Category: economics

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Labour Day Berlin 2025

In 2025 Labour Day Parade in Berlin started again on Karl-Marx-Allee to the destination at the “Rotes Rathaus”, the red brick City Hall of Berlin. The slogan: “Mach dich stark mit uns” (engl. empower yourself with us) refers to the building up of force by members of the trade union movement in growing bigger again. Solidarity in crisis is currently tested again in each collective bargaining and negotiations at the local, sectoral, regional, national and European level. However, on the 1st of May the parade obviously has the political part with the speeches, but also the family party atmosphere towards the end at the Neptun fountain at Alexanderplatz. Large crowds come out in Berlin and the organizers of the DGB and the police do a great job to ensure a safe and enjoyable demonstration in the heart of Berlin. More impressions on the mobilizing event here. Images from Berlin Labour Day 2025.

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Robot assistant

Adjustment processes on the labour market take their time. This means that care workers are in short supply in most countries of the OECD. Engineers as well. There are so many robots, care robots I mean, still to develop that the shortage of engineers give little hope that we shall have affordable solutions in this area for the next few years. The issue is mainly about integrating and enhancing already existing solutions. If you are a mechanical engineer you can put together motorised mechanical pieces, small motorised electric devices and, for example, small infrared emitting and receiving devises.
All this is child’s play these days (see image below). The assembling of a small Robot assistant that follows movements or can escape from a small labyrinth makes such simple structures transparent for learners and users. There is nothing magical about it, just adding together small pieces and the electronic devices to steer the movements. The learning tool from KOSMOS has been on the market for 5 years. It is a helpful device to explain basics through hands-on experience. The limits of robotics equally become more evident. Our own health and safety is concerned with larger devices cohabiting with us. A robot assistant can take on easy tasks like to follow me through my living space in old age carrying a mobile phone, keys or an emergency device. More sophisticated tasks need more sensors and AI to train the most needed and best routines. For many years this needs our input and our control as well as supervision of such devices. Most robots will operate as assistants with us in the driving seat or the boss.
This is yet another element of the “all electric society“. We are moving towards the use of more electronics assisting us from year to year.

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Dysprosium 66

Dysprosium figures as Nr. 66 in the periodic table (short: Dy). This metal was given this Greek name, which translates to “hard to get”. Although more common than gold on earth, Dysprosium is part of the so-called rare earths on earth. Since it is very temperature resistant before becoming fluid and at the same time having good isolation properties, for example against radiation in combination with lead, the nuclear energy industry has a definite use case.
Additionally, wind turbines, electric vehicles and some smart phones use these characteristics of the metal only known to us since the late 19th century.
The major exploitation happens in China and, therefore, the recent tariffs have complicated the trading. Prices tend to rise and products that contain Dysprosium are likely to become more expensive. However, there is the other side of the coin, which means recycling and reuse of Dysprosium is also more interesting to companies. Hence, the price increase will likely enhance circularity of the metal from obsolete products into newer ones. In this respect it is good news that smartphones receive longer updates of their operating systems and security as of 2025-6-20 in the EU. This will also reduce the amount of rare earths needed in the production of the rapidly changing technical specifications of smart phones and tablets. Repairing the devices makes more economic sense before “programmed” obsolescence.
(Image: extract from Willem van der Vliet (attributed), The money counter. early 17th century, Brussels MRBAB).

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Marx Home

The home of an influential philosopher, economist and political scientist is not easily presented like a home of a musician, a composer or an author. However, the home of Karl Marx in Trier on the Moselle river succeeds to present the biographical links of growing up in a historic city, the bourgeois upbringing of the young Marx and his formation as an independent and even revolutionary thinker of the economy and society. In 2025 the home is a museum supported by the Friedrich Ebert Foudation with a great online guide and access to additional scientific material. For authors like Karl Marx it is always of interest to follow not only the origin and evolution of the thought process, but also the shifts in the reception of his writings by subsequent generations. This part of the exhibition and an audio guide (downloadable as App).

