UKL20: Can Policy Actions Destabilize the SocioEconomic System?

 


Typically, when commentators talk about Policy Actions such as the UK Climate Change Act of 2008, the assumption seems to be that governments will never do enough and that the more aggressive the policy targets the better. Seldom are the effects on the political-economic system taken into consideration and seldom is consideration given to stabilizing the political-economic system before policy measures are enacted.

In the graphic above, I have plotted two forecasts for UK1 (the dominant state variable in the UKL20 BAU Model. The top graphic shows system collapse in the Business-As-Usual (BAU) model which, as estimated from the World Development Indicators, is unstable. The lower graphic shows the stabilized version of the BAU model reaching a steady-state after 2046 (the model is stabilized by reducing growth rates).

My next question is whether the Climate Change Act of 2008 destabilized the system. In the Notes below, I present the UK2000 BAU model compared to the UKL20 BAU model. Notice that after 2000, the historical controller for UK2 =  (CO2+EG - LU - L) was destabilized as a result of CO2 reductions.

The UKL20 BAU model is on a growth-and-collapse path unless the UK2 historical controller is stabilized.

For my current and future posts see Blog Roll: The United Kingdom. You can run the  UKL20 BAU Model yourself on my Google site.


Notes


Google AI Summary


UKL20 Codes and Measurement Model




The UKL20 Measurement Model defines the state space of the UK DCM model: UK1 = (Growth-CO2-LU), UK2 =  (CO2+EG - LU - L)  UK3 = (LU + EG + N). Notice that (1) the component explaining the most variance (63.4%) is not an overall growth component but rather an historical growth controller, (2)  CO2 Emissions are important indicators in both UK1 and UK2 and (3) Both UK1 and UK2 are unstable components in the UKL20 model.


UK2000 BAU



In the UK2000 BAU Model, the UK2 historical controller is stable (coefficient less than 1.0). The UK2000 BAU Model is an example of a Moving Equilibrium Model which is very common in socio-political systems and which can be easily destabilized by policy actions.

UKL20 BAU


Both the UK1 and UK2 state space components are unstable.

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