Category: economics

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Adaptive Expectations

In economics it is important to understand the concept of adaptive expectations. We all form expectations about prices and inflation, but there is more than just simple expectations. These expectations guide our behaviors in many domains. If we expect a drastic price change for goods and/or services we shall most likely modify our behavior in response. We might want to advance a purchase to take advantage of currently lower prices in the expectation of higher costs later on. Most people would follow the price changes on a regular basis and adapt their expectations according to the updated information. It is an important process as there are millions of people who do this and this process drives price levels in many countries. In Europe we would like to see not only inflation, but also expectations about inflation to be around the target level of 2% per year. After the high price rises of energy and food (Putin’s war) as well as the disrupted supply chains (Covid-19 crisis) we were unsure, whether we would have to adapt our expectations for the coming years. The credit crunch in the last few years forced people to adapt spending plans and expenditures. We seem to have overcome these major crises due to rapid adaptive expectations. The crucial mechanism to achieve this is a timely and open communication of changes. Media have a role to play to not only spread the information, but to explain underlying reasons. This contributes to a widespread understanding of basic economic principles that helps countries to navigate stormy weather. It is like players of chess who adapt their strategy after the other player has acted or not according to their expectations. It’s simple, isn‘t it?

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Co-authorship Kafka

In science Co-authorship is a tricky issue. Therefore, many higher reputation journals list precisely who has contributed what to the paper. In the teaching and supervision of bachelor, master or doctoral dissertations it is imperative to scrutinize the original contributions of authors to the subject. There are huge differences between universities to the amount of innovation or originality that is required to award degrees or the publication of the research and results. Rüdiger Safranski published with Hanser 2024 an essay on Kafka which has 224 pages, but a 16 page long list of the sources of the copy-paste citations used from the orignal Kafka writings. By scientific co-authorship practice Kafka should claim co-authorship of the book and the costs of the „Process“ should be paid by the publishing house. However, I enjoyed the many links between comments and the originals next to each other. It is like a data analysis that sticks plausibly to the original data. AI still has a hard time to rival with these skills, although AI is catching up faster than many of us might believe or want to believe. From a social science perspective we might say the original work of maybe only 180 pages is inflated to make for a longer text of 240 pages. This justifies, probably, the publisher’s price (€26) and the marketing costs. On the other hand it becomes evident that Kafka has an enormous impact on writers and seems to take possession of them in an encompassing fashion. You move with him, but rarely beyond him. Tough lessons indeed from the publishing world.

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Bikenomics

There is a whole cluster of enterprises associated with bicycles. Selling a bike is only the first we might think of. Repair works are the most tricky part of bikenomics, a bit like bidenomics. In many cities during spring and summer it is even more difficult to get an appointment for bicycle repairs than for a doctor’s appointment, and that can be hard at times. Shortages of skilled technicians are pervasive in this sector. DIY for do it yourself is the best alternative. With the arrival of e-bikes and the digital connectivity the skill set has been enhanced recently as well. Insurance for bikes, lockers, helmets, airbag system or clothing including spectacles are part of the standard safety and security set of bicycle riders nowadays. Many, many job opportunities there and the willingness to pay for bicycles has steadily increased over the last years.

Berlin has just seen its 48th bicycle demonstration in 2024-6 on roads including 2 motorways with several ten thousands of participants. In a star like fashion multiple tracks met at the city center. The final meeting with stands and information was at the Deutsche Technik Museum with refreshments and repairs. The exhibition of cargo bikes and taxi bikes or “rickshaws” was another highlight. We need to rethink our mobility concepts and try to get the sharing to work more comfortably. For different purposes and activities you need a different bike. Ownership of each is no longer adequate as for example with aging alone your preferences for mobility with bikes also changes. Sharing is caring and this is also part of bikenomics.

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Law Nature

There exists a rather complicated relationship between law and nature. It is part of constitutional law to check whether nature figures at all in a state’s constitution as part of the fundamental legal principles. On a global scale the nations or people living in the closest relationship with nature most often do not have written constitutions. In the same vein, animals or biodiversity do not figure in most constitutional documents (nice project to substantiate this claim). The philosophy of law has line of literature devoted to “Naturrecht” which is more concerned with human beings and their differentiation than the millions of other species.
Administrative law is probably the domain with most of the legal judgements with relevance to nature or the environment as for example any larger scale construction is either land, water, air or biodiversity grabbing. Rights and limits need to be defined precisely. In this field the role of law as “appeasement” is widely applied. However, this is more complicated in cases when a whole population of an island in the ocean is threatened to disappear due to the rise of the sea level like in the case of the Torres Strait Islands, next to and part of Australia.
The UN Human Rights Committee (UN-HRCee) in Geneva has made a decision on the claim of these people to have rights that the nature of the islands as low-lying islands is threatened by disrespect of their fundamental rights of existence and survival. The claim has been received by the court, but the court deems that the threat to their culture and survival is not imminent. In practice, therefore, the sword of law is rather weak and time until the disaster is used as a right to continue the usual economic exploitation of earth as before despite the deferred consequences for the planet in a rather unequal way.
(Image by AI copilot designer 2024-6-2 “5 judges in red gowns sit in a flooded courtroom”, 2 propsitions)

