Like previous models, this model shows the operation of a simple economy, the influence of changes in the consumption rate, and the effect of government intervention. In addition, this model shows changes in the hypothetical general price level. It gives an idea of changes in price trends based on changes in the quantity of money. NOTE: No general price level exists. Prices provide information for the exchange of individual economic goods.
ECONOMIC GROWTH feeds on itself, provided the growth engine is fed with materials and
finance. In this highly simplified representation some of the factors that influence economic growth
are show in the incircled green fields. Governments can influence economic growth positively
via investments and payouts. The most
obvious tool which governments can use to slow an overheated economy is
taxation.
This model illustrates the current practice and consequences of government spending. Following the
direction of the arrows from right to left the model shows the following sequence
based on current practice:
Government
Spending at a certain point leads to spending in excess of tax receipts. This
will automatically lead to the issue of treasuries in the belief that the excess
spending must be financed by borrowing (although the government has the capacity
to create money). This in turn will
increase the national debt.
Consequences that follow from this practice:
1) That national
debt increases whenever the government spends in excess of tax receipts.
2) That the
government must pay interest on the debt issued, which in turn increases and
reinforces the need for government spending.
3) That the
interest paid on treasuries will increase private sector income.
There is an
alternative view, supported by Modern Monetary Theory, of how government spending
can proceed. Please see this Insight:
A clone of the Goodwin cycle IM-2010 with debt and taxes added, modified from Steve Keen's illustration of Hyman Minsky's Financial Instability Hypothesis "stability begets instability". This can be extended by adding the Ponzi effect of borrowing for speculative investment: http://www.jstor.org/stable/10.2307/4538470.
This model requires development and testing. Please contact the author if you are able to help.
WIP of several books of Karl Polanyi's thoughts and papers around social science economic history and capitalism. . See also Summary of the Great Transformation IM-10640
The World3 model is a detailed simulation of human population growth from 1900 into the future. It includes many environmental and demographic factors.
THIS MODEL BY GUY LAKEMAN, FROM METRICS OBTAINED USING A MORE COMPREHENSIVE VENSIM SOFTWARE MODEL, SHOWS CURRENT CONDITIONS CREATED BY THE LATEST WEATHER EXTREMES AND LOSS OF ARABLE LAND BY THE ALBEDO EFECT MELTING THE POLAR CAPS TOGETHER WITH NORTHERN JETSTREAM SHIFT NORTHWARDS, AND A NECESSITY TO ACT BEFORE THERE IS HUGE SUFFERING.
BY SETTING THE NEW ECOLOGICAL POLICIES TO 2015 WE CAN SEE THAT SOME POPULATIONS CAN BE SAVED BUT CITIES WILL SUFFER MOST.
CURRENT MARKET SATURATION PLATEAU OF SOLID PRODUCTS AND BEHAVIORAL SINK FACTORS ARE ALSO ADDED
Use the sliders to experiment with the initial amount of non-renewable resources to see how these affect the simulation. Does increasing the amount of non-renewable resources (which could occur through the development of better exploration technologies) improve our future? Also, experiment with the start date of a low birth-rate, environmentally focused policy.
2014 Weather & Climate Extreme Loss of Arable Land and Ocean Fertility - The World3+ Model: Forecaster
This page provides a structural analysis of POTUS Candidate Lindsey Graham's
economic policy based on the information at: http://www.lindseygraham.com/issue/restore-fiscal-discipline/ http://www.lindseygraham.com/issue/ease-tax-and-regulatory-burdens/ http://www.lindseygraham.com/issue/achieve-energy-independence/ http://www.lindseygraham.com/issue/reform-entitlements/ The method used is Integrative
Propositional Analysis (IPA)
available:
http://scipolicy.org/uploads/3/4/6/9/3469675/wallis_white_paper_-_the_ipa_answer_2014.12.11.pdf
In a recent report, the World Economic Forum
considered that the use of robots in economic activity will cause far more job
losses in the near future than there will be new ones created. Every economic
sector will be affected. The CLD tries to illustrate the dynamic effects of
replacing human workers with robots. This dynamic indicates that if there is no replacement of
the income forgone by the laid off
workers, then the economy will soon grind to a halt. To avoid disaster, there
must be enough money in circulation, not parked in off-shore investments, to
permit the purchase of all the goods and services produced by robots. The
challenge for the government is to make sure that this is case.
This page provides a structural analysis of POTUS Candidate Chris Christi's
economic policy based on the information at: https://d70h9a36p82zs.cloudfront.net/Ccpres2016/base/assets/1-0-1/production/Chris-Christie-TheEconomy.pdf The method used is Integrative
Propositional Analysis (IPA)
available:
http://scipolicy.org/uploads/3/4/6/9/3469675/wallis_white_paper_-_the_ipa_answer_2014.12.11.pdf
A Tragedy of the Commons situation exists whenever two or more activities, each, which in order to produce results, rely on a shared limited resource. Results for these activities continue to develop as long as their use of the limited resource doesn't exceed the resource limit. Once this limit is reached the results produced by each activity are limited to the level at which the resource is replenished. As an example, consider multiple departments with an organization using IT resources, until they've exhausted IT capacity.
Environmental economics Niger Delta oil polluted case study
Grid-Group Culture applied to Public Management based on Christopher Hood's 1998 book. plus excerpts from Schwartz and Thompson's 1990 Book Divided we stand. See also Managing Mess IM-11581 and FourCultures Blog and Wikipedia Cultural Theory of Risk
Modern industrial civilisation has created massive
interdependencies which define it and without which it could not function. We all
depend on industrial farming to produce the food we eat, we depend on gasoline
being available at the gas station, on the
availability of electricity and even on the bread supplied by the local baker. Naturally,
we tend to support the institutions that supply the amenities and goods to
which we have become accustomed: if we get our food from the local supermarket,
it is likely that we would be opposed to it’s closure. This means that the economic
system that relies on continuous growth enjoys implicit societal support and that
nothing short of environmental disaster or a shortage of essential raw
materials will impede it’s growing indefinitely. It is not hard to work out the
consequences of this situation!
Unfolding story based on Emery Roe's 2013 book Making the Most of Mess, revised in 2026. See also Dynamics in Action IM-3239 for more on behavior and The Art of the State IM-11962 for more on Grid-Group Cultural Theory
Wealth can be seen as the factories,
infrastructure, goods and services the population of a nation dispose of. According
to Tim Garrett, a scientist who looks at
the economy from the perspective of physics, it is existing wealth that generates
economic activity and growth. This growth demands the use of energy as no
activity can take place without its use. He also points out that the use of this
energy unavoidably leads to concentrations of CO2 in the
atmosphere. All this, Tim Garrett says, follows from the second law of thermodynamics.
If wealth decreases then so does economic activity and growth. The CLD tries to illustrate how wealth,
ironically, now generates the conditions and feedback loops that may cause it to decline. The consequences are inevitably economic stagnation (or secular recession?).
You can
read about the connection Tim Garrett makes between 'Wealth, Economic Growth,
Energy and CO2 Emissions' simply by
Googling 'Tim Garrett and Economy'.