In 2025 with an apparently ruthless capitalism at work in the biggest economy of the globe, the reminder that the economy is best to be understood as a political economy, which focuses on self-interest and profitable business deals, we find in Karl Marx still a worthwhile reminder of economic development even in the 21st century. The note-taking and studies in Exile in London are well documented in the tiny home and museum. Studying the misery of exploitation in supply chains and international commerce remains a topic of continuing interest as well. 

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Retirement Plans

There are debates about the best organization of retirement. The major fault lines lie between public pension systems and systems that are built based on mainly private provision. Retirement plans in either system are subject to constraints. The recent stock market turbulence has increased the amount of uncertainty people face who invested in 401K plans in the US. Some had to take an unannounced hit to their retirement savings due to the loss after Trump’s back and forth policies on tariffs (OECD Pension Outlook). High volatility of stock market prices creates an additional constraint that you are less inclined to retire when your retirement investments have overall a reduced value. You are a bit at the mercy of capital markets even in your retirement decision, irrespective of the difficulty to predict what your retirement funds will yield as returns. Quite an important lesson to keep in mind when comparing retirement systems in OECD countries. It has been all too easy to blame public pension systems for maybe lower short term interests on pension savings. Being subject to an American president concerning your retirement plans is probably not what many countries would like to have. Trump’s choices on tariffs may have consequences we did not expect to affect us so directly.

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Tariffs Trade Deficits

US Tariffs target the US trade deficits across the globe. For a start on the topic it is helpful to take a look at the data. The US bureau of census publishes this time series regularly. Currently, you can compare monthly or annual data across countries from 1985 to 2025. The worsening of the trade balance is obvious just looking into some examples like trade with the EU, China, Japan, South Korea or Switzerland. we might calculate some rough indicators of trade deficits of the US with countries by the size of the country, which would make Switzerland look really bad relative to many much more populous countries. This probably explains why Switzerland is threatened by higher tariffs than the EU. However, this hints towards the “hidden” agenda of tariffs on countries. The major targets are multinational companies that produce in countries outside the US and particularly in those with low corporate taxes, like Ireland and Switzerland. Importing products from such countries worsened the US trade balance over decades.

Another factor to study more precisely is the sectoral pattern driving the trade deficits with countries. Exports in for example health-related products have soared due to Covid-19 pandemic starting in 2019. Where did the US buy face masks, ventilators, medicines and pharmaceuticals?  These countries will now also be penalized by higher tariffs. The tariffs topic is a complex interconnected business issue, which is not solved by blunt measures. The real danger is that with each month trust in US will erode further. For decades this has been an underestimated currency of international business. Eroding trust is likely to be the major fallout of the tariff and trade deficit nexus. It takes decades to build, but can be destroyed within a few days or weeks. (Image: Mont des arts Brussels February 2024, celebration of surrealism).

 

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Value destruction

The destruction of economic values as they are embedded in quotations on national and international stock exchanges has reached levels after the US tariffs announcements of unprecedented levels. Only the banking crisis had reached similar levels and bursting speculation bubbles. Whereas professional investors might have seen this coming, the normal small investors who had hoped for a positive effect of Trump’s economic policies on shareholder values, which occurred right after the election has been wiped off already. For those people who rely on stock market investments for their pensions have to digest heavy losses now. The second round effects of reduced consumption of pensioners who have lost 10% of their retirement savings will further aggravate the situation for this group of people. Paired with higher expected inflation the economy will be forced into a recession caused by Trump’s tariff announcements and enactments. As this will lower prices of oil and gas as well as other raw materials, his electoral base of tycoons following a « drill baby drill » device experience also losses. A lot of damage all around him leaves millions of people in the US with losses to digest. Probably even more across the world, particularly in the poorest countries of the world. Such a real world macroeconomic experiment is like playing poker on a global scale. However, many countries may build new alliances that may wither the storm better than Trump anticipated. Hence, the game of poker will reenter economic textbooks again in addition to game theory and maybe chess strategies. (Image winter sunset).