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Cars electrified

It is not only cars, but the whole automotive industry that got somehow electrified. The U.S. have imposed a 100% tax on electric cars produced in China recently. Europe is feeling the heat as well (compare Fressoz in Le Monde 31.5.2024). Production of cars is not a for fun activity. It is firmly embedded in our economic system which believes in profit maximization even at high environmental costs. Therefore, the production of cars follows the logic to build cars that generate the highest profits. Bigger cars yield bigger profits and this has been known for decades. Why should we expect our car producers to deviate from this logic. Investors push hard in this direction as well. Small e-cars generate small profits. This can only be economically valid if large numbers are produced. China’s home market has the market size and air pollution levels that make this a viable strategy also for the lower income people. If not sold in the US or Europe, the home market is able to absorb huge amounts of electrified cars. Downsizing of cars needs to happen particularly in inner cities. The implementation of this is not going to be easy and without resistance.

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Killing me softly

The problem with pollution is, it is killing you softly from inside. It is almost impossible to escape air pollution as it is pervasive in cities, but also in the countryside where you do not expect it that much. This is the result of the study by Kuzma et al. (2024) published in “The Lancet Regional Health Europe”. Based on a data set of 8 million persons from Eastern Poland the effects of air pollution on myocardial infarction incidence was analysed. The use of the “European Union’s Earth Observation Programme” contributed data on air pollutants like PMs, BaP (benzo(a)pyrene), SO2 and NO2 concentrations. The multi-level data of 5 voivodeships, 101 counties, and 709 communities in Poland allows to differentiate the effects of damage to the heart tissue on cardiovascular disease. The other well-known factors are arterial hypertension, diabetes, obesity, chronic kidney disease, hyperlipidaemia, and smoking as most of us know already. The effects of  BaP (benzo(a)pyrene) is shown for rural areas despite the lower observed traffic density in these areas. The killing occurs softly from within our bodies by just breathing in and out, and in and out continuously. The disease burden in these regions is observed with “recorded 63,154 hospitalizations and 5921 in-hospital deaths (9.4%) due to STEMI; and 76,543 hospitalizations and 4079 (5%) in-hospital deaths due to NSTEMI”. In short, the need to reduce air pollution further is an urgent demand that saves lives eventually.
(Image from public domain wikipedia or “do-it-yourself” here).

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AI Racing

AI has entered the racing of cars after we have been racing horses, dogs and camels for many decades. The fact behind all these races is the huge market for gambling. Anything you can bet on will do for juicy profits in that industry. The recent “Abu Dhabi Autonomous Racing League” is the latest addition to the racing craze. Moving online with 600000 spectators at its peak on video and gaming platforms the investment seems promising. The only problem, AI is not yet ready to really compete with the world of real drivers. The progress, however, is astonishing. Just one lap of 2 minutes on the circuit yields 15 Terrabyte of data from 50 sensors. These are closed circuits so no person can enter or animal can get in their way. The challenge to integrate more data and faster processing as well as algorithms for fast decision making is steep. Great learning opportunities for advances in robotics. The hype has not been able to live up to the expectations as no real racing took place yet. We have replaced the gladiators of the Roman empire with Formula 1 drivers. It is only fair to retire those drivers soon and let AI race cars against each other. It feels like a computer game on screen and it is as we shall most likely watch these races on a screen as well. Hence, what is the point. Watching youth on TWITCH play racing games will probably not change the viewing behavior of the masses. The programmers have nevertheless great learning opportunities and will find their way rapidly into the job market. The other challenges of ASPIRE seem more important for humanity like human rescue and food for the growing world population. In the meantime let the boys play around with cars and learn about potentials as well as failures of AI-programmers and dealing with both.

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Puccini Media

In honor of Giacomo Puccini the Media enterprise Bertelsmann features one of its treasures. In cooperation with the “Archivio Storico Ricordi” of Milano, Italy, 100 years of Puccini’s oeuvre is celebrated with this exhibition. Fans of Puccini’s operas will have to visit the archives but the interest of this small exhibition lies in the impressive success story of Puccini and his publisher (part of Bertelsmann). Continuous innovation and adaptation to new media, like disks, accompanied an extraordinary marketing campaign throughout the 100 years. Even today there are cycling tours around Puccini’s hometown for the modern eco friendly tourists. We learn a lot about how the media industry functioned in the 20th century. It was absolutely vital to fighting for the rights of authors, composers and rights to receive royalties for performances as well as for the publishing on media. The exhibition in “Unter den Linden 1” is just next door to the Staatsoper which also gave honor to Puccini’s “Madame Butterfly” in 2024. His uncompleted Opera Turandot closes the exhibition with his rough sketches of the final scene. Merchandising is not an invention of the 21st century, but almost a century old tradition. This exhibition is a great testimony for this. It remains an important effort to allow authors and composers to gain a comfortable living during their lifetime. The gains for humanity as a whole are enormous.

