THE WORLD IS A COMPLEX AND DYNAMIC SYSTEM

WHICH IS WHY THE LEFT’S SIMPLE AND STATIC PREDICTIVE MODELS ARE USUALLY WRONG …

The world is not a simple and static system — bound by a fixed or stationary condition, lacking movement, development, or vitality, acting and responding automatically to stimuli in a monotonous, routine and predictable manner, without active intelligence or external motives. Rather, it is a complex and dynamic system — alive, free and in constant motion, undergoing continuous change, reacting to stimuli both positively and negatively.

Proponents of more government control often ignore real world dynamics when utilizing static models to justify their flawed arguments and predictions.

We offer for your consideration three examples of complex systems and their dynamic reaction to stimuli.

EARTH’S CLIMATE REACTION TO GLOBAL WARMING

Conventional (static) climate models predict catastrophic global warming changes if human emissions of greenhouse gases such as carbon dioxide (CO₂) and methane (CH₄) are not immediately curbed. Authors of the Green New Deal even predict the earth’s demise in just 12 years from now.

But their static models do not account for the real world’s dynamic carbon cycle system. Carbon-based compounds, such as CO₂ and CH_4, are now far higher than they have been at any stage during the past several thousand years. However, of the carbon released in greenhouse-gas emissions, only about 40% remains in the atmosphere. The rest is absorbed by the oceans and the land biosphere.

As explained on NASA’s Global Climate Change website, the Earth possesses a closed loop feedback system with processes that can either amplify or diminish the effects of climate forcings. A feedback that increases an initial warming is called a “positive feedback.” A feedback that reduces an initial warming is a “negative feedback.” Also noted from NASA’s website below, three quarters of the dynamic feedback processes in the Earth’s toolbox is negative (or good) for reducing global warming:

1. Clouds (negative – good – feedback). Clouds have an enormous impact on Earth’s climate, reflecting about one-third of the total amount of sunlight that hits the Earth’s atmosphere back into space. Even small changes in cloud amount, location and type could have large consequences. A warmer climate could cause more water to be held in the atmosphere, leading to an increase in cloudiness and altering the amount of sunlight that reaches the surface of the Earth. Less heat would get absorbed, which could slow the increased warming. 
2. Precipitation (negative – good – feedback). Global climate models show that precipitation will generally increase due to the increased amount of water held in a warmer atmosphere, but not in all regions. Some regions will dry out instead. Changes in precipitation patterns, such as increased water availability, may cause an increase in plant growth, which in turn could potentially remove more carbon dioxide from the atmosphere. 
3. Greening of the forests (negative – good – feedback). Natural processes, such as tree growth, remove about half of human carbon dioxide emissions from the atmosphere every year.
4. Ice Albedo (positive – bad – feedback). Ice is white and very reflective, in contrast to the ocean surface, which is dark and absorbs heat faster. As the atmosphere warms and sea ice melts, the darker ocean absorbs more heat, causes more ice to melt, and makes the Earth warmer overall. The ice-albedo feedback is a very strong positive feedback.

As reported by the Nongovernmental International Panel on Climate Change (NIPCC), scientific literature finds the impacts of warmer temperatures and rising atmospheric CO₂ concentrations on plants to be overwhelmingly good. This extends to rates of photosynthesis and biomass production and the efficiency with which plants and trees utilize water (Ainsworth and Long, 2005; Bourgault et al., 2017). The result is a remarkable and beneficial greening of the Earth as shown in the figure below.

Most climate predictions referenced by doomsday alarmists are derived from static models that grossly underestimate the planet’s negative (good) feedback to increasing levels of carbon emissions. The result, as noted and graphed below by Dr. Roy Spencer, climatologist and former NASA scientist, is that “the observed rate of warming — when we ignore the natural fluctuations in the climate system (which, along with severe weather events dominate “climate change” news) — is only about one-half of that projected by climate models at this point in the 21st Century. This fraction is consistent with the global energy budget study of Lewis & Curry (2018) which analyzed 100 years of global temperatures and ocean heat content changes, and also found that the climate system is only about 1/2 as sensitive to increasing CO₂ as climate models assume.”

Americans must understand that static climate models do not represent real world dynamics before expanding the federal government’s role in our daily lives and spending $93 trillion of taxpayer money on something as radical as the Green New Deal.