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Rich richer

The US economy under Biden had continued to make Americans richer. In an article by Talmon Joseph Smith in the New York Times from 2025-4-3 p. 7 the puzzle that Americans have grown richer, but don’t feel it, has been well explained. The large share of households owning their homes albeit with mortgages from low interest periods have witnessed their increased wealth. However, inflation is eating into their cash available for daily purchases. With another round of tariffs and additional inflationary pressure caused by those, the average person or household doesn’t fell much better off than some years ago. Economic anxiety and our preference for loss aversion or loss avoidance make us react with consumption restrictions to prepare for increased risks as well increased uncertainty about the directions of the whole economy and our very private wealth and consumption patterns. How and when the US economy will get back on track remains to be seen. Higher uncertainty usually reduces investments and with increasing interest rates again the economic recovery might be protracted. The NYT p.7 cites business owners with statements like “we’re not putting our foot on the brake, but we’re taking our foot off the gas.” Betrayel of working class people due to rising unemployment after 3 years of very low unemployment is likely to widen wealth gaps in the US population even further. The rich will get richer, but at high costs to the population as a whole. (Image: ceiling painting in Petit Palais, Paris).

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Tariffs trumped

Economists are used to differentiate between micro-and macro-level effects of tariffs. For each buyer of a car, import tariffs raise expectations about prices for a product. Many consumers will then decide to buy lower quality at the same price or postpone buying a new or replacement product for some time. For cars it might mean that many people will then decide to buy rather later than sooner. If thousands of people do so, the market will fall into recession overall and it will take months or years to come back to the same or a higher level. A political economy perspective has taught us that eager politicians are in favor of a short recession immediately after an election which increases the chances of re-election once the economy gets back to normal or catches up on lost growth. 

The US under Trump apparently gambles with such an economic rationale. Short term inflation is already rising, interest rates stay high before the upheaval caused by tariffs starts to settle. 

There is, however, another alternative mechanism at work as well. Thorstein Veblen long ago hinted towards what is not called in economics the Veblen effect. Some fancy cars for example can raise prices well above others because of their cleaving image. Just because they get even more expensive the buyers of such products gain additional attention as part of a social class which does not have to care much about their additional spending. The consequences of tariffs will most likely widen the gap between those saving dearly and those able to splash out cash despite increased tariffs. The most felt consequences, therefore, will be on social inequality within the US (compare WSJ 2025-4-24 A2 by Juliet Chung, “Richest of Rich Gain §1 Trillion”).

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Bricks and algorithms

Construction as an economic sector has suffered for decades from skill shortages. The PWC study on skill needs in construction and management of digitalization in this sector shows various deficiencies. Labor demand in excess of own training efforts in the related professions is further increasing in coming years. Migrants from across the world have come to Europe to fill the skill shortages and willingness to work in the sector. Population aging increases demand for adaptions of housing and tertiarization of the economy asked for new office space and adaptation of existing ones. 

The skills involved in construction have also evolved. Digitalization and understanding of new technology needs of modern housing increased the level of cognitive skills in the sector enormously. “just let the liquid concrete flow” will no longer suffice. Environmental obligations, renewable energy and design issues had an impact on the sector. 

Many enterprises in this sector have trailed other sectors to adopt strategies like digital pairs of a building or connected manufacturing of facilities with data sharing and compatible software. All this led to the fact that younger employees or university graduates (m/f/d) have preferred other sectors. IT development and applications are interesting and challenging in this sector as well. Logistic arrangements a formidable task as well. 

The claim of too much bureaucracy is just an excuse for lacking digitalization of the sector. Years ago we stated that every task you carry out more than once can be automized. With AI in construction digitalization starts with each singular case as a learning occasion for humans and algorithms supporting us.