Bertelsmann, Berlin 2024 Puccini.
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Photos Exhibit

Our usual expectation of an exhibition of photography is to look at photos at a wall. Sometimes there is more it. The Exhibition Space at the “Haus am Kleistpark” features Michael Schäfer who attempts to go a bit beyond these traditional forms. In the works of photo cubes on water surfaces “2021_57”, or a dice floating on the waves of oceans, the video representation of his photographs takes the assembled images beyond their flat 2D surface. However, the 2D representation is at the origin, then transformed into a 3D dice, which then is animated as a 4D format. Moving beyond the flat screen image takes photography into the 21st century.
His work “Les acteurs 1-26” from 2007 is shown at the entry hall of the exhibition. It shows pupils of a class at an elite school who deem themselves in leadership roles in the near future. Is it acting? Is it projection into a future role they are likely to take on. They represent stereotypes, of course, but some are pretty convincing in these roles already. Some others still seem to reflect on what they are doing there. Even acting these roles, they are aware of the meaning of social rank and class in society. Without having read the sociologist Bourdieu, all are aware of the fine, little elements of distinction as they have evolved over time. We could teach an interesting sociology class in this exhibition.

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May 1st

More people take to the streets on the 1st of May in Germany. The costs-of-living crisis with high inflation has increased the claims for pay rises for workers and adjusted wages for employees. We all have observed “greedflation”, i.e. excessive company profits in several sectors. Additionally, “shrinkflation” has affected consumers in their daily shopping experience. Political efforts to curb inflation have taken a long time to come about and most initiatives have ended already (Energy sector). This spurred a new drive for trade unions to come out in huge numbers to protest and claim adequate wage increases to cover the increased costs of living. In Germany the DGB informed on the annual 1st of May demonstrations across the country about a strong new entry movement of members of 400.000 persons. It is higher than the loss of members of the large baby boomer cohorts who retire.
Through a broad and engaged membership the pressure on higher wage settlements will persist. Companies have used the crises to generate extra profits. It is only fair that those employees who largely contribute to the success of a company will claim their share as well.
For society as a whole it is important to consider that the discrepancy between managerial pay and shop floor wages do not increase further. The social fabric of societies is in danger if perceived injustices grow. More radical forces can all to easily exploit this causing a severe danger for democracies. Meeting people on the 1st of May and joining forces across sectors and trades ensures that a society continues to build and rely on solidarity. High inflation times are a great reminder of the economic basics of societies in history as well as today.

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Find Trust

Societies have different levels of trust. Trust in politicians or political institutions has been researched a lot. Another example of trust is related to things lost and found. Losing an item on a train or a mobile phone somewhere are severe tests of the level of trust in a society. How likely is it that the item is going to be found and returned to you. We usually estimate the probability of the return of items as being rather low. The more we are surprised to find out that there are thousands of items found and returned. The Deutsche Bahn has a special service in operation to take care of lost items. Additionally, there are auctions of items found but nobody claimed the ownership of it in the following months. Not giving up on a lost item is the first step to find it again. It would be a nice test whether in high trust societies it is more likely to find something lost. If you have a higher trust that items will be returned you are also more likely to make the effort to claim the item back.

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Comparative Advantage

In economics all students go through the calculus of comparative advantage. People, regions or whole countries tend to apply comparative advantage to their production systems and ensuing internal or external trade. The basic  rationale developed by David Ricardo has not changed that much over 200 years. The fields of application, however, are continuously expanded. Lindsay and Gartzke (2020) have applied the comparative advantage rationale to military strategy. The paper quotes 26 times Clausewitz and demonstrates the links of strategy to the basic economic and social rationale of comparative advantage. It is the politics of production that even the presence of trade may override the rationale of comparative advantage to favour local production of “operational domains” or military equipment.
In Russia’s aggression and war against Ukraine own production and trading of weapons has returned to the forefront of the concerns. In addition to the production of ammunition, the provision of drones has dominated the international arms trade related to the Russian aggression. Resources and time for production are additional factors that have an impact on availability of weapons at the right time at the right place and with the sufficiently trained persons to operate them.
The strategies that cross domains or combine domains seem the most promising. The careful analysis of your own comparative advantages or disadvantages needs to be the basis of any strategic decisions. This has been known for 2 centuries at least and is still valid in many fields of application. Additional considerations for “home production” might add to the complexity of the issue. Sustainability has also found its way into the field of comparative advantage at last. This may alter the analysis of comparative advantage of operational domains as well. Lots of unresolved puzzles still around. It will need years to sort this out despite the urgency of the Russian aggression on Ukraine.(Image: AI Copilot.2024-4-30 2 political leaders deal weapons. One has a comparative advantage in ships. The other one has a comparative advantage in aircrafts. they deal together)

