicitly based (see Table I). Usually population growth is taken as exogenous because Capitalist economies can accommodate the demands of an expanding population. The original MM was simply two equations: a linear one for production growth, Q, and a geometric one for population growth, N. The equations didn't interact as a system** and when growth in N exceed Q, a Malthusian crisis was triggered. Kenneth Boulding put (Q,N) together in a system, with no assumptions about functional forms, and we have the modern version. The MM System model uses the state of the system S=(Q-N) as an Error-Correcting Controller (ECC); when (Q>N) population can expand (a feedback effect) and when (Q<N) population will contract through "positive checks".

Measuring Crisis

The MM Systems Model can be estimated for Ethiopia after WWII using the WDI to determine the state of the Malthusian Crisis. The first step is to estimate a measurement model using data we have from the WDI. N and Q are the most complete series and, luckily, form the basic Malthusian model.


 Measurement Matrix 

      N     Q

[1,]  0.707 0.707

[2,] -0.707 0.707


 Fraction of Variance 

[1] 0.958 1.000


The Measurement matrix can be estimated using Principal Components Analysis (PCA). The components will be used to form the approximate state variables of the Malthusian System. When estimated, the first component is overall growth (ETH1 = 0.707 N + 0.707 Q) and the second component, the Error Correcting Growth Controller (ETH2 = 0.707 Q - 0.707 N). Growth explains 96% of the variance and the ECC explains 4%.

The Figure above shows ETH1 (Growth) and ETH2 (The Malthusian ECC) plotted over time. ETH2 enters negative Malthusian-Criss territory around 1990 and starts recovering after 2010 (the 1983-1985 Famine was the worst in a Century and started the downward slide in the Malthusian Crisis). Overall growth (ETH1) although wiggling a little over time was not permanently affected.

Typically, commenting on historical time plots is as far as historical analysis gets, Malthusian or not. But I want to estimate a system model and try to understand how trends are causally related. 

Modeling Results

Modeling forces the question of "What is the System?" World Systems Theory (WST) provides a framework for answering the question. Ethiopia (ETH) is a country embedded with in a system of other countries. 



Discussion



NOTES

* My identification of Ethiopia as a Peripheral Country is a little casual and can be debated (see Babones, 2005). In studying the WDI, one indicator of Peripheral status is simply the lack of information in the data set. Semi-Peripheral and Core countries are fully populated with data.

** We might criticize Malthus for not inventing Systems Theory (a Twentieth Century discovery) and Marx came close recognizing that social systems are "over-determined" (Wolff and Resnick, 2006). You can read more Marx and Engels on the Population Bomb here. Unified Growth Theory puts all these various approaches together in one model starting with the MM at low levels of growth or stagnation (the Malthusian Trap) and ending with the Steady State Economy.


Appendix: ECC Models


Appendix: Systems Model

Models have a compact R-code in dse and can be run easily in SnippetsNote that the RUL20 model is only unstable in the feedback components $F[3,3] = 1.03$. If you stabilize the third feedback component (e.g.,$F[3,3] = 0.98$)  the entire system is stable. 


===========

merge.forecast <-

function (fx,n=1) {

#

# Merges a forecast with the output data

x <- splice(fx$pred,fx$forecast[[n]])

colnames(x) <- seriesNames(fx$data$output)

return(x)

}

#

#

# RUL20  Russia (1950-2000)

#

# Measurement Matrix 

#    EN.ATM.CO2E.KT EG.USE.COMM.KT.OE NY.GDP.MKTP.KD SL.TLF.TOTL.IN SP.POP.TOTL

#[1,]        0.28209            0.4060         0.3336         0.4343      0.3721

#[2,]       -0.43993           -0.2199        -0.1359         0.1328      0.2266

#[3,]        0.06433           -0.1446         0.5944         0.0494     -0.3944

#     SL.UEM.TOTL.ZS     HDI      EF    KOF

#[1,]         0.1893 0.43400  0.2348 0.1948

#[2,]         0.4971 0.03409 -0.3950 0.5161

#[3,]        -0.3374 0.22538 -0.4878 0.2470

#

 #Fraction of Variance 

#[1] 0.5489 0.8484 0.9677 0.9814 0.9921 0.9975 0.9988 0.9995 1.0000

require(dse)

require(matlab)

AIC <- function(model) {informationTestsCalculations(model)[3]}

f <- matrix( c( 0.976658001, 0.02127754,  0.2249071, 0.161990376,

                     -0.008392259, 0.97543675, -0.2319674, 0.001666581,

                     -0.005587383, 0.09718186,  1.0312754, 0.035854885,

                      0.000000000, 0.00000000,  0.0000000, 1.000000000

),byrow=TRUE,nrow=4,ncol=4)

h <- eye(3,4)

k <- f[1:4,1:3,drop=FALSE]

RUL20 <- SS(F=f,H=h,K=k,

z0=c(0.161990376, 0.001666581, 0.035854885, 1.00000000),

              output.names=c("RU1","RU2","RU3"))

stability(RUL20)