U.S. ECONOMY’S REACTION TO TAX CUTS

Liberal Democrats and Democratic Socialists, who always want to increase government control by raising taxes, claimed that the tax cuts passed by Congress and signed by President Donald Trump in 2017 would significantly decrease tax revenue. The Institute on Taxation and Economic Policy (ITEP), representing far-left groupthink, predicted (using static modeling) that the tax cut plan would decrease federal revenues by $4.8 trillion over the next ten years and worsen state and local fiscal health rather than improve it.

Trump and his conservative economic advisors (Art Laffer and Stephen Moore) believed that federal government tax cuts would put more money in the hands of businesses and workers and boost growth. They predicted (using dynamic modeling) the Trump plan would pay for itself at the federal level and free up $2 trillion to $4 trillion over 10 years for state and local economies.

As noted in the WSJ, critics said this forecast for economic and revenue growth was wishful thinking, but Laffer and Moore said “it is based on the historical record. In the seven years after the Kennedy tax cuts, real state and local receipts grew by more than 60%, according to data from the Federal Reserve Bank of St. Louis. In the seven years after the Reagan rate cuts, the real increase was 37%. After Mr. Obama’s tax increases, real growth was a meager 10%.”

Fiscal year 2019 will be the first to fully incorporate the Trump tax cuts. According to thebalance.com, federal tax revenue is actually increasing, not decreasing. Which means that the tax cuts, due to the resulting economic acceleration (>3% GDP annual growth), are in fact paying for themselves.

And, according to governing.com, “state income tax revenues surpassed pre-recession peaks last year in 41 states, largely due to federal tax reform and the strong economy.”

And, per a recent report by The Pew Charitable Trusts: “State tax revenue turned a corner in late 2017 after the weakest two years of growth—outside of a recession—in at least 30 years. As most states entered the 2019 budget year, a fourth consecutive quarter of solid gains pushed total state tax collections to 13.4 percent above the peak recorded in 2008, after adjusting for inflation.”

So, once again, proponents of more government control and a simple, static, zero-sum-game model were wrong, as they underestimated the dynamism of businesses and consumers gaining more freedom and incentives to save, invest and spend their own money as they see fit.

GLOBAL TRADING SYSTEM’S REACTION TO TARIFFS

In the first quarter of 2018, the Trump administration began imposing increasing levels of tariffs on steel, aluminum and Chinese imports in an attempt to address substantial deficits and unfair barriers with America’s largest trading partners.

Not surprisingly, as should be familiar to you by now, critics mostly on the left leaned on their simple, static, zero-sum-game model to predict that American consumers would literally pay the price for Trump’s tariffs via higher inflation. But as you can see in the chart below, the Federal Reserve’s preferred measure of inflation, Personal Consumption Expenditures (PCE), refutes that errant prediction.

As reported in the WSJ, “PCE has increased at only 1.6% over the past year, far below the Fed’s target rate of 2%. What’s more, it’s decelerating. So far in 2019 it has increased at an annual rate of only 1.4%.”

So what’s going on here? Taxing imports should automatically result in price increases, right? No! Wrong! Once again, the simple and static models don’t account for how the world’s complex and dynamic systems work.

When tariffs are imposed, the dynamic trading system can react in a multitude of ways. For example:

• The Chinese government, fearing negative political repercussions due to lost exporter jobs, might subsidize its exporters with financial aid.

• Chinese exporters, fearing the possibility of lost sales, might reduce their profit and /or seek out alternative manufacturing locations in non-tariffed countries (e.g., America) so that the price to importers / consumers is unchanged.

• U.S. importers and manufacturers, fearing the possibility of lost sales, might reduce their profit and / or seek out alternative sources in non-tariffed countries (e.g., Vietnam, America, etc) so that the price to consumers is unchanged.

• Smart and nimble U.S. consumers, averse to paying higher prices for imported goods, will perform a value analysis and seek out alternative products from non-tariffed countries.

• The U.S. government, fearing negative political repercussions due to lost exporter (e.g., farming) jobs, might subsidize its exporters with financial aid.

All of these reactions are occurring in one form or another, which is why U.S. inflation has been muted. While tariffs could eventually cause modest inflation in prices that importers, manufacturers and consumers pay for irreplaceable products from tariffed countries, the trading system’s dynamic feedback loop, like the planet’s Carbon Cycle and the free market economy’s Laffer Curve, will absorb most of the adverse effects … at least until all legitimate grievances have been addressed and the ultimate goal of zero tariffs and zero trade barriers is achieved.

CONCLUSION

The world is a complex and dynamic system, so don’t be fooled by simplistic predictive models that are usually wrong and include more government control as the only solution to every problem.