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AI Disruption

Many scientists started to question the disruptive potential of AI in, for example, the military’s domain. The Journal of Strategic Studies featured 3 papers on AI and autonomous systems more generally. The major argument by Anthony King is the reliance of autonomous systems on other systems mainly human operators even in the background to get these systems off the ground and maybe back again. Not only logistic support but also satellite communication is needed to guide and protect the operations. In quoting Clausewitz, Anthony King stated that war is a “collision of two living forces”. Strategy and counter-strategy will co-evolve as will attack and defence.
Jackie G. Schneider and Julia Macdonald (2024) advocate the use of autonomous and unmanned systems for their cost effectiveness. Economic costs as well as political costs are lower for these new strategic weapons. Mass fire power from swarms of drones is much cheaper than nuclear warheads and the home electorate is assumed to be more willing to accept and support limited and more precisely targeted unmanned missions. The disruption potential of AI is huge but it is most likely an addition to the arsenals than replacing them. (Image 2 swarms of drones fly in the air above tanks, created by AI – copilot-designer 2024-4-29).

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Hospital Bias

Asking people about differences between private and public hospitals, you are most likely getting answers that the private hospitals deliver superior patient outcomes. Whereas private hospitals seem to have a positive stigma attached to them, public hospitals commonly have a negative stigma. Scientific evaluations are helpful to set the record straight again. The study published in “The Lancet Regional Health” in 2024 shows that in the simple descriptive statistics on several patient outcome indicators, this is what the data showed between 2026 and 2019. However, a more precise statistical analysis reveals that there is also a selective admission to the private and public hospitals in England. Using so-called instrumental variables approaches that account for the selection process between admission to the 2 types of hospitals (private versus public) most of the differences between the hospital types disappear. The underlying mechanism is a sorting of different patients into the private or public hospitals. Put in easy words, for a routine intervention people tend to chose the private hospital, but the more rare and difficult operations were more likely admitted to public hospitals. The number of co-morbidities (heart disease) is also of importance as they might negatively affect patient outcomes. Jumping to conclusions and reinforcing stigma about public or private provision of services hinders progress and an equitable provision of services.
The analysis of a potential selection bias can reveal the “creaming” effect of private provision of (health) services. Just caring for the “easy” or routine cases and avoiding the more difficult and costly cases has economic advantages, but for society as a whole the costs overall remain the same. A good public service in health is a definite asset.

(Image: Exposition Isa Genzken 2023 in Neue Nationalgalerie Berlin)

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Hannover Fair

The annual science fair at Hannover is a kind of a show of things to touch and of those things that come to the public market in the near future. Most of the annual hype is about potentials of production. Rationalization, using few resources or innovative solutions of digitization are high on the agenda. Create your digital twin, save energy, make production more safe or cyber secured.
Robotics is another reason to visit the fair. Some 7 years ago I had my Sputnik experience there. The robotics company KUKA had demonstrated live the that assembling a car from pre-manufactured components takes just 10 minutes for the robots. Shortly afterwards the whole company was bought by Chinese investors. Roughly 5 years later we are swamped by cars from China. It was not that difficult to predict this at that time. Okay, we need to focus on more value added production and take our workforces (not only) in Europe along on the way. Reclaiming well-paid, unionized jobs in manufacturing, as Joe Biden does, will not be an easy task. Robots and their programming is expensive, but skilled workers, too. Hence, the solution is likely to be robot-assisted manufacturing as a kind of hybrid solution for cost-effective production systems.
Following the proceedings of the 2024 fair we are astonished to realize that visiting the fair is still a rather “physical exercise” walking through the halls. After the Covid-19 shock we expected a lot more “online content”. Instead we keep referring to webpages and newletters rather than virtual visits and tours. The preparation of the visit in advance remains a laborious adventure. However, the in-person networking activities in the industry are largely advanced by ease of exchanging virtual business cards and the “FEMWORX” activities.
This year’s Sputnik moment at Hannover is probably most likely related to the pervasive applications of AI across all areas of the industry and along the whole supply chain. Repairing and recycling have become mainstream activities (www.festo.com). Robotics for learning purposes can also be found to get you started with automating boring household tasks (www.igus.eu).
Visiting Hannover in person still involves lengthy road travel or expensive public transport (DB with ICE). Autonomous driving and ride sharing solutions might be a worthwhile topic for next year’s fair. Last year I thought we would meet in the “metaverse fair” rather than in Hannover 2024. Be prepared for another Sputnik moment next year, maybe.
(Image: Consumer’s Rest by Stiletto, Frank Schreiner, 1983)