#tfplot(simulate(RUL20,sampleT=20))

shockDecomposition(toSSChol(RUL20))

RUL20.data <- simulate(RUL20,sampleT=50,start=1950,noise=matrix(0,50,3))

m <- l(RUL20,RUL20.data)

#tfplot(m)

AIC(m)

tfplot(RUL20.f <- forecast(m,horizon=50))

RUL20.fx <- merge.forecast(RUL20.f)



#    Models have a compact R-code in dse and can be run easily in Snippets

#    The RU20 must be run first to provide input for #ETH20.

#

# W20 ETH (Ethiopia) Russia Input

#

# Measurement Matrix 

#       N  Q

#[1,]  0.707 0.707

#[2,] -0.707 0.707

#

#Fraction of Variance 

#[1] 0.958 1.000

#

require(dse)

require(matlab)

AIC <- function(model) {informationTestsCalculations(model)[3]}

f <- matrix( c(  1.04647269, -0.1059723, 0.10155553,

                        0.01918655,  0.9306230, 0.01335861,

                  0.000000000,  0.00000000,  1.00000000

),byrow=TRUE,nrow=3,ncol=3)

g <- matrix(c(-0.003819938, -0.01406381, 0.009235749,

                     -0.010773904, -0.01627134, 0.017135870,

                      0.000000000 , 0.00000000, 0.000000000

),byrow=TRUE,nrow=3,ncol=3)                      

h <- eye(2,3)

k <- f[1:3,1:2,drop=FALSE]


ETH20 <- SS(F=f,H=h,K=k,z0=c(0.11991149, 0.04457381, 1.00000000),

              output.names=c("Growth","(Q-N)"))

stability(ETH20)

shockDecomposition(toSSChol(ETH20))

ETH20.data <- simulate(ETH20,sampleT=50,start=1950,noise=matrix(0,50,2))

m <- l(ETH20,ETH20.data)

#tfplot(m)

AIC(m)

tfplot(forecast(m,horizon=50))

ETH20x <- SS(F=f,H=h,K=k,G=g,z0=c(0.11991149, 0.04457381, 1.00000000),

              output.names=c("Growth","(Q-N)"))

ETH20x

data <- TSdata(output=outputData(ETH20.data),input=RUL20.fx)

m <- l(ETH20x,data)

#tfplot(m)

AIC(m)

shockDecomposition(m)

tfplot(forecast(m,horizon=50,conditioning.inputs=RUL20.fx))







Blog Roll: Colombia

 





Posts


Tuesday, October 7, 2025

Blog Roll: France

 



The French government has collapsed again "less than 24 hours after its formation" (here). It seems like a good time to look back at what I have found about the French Economy:

There is certainly a lot more to learn about the French economy. The important conclusion, at this point in my research, is that France might be heading toward a Steady State Economy which will lead to a period of World-System Chaos before government's learn to deal with the end of growth or Environmental Collapse or are able to discover new growth technologies through Schumpeter's Creative Destruction.

Wednesday, August 20, 2025

Blog Roll: Ukraine


 The Russo-Ukrainian War began in 2014 and is still ongoing without any clear sign of resolution. What the Russian Invasion will mean for the Ukrainian Economy is not clear but it has been a sever shock to the system. On this page, I will list what I have learned so far about the  Ukrainian Economy and Russian Economy in the hopes of understanding what might happen in the future. I will continue to update this page as I learn more.

My objective at this point (since the future us unknowable) is to try to figure out how the Ukrainian Economy, the Russian Economy and the economies of the European Union work and understand how they will respond to the shocks of the Russo-Ukrainian War.

For more information about how my State Space models are estimated and constructed, see the Boiler Plate.

Friday, August 1, 2025

Trump's Trade War: the World-System Perspective

 


The New York Times today posted two interesting graphics about Trump' Trade War (here): The country status (above) and the results ranked by 2024 Imports (below).



From the ranks (above) it seems that he is going after the money, targeting our biggest trading partners. The economic sense of this (if there is any) is Import Substitution Industrialization (ISI) for the US, a strategy typically employed by Global South countries. Basically, price imports so high that home-grown industries will develop to fill the gaps. Unfortunately, building factories and developing an ecosystem of suppliers takes times. In the mean time, prices in the home country (US) go up as are result of tariff expenses being added to list prices (remember when tariffs would be listed on automobile sticker prices).

By the time ISI would have any impact, Trump will be out of office.

Wednesday, July 9, 2025

Blog Roll: Iran

 


Iran has been in the news lately after US and Israel bombings. However, the problems for Iran are really historically driven and go back to the immediate aftermath of WWII. I have state-space models of the Iranian economy from 1950 to the present and use the models to help understand Iran's historical development 

HINT: the Iranian economy is an historically driven economy not a Neoclassical Economy

Here's a blog roll:


Further reading: