WL20 Poverty Scenarios

This Page is UNDER CONSTRUCTION but the results of the graphic above make it clear that predictions for Poverty in the World-System are better than in the United  States!

Notes

World Bank Poverty Reports (not very reassuring) From 1990 to 2026, the total number of people worldwide living in extreme poverty declined from around 2.3 billion to 811 million, each trying to survive on less than $3 per day. The sharp decline over this period was largely driven by robust, broad-based economic growth in East Asia and South Asia.

Over the last decade, however, global poverty reduction has slowed substantially. This slowdown is due to a combination of interconnected crises, including sluggish economic growth, high levels of debt, the effects of the COVID-19 pandemic, conflict and fragility, and severe weather-related shocks.

These overlapping crises have hit low-income countries the hardest. At the current pace of progress, it could take decades to eradicate extreme poverty.

Extreme poverty has become increasingly concentrated in Sub-Saharan Africa, and places affected by conflict and fragility. Although a necessary condition, economic growth is not enough to break the cycle of poverty. Stronger foundational investments in infrastructure, human capital, and institutions are critical to ensure people can climb the socioeconomic ladder and escape extreme poverty.

 

USL20 Poverty Scenarios

The video below was another in a long line of crazy pronouncements from US President Donald Trump but does the US have the best poverty numbers? That's easy to check.

The graphic above plots SI.POV.DDAY for the US from the World Development Indicators (black line prior to 2010). The US did have a brief reduction in Poverty around 2010 but now we are back to Business as Usual (BAU). Like a lot of other boasts, no one knows what President Trump is talking about. However, even if not accurate, it raises the question about what to expect for the future (since no one seems to believe that Trump cares much about Poverty or the Poor).

In prior posts (here and here) I've presented forecasts for US Hardship and Poverty that (1) were not very reassuring and (2) did not suggest any policy options. In this post, I will present and discuss some Poverty Scenarios based on different drivers for policy. The graphic above presents six possible future scenarios for SI.POV.DDAY from the World Development Indicators.

The TECH models indirectly address the current concern of the impact of Artificial Intelligence (AI) on employment, that is, taking away jobs. The BAU (Business as Usual) and RW (Random Walk)  describe two options for a Benevolent Neglect Policy (see below). The USL20-Input model allows the US economy to generate whatever level of economic progress it produces in terms of poverty reduction (it doesn't). The WL20-Input lets trends in development of the World System (which appears to be doing a better job of Poverty reduction) determine levels of poverty.

• Business as Usual (BAU) turns out to be one of the best models given the AIC Statistics (see below).
• Random Walk (RW) the muddling-through model assumes that random attempts to reduce poverty might eventually find a solution.
• TECH Efficiency (TECHE) assumes that attempts to manipulate the intensive coefficients in the Kaya Impact model will affect poverty (Technical efficiency could reduce Poverty but it doesn't look like that is happening in the US especially in the age of AI).
• WL20-Input assumes that keeping US Poverty in line with the World-System will at least ensure that Poverty remains at world-wide acceptable levels.
• USL20 Input assumes that growth in the US Capitalist economy provides the best way to reduce poverty (in the US, increasing poverty is just part of the Capitalist system).
• TECH Productivity (TECHP) assumes that Technical Productivity (Solow-Swan Economic Model) is the primary driver of economic growth and poverty reduction (it isn't).

The best models, in terms of keeping poverty at existing levels, are the BAU and RW (benevolent neglect, see below) models. All the other models raise US Poverty above current levels. 

        None of the models considered will Reduce Poverty in the US.

Notes

Benevolent Neglect

From Google AI:

USL20 Poverty AIC Statistics

All the AIC Confidence intervals are overlapping so it is hard to pick one model as the winner.

USL20 Poverty BAU Model

At least under the BAU model, Poverty in the US is stable (I'm not sure this is a positive finding and so much for Lyndon Johnson's War on Poverty).

 

Is the US Flawed Democracy?

This Page is UNDER CONSTRUCTION

Notes

• The Economist Democracy Index published by the British media company the Economist Group is an index measuring the quality of democracy across the world. This quantitative and comparative assessment is centrally concerned with democratic rights and democratic institutions. The methodology for assessing democracy used in this democracy index is according to the Economist Intelligence Unit which is part of the Economist Group, a UK-based private company, which publishes the weekly newspaper The Economist.

Economist Democracy Index

 

USL20: Healthcare, Austerity, Hardship and Debt

This page is UNDER CONSTRUCTION but you can consider the information available and the Questions below until it is complete.

The Easton Political System Model with HC1 (Healthcare), AUST1 (Austerity), HARD1 (Hardship) and DEBT1 (Debt) as outputs with input from the USL20 Model.

 

Notes

QUESTIONS

1. What are the outputs of the Political System?
2. Should "Healthcare" be one of the outputs?
3. The USL20 POL Model is in growth-and-collapse model (see graphic above).

USL20 POL Measurement Model

USL20 POL Model

USL20 Measurement Model

A Simple Model of the US Healthcare System

 

In Pasdirtz (2007) I published a State-Space "covering model" for the US Healthcare system and generated Policy Wedges for areas of the system that needed control (see Blog Roll: Healthcare for more information). In this post, I'll present a simpler model (six variables based on the Kaya Identity, see below) that might prove useful for further policy analysis.

Starting with the basic Kaya Identity (above) where N=Population, L=Labor, Q=Production (GDP), P=Prices and K=Capital.

Adding in the Healthcare Sector (terms defined below) we have a simplified Healthcare Systems model.

Kaya Identity models are easy to understand but incomplete because all the possible feedback loops in the system are never clear. The State-Space Measurement model (computed with Principal Components--see below) has three components:  HC1 = (Growth - Hospitals), HC2 = (Population Insured + Labor in HealthCare + Hospitals) and HC3 = (Growth - Prices). The graphic above displays the state variables over time. HC1 grows over time, HC2 peaks in 1975 and HC3 is cyclical.

Notes

• Policy Wedges and State-Space Simulation Models If ever there was any political will, there is a way to control the US Healthcare System.
• US Healthcare Expenditures: Three Futures Currently, there is no political will for keeping Health expenditures in line with growth in the US or the World Economy. However, if HC Expenditure is part of the US Political System, there may be a different future.

More information about the US Healthcare System can be found in Blog Roll: Healthcare.

Readings

Pasdirtz (2007) Controlling the US Healthcare System with Policy Wedges Springer Health.

USL20HC Measurement Model

The State Space of the simplified Healthcare model has three components that explain 99.8% of the variation in the indicators. HC1 = (Growth - Hospitals), HC2 = (Population Insured + Labor in HealthCare + Hospitals) and HC3 = (Growth - Prices). What the three component state variables show is that the major feedback loops in the system center around Hospitals. Another way to say that is that Hospital growth controls the system and are essentially dependent on the Population of Insured patients.

Notice, in HC2, that Hospitals peaked in 1975 and hospital consolidation increased centralization. And, HC3 peaked in 1990. Although there have been structural changes in US Healthcare, this simplified system is still unstable (as are the other models with input from either the World System, WL20, or the US, USL20. 

USL20HC AIC Statistics

Notice that all the models are unstable and would require stabilize to control the system. The best model is alignment with the World System, the WL20 model.

USL20HC BAU Model

The BAU model has two unstable components involving HC1 and HC3.

Austerity, Growth and Debt in Italy

This page is UNDER CONSTRUCTION but you can go ahead an explore the Questions presented blow using Wikipedia links and State-Space Models.

In a previous post (here) I reported a chatGPT model that links Austerity (AUST), Economic Growth (GROWTH), Debt (DEBT) and Interest Rates (i)--graphic above. The State-Space models below test this Causal Model.

Notes

Run the ITL20 model in R-code (here). Information on how the State-Space models were constructed and data sources is available in the Boiler Plate.  For more of my posts see Blog Roll: Italy.

• Italian Debt Crisis: Sick Man of Europe? No! Italy is heading for a Steady-State Economy.

Questions

1. Do you think Italy is heading for a Debt Crisis?
2. What will happen if the Italian Economy experiences a strong, negative shock?
3. Can Italy "Grow out of" a Debt Crisis if it get's into one?
4. How much would an Italian Debt Crisis affect the European Union?
5. If Italy experiences a Debt Crisis will will it (1) increase Austerity and (2) will that make the Debt crisis worse or better?

Wikipedia Links

• The Economy of Italy a highly developed social market economy. It is the third-largest national economy in the European Union, the 8th-largest economy in the world by nominal GDP, and the 12th-largest by PPP-adjusted GDP
• The Economy of Fascist Italy the economy in the Kingdom of Italy during the Fascist period.
• The Politics of Italy conducted through a parliamentary republic with a multi-party system. Italy has been a democratic republic since 2 June 1946.
• The History of Italy inhabited by humans since the Paleolithic. During antiquity, there were many peoples in the Italian peninsula, including Etruscans, Latins, Samnites, Umbri, Cisalpine Gauls, Greeks in Magna Graecia and others.
• Giorgia Meloni an Italian politician who serves as Prime Minister of Italy since October 2022. She is the first woman to hold the office and the head of the third-longest government in the history of the Italian Republic.

Austerity (AUST) Measurement Model

Debt Crisis (DEBT) Measurement Model

Debt Crisis (DEBT) AIC

Austerity (AUST) AIC

Debt Crisis-Austerity (DEBT-AUST) Model

US 2026 Debt Forecasts: Is $40T Too Much?

Aug 22, 2026 Should we be thinking seriously about Debt Forgiveness? Good Luck! Student loans should have been a snap!

CNN just reported (here) that US "National debt reaches grim $40 trillion milestone. Here’s why that matters..." says the article: "The United States is digging itself into an ever-deeper debt hole." This post explores the issues surrounding US Debt from the standpoint of Systems Theory.

First, Treasury Secretary Scott Bessant proclaims, in the video above, that we can "...grow our way out of Debt".

Let's look at a  GROWTH -> DEBT positive shock using the USL20 DEBT model (see below). Growth, in fact, increases debt and Bessant is quite wrong.

From the standpoint of World-Systems Theory, it might be argued that as long as US Debt keeps in line with growth of the US Economy (which it is, see below) the debt should be sustainable. On the other hand, if US Debt is growing in an unstable, Business-as-Usual (BAU) fashion, without regard for economic conditions, it might be considered a problem.

Unfortunately, if you think $40T in Debt is unsustainable, the other models (expect the Random Walk, RW) continue to much "higher" levels of debt in the future (see the graphic at the start of this post)!

According to ChatGPT and Wikipedia, the Classic Debt Crisis is presented above as a Directed Graph. A shock to the Economy increases deficit spending which increases the issuance of TBILLS which increase Bond YIELDS which increases interest rates (i) which makes it hard to finance the DEFICIT. If the loop is unstable, DEFICITs will continue rising forever until there is some SHOCK that allows DEBT to be retired (unlikely).

If we bring the US Federal Reserve (FFR) into the Path Model, and if their policies lower interest rates, (i), a measure of control is possible by creating a negative feedback loop. Notice that this model describes the operation of the US2 = (TBILL+CPAPER+FFR+QOIL-KOF) historical Controller with the added effects of Commercial Paper and Oil Production balanced by Globalization (KOF).

Unfortunately, ChatGPT is quick to add that the mission of the US FED does not include controlling the debt. DEBT is an output of the Political System and, in the US at least, the Political System seems unable to control debt, maybe because they all accept Scott Bessant's mistaken idea that growth will reduce debt.

Notes

You can read more of my posts on the US, to include further Debt Crisis Analysis, here. For more information about data sources (see Codes below, also) and how the models were constructed, see the Boiler Plate.

Questions

1. Assume (for planning purposes) that the USL20W model is in Growth-and-Collapse mode. How will DEBT be affected? How will the Political System and the Financial System respond? How will foreign and domestic investors respond. How will different countries in the World-System respond?

Wikipedia Links

• Modern Monetary Theory (MMT)  a heterodox macroeconomic theory concerning the role of fiscal and monetary policy in sovereign governments that borrow and issue government debt in their own currency.

USL20 DEBT Model US-Input

The US Debt Model with input from the USL20 Measurement Model (see below) is stable and shows (1) US1 (Growth) increases debt, (2) only US2 (The Financial Market-Globalization Controller) reduces debt (3) The complicated Globalization (KOF)-Housing Starts historical controller (US3) also increases debt.

Shocks from US2 and US3 are presented above. Again, only positive shocks from the Financial System reduce debt. The USL20 Input Model is stable using US Debt Data from the FRED Database.

USL20 Measurement Models

The USL20 Measurement Model has three components that explain 90% of the variance in the indicator variables. US1 = (Growth). US2 = (Historical controller balancing Monetary policy and Oil Production with Globalization). US3 = (A complicated historical controller balancing Exports and Unemployment with Housing Starts).

Notice that Government Expenditure (G) which drives debt is not weighted heavily in any of the Historical Controllers, either US2 or US3.

DEBT AIC Statistics

The best stable model, using the Akaike Information Criterion (AIC, smaller-the-better) is driven by the USL20 Model. You can run the USL20 BAU Model on my Google Site using R-code.

USL20 Codes