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Digital Estonia

The progress of Estonia in going digital is quite advanced. The electronic identity card which allows data to be linked to health data and accounts or banking gives an impression of how far-reaching digitalization may go. Great steps have been taken to guide the population on the way to move towards the digital (only) world. Learning and coaching of a huge amount need to take place so that people do not abandon or get lost on the path towards “everything digital”. For the so-called digital natives, who have grown up with the sound of their smartphone at the bedside all the time, this move feels “natural”. Some experienced or silver workers got on track, if they were accompanied in suitable forms. The 65+ population might find it harder to adapt to the permanent use of digital devices for not only getting around in your city, but also to do your tax declaration, pay your dues and vote in elections.
Digitalization is not a goal in itself. It has advantages to reach communities in remote places or islands, but it might alienate older persons that have no other person around to assist them in the digital only world. An easy way to get some social science data to inform the debate is to refer to Eurostat and the surveys with information about the “overall life satisfaction” of people (EU-SILC). Checking for some major countries of the EU and neighbours of Estonia with less digitalization the differences are rather small. In terms of overall life satisfaction (16+ years old) Estonia has been catching up to the EU-average mainly between 2013 and 2021. Since then, stagnation at the EU-average is what the data tell. A quick testing of the hypothesis that the older persons (65+) might not see the past evolution as rosy is reflected in the EU-data as well. Good pensions seem to drive the “happiness” of older persons in the EU more than good digitalization. Eventually the two features of a society will have to go hand in hand to improve life satisfaction to higher levels. (Image: Data Eurostat EU-SILC Life satisfaction 65+, selected countries 2013-2023, retrieved on 2024-4-23, comparison with table all ages here, Data source)

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AI Travel

Playing around with AI it is nice to test take fun examples. Image you want to plan a vacation, then the use of AI is ready to suggest to you a couple of things to do. Of course, AI is eager to propose travelling services like transport or accommodation to you where it is likely to earn some commissions. So far, the use of the “Vacation Planer of Microsoft’s BING Copilot” is free of charge. In entering the time period and a region as well as some basic activities you’ll receive suggestions with quotes on the sources (webpages of public services from tourist offices mostly). It seems like trustworthy sources and the suggestions of D-Day activities in Normandy is a positive surprise to me. These are popular activities which attract huge international crowds every year.
Thinking further on the potentials it becomes evident that travel suggestions will be biased to those paying for ranking higher on the algorithms selection criteria, which are not disclosed. Entering into the chat with the AI you and AI can target more precisely locations and also hotels etc. You are disclosing more of your own preferences in the easy-going chat and probably next time you will be surprised to be recommended the same activities at another location again.
So far, I have bought travel guides or literature about locations to prepare vacations. This is likely to change. I complement my traditional search or planning with the “surprises” from AI for travelling. I rediscovered, for example, the public service of tourist offices and their publications ahead of the travel rather than the leaflets at the local tourist office. In order to plan ahead there is value in the augmented search and compilation capacities of AI. Drafting a letter in foreign languages is also no problem for AI. The evaluation of the usefulness of AI, however, can only be answered after the vacation. Outdated info or databases have a huge potential to spoil the fun parts as well.

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Repair Building

All buildings need repairs from time to time. For most of them the basic structure is solid enough so that isolation or maintenance will do. However, 100 years old buildings that have lived through 2 wars might have deep rooted deficiencies that are not visible at first glance. This can be observed in Berlin near the city center in a popular neighborhood with many visitors in „Schöneberg“ sometimes translated as „pretty hill“. The building at the crossroads seems to have been renovated only a few years ago, but the static of the building is so unstable that the city council has decided to block the whole crossing for circulation due to the danger of an imminent collapse of the building. The neighborhood has mixed feelings. It is great that the danger has been identified in time and blocking the road reduces the nuisance of traffic in the surroundings full of restaurants and cafes. The cover up of the repairs and renovation at the building is shocking as there appears to be just paint over basic structural faults. Construction work has failed to detect and prevent the static risks. An inspectorate that acts promptly to avoid bigger disasters is a societal asset.

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AI and PS

AI like in ChatGPT is guided by so-called prompts. After the entry of “what is AI” the machine returns a definition of itself. If you continue the chat with ChatGPT and enter: “Is it useful for public services” (PS), you receive an opinion of AI on its own usefulness (of course positive) and some examples in which AI in the public services have a good potential to improve the state of affairs. The AI ChatGPT is advocating AI for the PS for mainly 4 reasons: (1) efficiency purposes; (2) personalisation of services; (3) citizen engagement; (4) citizen satisfaction. (See image below). The perspective of employees of the public services is not really part of the answer by ChatGPT. This is a more ambiguous part of the answer and would probably need more space and additional explicit prompts to solicit an explicit answer on the issue. With all the know issues of concern of AI like gender bias or biased data as input, the introduction of AI in public services has to be accompanied by a thorough monitoring process. The legal limits to applications of AI are more severe in public services as the production of official documents is subject to additional security concerns.
This does certainly not preclude the use of AI in PS, but it requires more ample and rigorous testing of AI-applications in the PS. Such testing frameworks are still in development even in informatics as the sources of bias a manifold and sometimes tricky to detect even for experts in the field. Prior training with specific data sets (for example of thousands of possible prompts) has to be performed or sets of images for testing adapted to avoid bias. The task is big, but step by step building and testing promise useful results. It remains a challenge to find the right balance between the risks and the potentials of AI in PS.

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Wage Minimum

A wage at a minimum level is frequently lower than the minimum wage. Most EU countries have a legal minimum wage that should protect against poverty risks at low levels of wages. Over decades it has not yet been possible to raise all low wages to this level. Le Monde (Béatrice Madeline et Aline Leclerc) has published on April 3rd a comprehensive analysis of sectors and people concerned with this difficulty to make a decent living while earning the minimum wage. In France (La désmicardisation), as in many other countries, it is difficult to earn just a bit more as the minimum wage because both employers and employees may lose social benefits if they just earn some hundred € more than the legal minimum wage. For all those persons who do receive only a wage even below the minimum wage getting stuck in a poverty trap is very likely. The number of working hours is then often is the only option to make ends meet your needs. Put bluntly, you work additional hours and/or take a second job to complement the lack of earning a wage at the minimum level. Public procurement that makes the application of the minimum wage compulsory and controls this application effectively benefits society as a whole. Lots of infrastructure projects, urban and rural development receive public support. The conditionality to pay the minimum wage + X should be a „conditio sine qua non“. The millions of workers at the lower end of the wage distribution have a power at the ballot box, which continues to be underestimated in many European countries. The EP elections on June 9th will probably alert us about the lack of faith in a bettering of living and working conditions of those persons coping with wage minima.

Home Delivery of everything ! Working Conditions
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Cinema D

In terms of statistics cinemas are almost back to the pre Covid levels of spectators. The sector is worth in Germany close to 1 billion € in 2023. The price level has risen as well but many cinemas have upgraded their cinema experience as well in terms of comfort, audio and visual quality. Traditional houses provide chairs that compare well with home comfort and for a little more you can put up your feet as well after a long workday. Drinks and food may be served directly at your seats so the time to relax is guaranteed. However, this depends a lot on what type of movie you have chosen. The movie industry has adapted to modern technology and comfort. The turnover of a movie theatre is supported a lot by the consumption of beverages on site and they make huge efforts to prolong the visit beyond the screening of the movie. The competition for the time and money of the consumer is intense. The quality of the whole experience will determine the survival of the cinema. It is worth much more than a second best solution for rainy days or the cold season.

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Fertility Growth

The first association of fertility and growth is likely the growing of fertility rates in a country or region. Only macro economists associate the growth or decline of fertility with the macroeconomic consequences of more or less economic growth. Countries with higher fertility rates in most cases have higher growth rates as parents spend more on food, clothes, mobility and education. Accommodations are changed, adapted and refurbished. Estimates of increased consumption per child by economists range from 500.000 to almost 1 million in the highest developed countries. Children are a country’s wealth, but they also cost a fortune in monetary terms. Good news for the economy if families keep spending independent of economic cycles. More children keeps dedicated shops running or even a whole sector of the economy. In recessions the downward pressure in this sector becomes an additional challenge not only for the families but with ripples-on effects for the whole economy and society. If you see shops closing which has sold furniture for children for the last 15 years then the realization of an economic downturn becomes also more real. Sometimes the parallels in the news of declining fertility and increases in pensions do not square well with the fitness for the future or the future orientation of a society. Democratic voting rights that give families more weight in elections could change this. It is not yet on the political agenda.

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Mehr vom Meer

Wir sollten uns mehr um das Meer kümmern. Länder ohne Küsten finden meistens wenig Gründe, warum sie sich um das Meer bemühen sollten. Es ist doch so weit weg. Weit gefehlt. Erderwärmung erhöht die Meerestemperaturen und das wiederum beeinflusst massgeblich die Regenfälle im Inneren der Kontinente. Wir sitzen buchstäblich alle zusammen in einem Boot. Historisch betrachtet war das Meer mindestens seit der Antike Teil des machtpolitischen Kalküls der Beherrschung der Welt und der sie Bewohnenden. Wirtschaftliche Interessen waren ebenfalls Bestandteil der Erkundung und Eroberung des Meeresraums. Die Hansestädte in Europa bieten dazu noch heute gute Beispiele. Nach dem Sklavenhandel sind heute die Überseekabel und Rohstoffe des Meeres die begehrten Schätze des Meeres. Der Artenreichtum der Tiefsee wird erst seit kurzer Zeit intensiver erforscht. Externalisieren von Kosten des Umweltschutzes zu Lasten unserer Meere hat noch wenig Berücksichtigung in Wirtschaft und Gesellschaft gefunden. Tourismus- und Migrationsströme zum Meer, auf dem Meer und über das Meer stellen uns vor große Herausforderungen. Wir werden sicherlich mehr über das Meer reden müssen, und das ist keine Mär. Image aus „Europa und das Meer“ (DHM).

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Energy Storage

On a sunny and windy day, even in winter or spring, renewable energy is abundant. If demand is stable prices will drop. Prices will rise again as demand for energy picks up. Hence, this is an obvious case for trading opportunities. All you need is … energy storage. All so-called prosumers, short for producers and simultaneously consumers have a lot to gain if they are able to store energy when it’s abundant and cheap. Sell it when it is expensive or use it yourself if needed. Just keep an eye on the costs of energy storage. A stylish insulated carafe is a well known example of storing hot water for astonishingly long time. Insulation is key to store transformed electric energy here. Other options use kinetic energy like pumping water to a higher level and then generate electricity again when the water returns to the lower level. Of course, batteries are a simple way for energy storage as well. Costs seem to come down rapidly and less environmentally hazardous materials leave the laboratory almost every month. It is about time to consider this seriously. More and more cities have understood that energy storage can generate cash for them (Example Feuchtwangen) and appears to be a worthwhile investment for a local power generating community. For the time being my favorite energy storage is the insulated carafe. It is often the beginning of energizing conversations.

Old school energy storage
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AI Collusion

In most applications of AI there is one system of AI, for example a specialized service, that performs in isolation from other services. More powerful systems, however, allow for the combination of AI services. This may be useful in case of integrating services focusing on specialized sensors to gain a more complete impression of the performance of a system. As soon as two and more AI systems become integrated the risk of unwanted or illegal collusion may occur.
Collusion is defined in the realm of economic theory as the secret, undocumented, often illegal, restriction of competition originating from at least two otherwise rival competitors. In the realm of AI collusion has been defined by Motwani et al. (2024) as “teams of communicating generative AI agents solve joint tasks”. The cooperation of agents as well as the sharing of of previously exclusive information increase the risks of violation of rights of privacy or security. The AI related risks consist also in the dilution of responsibility. It becomes more difficult to identify the origin of fraudulent use of data like personal information or contacts. Just imagine using Alexa and Siri talking to each other to develop another integrated service as a simplified example.
The use of steganography techniques, i.e. the secret embedding of code into an AI system or image distribution, can protect authorship as well as open doors for fraudulent applications. The collusion of AI systems will blur legal borders and create multiple new issues to resolve in the construction and implementation of AI agents. New issues of trust in technologies will arise if no common standards and regulations will be defined. We seem to be just at the entry of the new brave world or 1984 in 2024.
(Image: KI MS-Copilot: Three smartphones in form of different robots stand upright on a desk in a circle. Each displays text on a computer image.)

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Opportunity Costs

Skiing in winter is a pleasure that has become more elitist. The downhill skiing has always been an expensive sport, but affordable school holidays gave the sport a more accessible touch. The cheaper version of long distance skiing or skating on larger trails involves much more endurance. The report of the French Cour des Comptes in 2024 questions the sense of the huge investment that is still devoted to save the pleasure of the few. I
nstead of investment to the benefit of relatively few persons, these funds could put the money into a more sustainable, socially and ecological productive purpose. Installations could be used all year round rather than in the few weeks at best months with snow. It is remarkable that the court has highlighted this kind of opportunity costs of such installations. Instead of investing in soon to be obsolete infrastructure at lower altitudes like water reservoirs and water canons, this money could already start the eventually necessary transition process. Each € spent is not only lost for the transition, but might create additional environmental liabilities and damage.
From economists it is to be expected that they mention competition in their arguments. Not all stations of skiing will survive. Put more dramatically, in the process of closing skiing at lower and middle level altitude, competition intensifies between stations and of who can survive. Public funds should not be misused in this endeavour. Lobbying is strong and political incumbents tend to favour the merit and legacy of digging for the white gold. Changes of mind sets, investment narratives and decisions are tough. From much downhill skiing we might soon remember only the downward slope before the healthy aspects of climbing a slope takes the upper hand.

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Cancer Inequality

Inequality is a hugely important topic for societies. Inequality has many different dimensions and differential longitudinal patterns. New data in this field of social research are helpful to inform on possible ways to prevent increasing inequality. At the same time, it is important to reflect on factors that may reduce inequality in and between societies. Inequality in health is both an outcome of inequality experienced during previous stages of the life course as well as a factor in causing inequality in the evolution of the life course later on. Disentangling the factors is a difficult research issue.
A first descriptive pattern across Europe allows to get a snapshot impression of the status quo as a first indication of what health inequality looks like. Cancer is a major cause of mortality across Europe and by 2045 it is estimated to be the leading cause of mortality.
Without precisely analyzing the causal factors the overview across European countries allows to give a first impression on fields that need more policy attention and more in depth studies. The European Cancer Inequalities Registry and the ECIR Data Tool is based on data from 2019  (Link). The overview matrix by employment status reveals the highest prevalence of smoking among the unemployed (followed by the employed, not shown in figure) and the frequency of alcohol consumption is highest among the employed. Low physical activity is mostly prevalent among the retired.  This has consequences for cancer and gives hints to how an intensified prevention may work.
The OECD report (Link) based on these data and additional country case studies and policy data base reiterates the known prevention recommendations: Reduce smoking, alcohol consumption, air pollution as well as more physical activity. The dimensions of inequality are gender, age, employment status and most of years spent in education. The curing of cancer also suffers from inequities as to the amount of and access to screening of cancer. Cost coverage and shortages in medical personnel add to multiple sources of inequality in treatment of cancer within countries by regions and between nation states. The Lancet Public Health editorial contributes to the spread of the awareness among scientists and the medical profession.
(Image: ECIR data tool download 2024-2-22)

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Gas Reduction

Gas consumption in the EU has been reduced by about 20% since the beginning of Russia’s war on Ukraine. This is a considerable accomplishment and has been sustained for 2 years now. The major element in this has been the reduction of gas consumption in industry, but also households have successfully managed to reduce heating of rooms and water with gas.
Diversification of provision with sizable increases in the provision by the U.S.A is another element in the beginning of a trajectory of gas reduction in Europe. Germany as a major consumer of this type of energy supply is also making strides in shifting consumption. This is my short summary of the report by IEEFA.org in 2024-1. All electric devices like heat pumps could speed up the gas reduction further according to the policy recommendation by IEEFA in 2024-2 reducing costs of living and CO2 emissions further.
Data from Eurostat allow to compare monthly data across Member States. The overall trend is a market decrease with differential patterns of refilling supply capacities. Big countries in the EU made and continue to make a real difference compared to previous years (see table below). The comparison of December and January figures across years reflect the months with high sensitivity of the public for heat and cold. Further reductions of gas consumption is feasible due to the mild winter months of 23/24 which allow to reduce heating costs for many households and offices. Good news for the planet and hopefully a move in the right direction to shift away from heating with gas.

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Processed food

We eat a lot of pre-processed food. Our busy work schedules allow us to take only short breaks for meals in order to get more work done while in office or at work in general. The intensification of work has reached the next level and we move from pre-processed food to ultra-processed foods (UPFs). In medical journals and nutrition recommendations the warnings to not eat too much ultra-processed foods are abundant. The signs of obesity in societies reach higher levels from year to year. Especially younger people seem to be at higher risks to consume a lot of ultra-processed foods. Freisling et al. highlight the “risk of multimorbidity of cancer and cardiometabolic diseases” due to UPFs. The discussion between scientists is a lot on which UPFs are most harmful (beyond animal origin or and artificially sweetened beverages) and/or whether it is the combination of UPFs that additionally increases the danger of UPFs. Preventing the “too much of each” is probably the safest recommendation. Being able to read the nutrition information on the labels is already a difficult task. Just making the information abundant and very small print discourages most efforts to compare across products. Learning about basic human needs like food has never been more difficult. Combined with “shrinkflation” we have a hard time to make informed choices of what to buy and eat. There are many hurdles to overcome for a healthy meal.

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Wage indexation

Currently inflation increases rapidly in many countries. Yes, Argentine. The Euro-zone and EEA have mastered the peak of inflation due to shifting away from Russian dependency and cheap prices for energy and dealt with carry-on effects related to high energy inputs. The annual rate of inflation calculated for January 2024 has returned in the Euro-area to 2.8 % close to the European Central Bank target of 2% (compare figure below).  Inflation puts wages under pressure, because household with little savings have a very hard time to cope with sudden price increases. For society as a whole, inflation raises many questions of differential impact of inflation on different parts of society. Savings become devalued, but debt might become easier to be repaid in so-called real terms.
Wage earners suffer in terms of lower purchasing power unless in subsequent wage negotiations pay rises can be achieved. This then depends of negotiation power of groups or sectors of the economy. Trade unions have to enter into tough negotiations and conflicts to even regain the same status quo previously achieved in wage negotiations. A series of conflicts and economic readjustments by more or less powerful sectors or representation comes into play.
All this is happening in a year of a series of national and regional elections as well as the European Parliament election in June. Political turbulance and the rise of extremists might be a result of a lack of taking into account the needs of lower wage groups who are likely to feel the full blast of the high inflation previously still today. Wage indexation as in Belgium, which fixes wages to the rise in inflation previously takes out most of the explosive power of a sudden rise in inflation at the risk of an upward wage-price spiral. The recent inflation figures for Belgium, however, show that this is not the case. An overshooting has been followed by an undershooting of the Euro-zone inflation. The political disturbance and risk of redistribution to more powerful groups in society can be limited through general wage indexation or indexation of for example just minimum wages.
The Russian caused spike in inflation has been successfully mastered in the EU. The political economy of redistribution through inflation will remain an important element unless wage indexation is used in more countries to escape populists’ and extremists’ voices. (Image Eurostat data and ESTATEC app)