Tag: economics

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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 reelection 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 stats to settle. 

There is, however, another alternative mechanism at work as well. Torsten 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.

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Design skills

The is a huge B2C or C2B market in connection with home design and adaptations. Nowadays people are inspired by instagram, pinterest, YouTube and TikTok. Additionally, many play around with Apps to create their own images of how they would like to arrange or rearrange their home. Some have taken first steps to include measurements of their home in the design. The compatibility with professional software of the construction sector, however, is a drawback that delays or leads people to go to enterprises that take into account the prior efforts of young lay designers. It is a little bit like an own contribution in home building quite popular among new home builders to alleviate the upfront cash needed for first home acquisition. The younger generation could offer some of their “digital native” skills to bridge the gap in construction and home design. Of course, reworking and precise measurements on the location will still be required as construction has a lot of legal liability issues involved. Cooperation is a form of burden sharing to advance faster and/or with lower costs.

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Unwinding USA

Stock markets move largely due to expectations. Therefore, the mixing of economics and politics can create lots of signals, which are likely to raise price expectations. Inflationary pressures will call for central banks to increase interest rates which will reduce economic activities that are largely financed through the credit market.
The unwinding of the economy reduces turnover and most likely also profits of companies. The fate of Tesla cars in the last 2 months (Link) and the stock market value of Tesla shares (Link) have plummeted. The unwinding of shareholder value and inflation on the rise as well are a the effects of the MAGA narrative and Musk‘s appointment in politics as chief of GOPE.
The „home made recession“ in the US and the choice to prioritize own products might work in the long run, but the costs of the short-term induced inflation will affect vulnerable consumers more than the people who buy many products that show few price increases. The unwinding of the economy of the USA is likely to cause shock waves rippling through the global economy.
Image: Prices to charge e-cars with solar energy in Germany according to sunshine.

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Corruption Caught

In fraud or corruption it is primordial that the probability to be caught is very high to deter potential fraudulent activity. The new Trump administration has enacted as one of the first executive orders that the FCPA stops to take on new cases of suspected corruption as well as reconsider some of the running procedures. In the same vein, the Corporate Transparency Act (CTA) has been silenced so that American companies to not have to disclose ownership information that fall under the CTA until 2025-3-21 until a major reform will be published.
These policy shifts concern more than just US citizens. The competition between countries will be effected because as companies trading with the US which used US bank accounts were also liable under this legislation and subject to prosecution. The FCPA has been an important example for other countries to follow at least within the Member countries of the OECD. The shift in priorities of the Trump administration might open doors again to corruption which we believed were shut with lasting effect.
In conjunction with the rapid increase in military spending when the capacity for the production of military equipment is slow to increase might increase the risks of corruption talking hold again. Market economies build on fair competition, but less prosecution of corruption introduces a bias into negotiations which works against innovation and competitiveness. We have a hard time to understand any kind of logic in such economic and legal strategies.
Image: Bridge collapsed due ro material defects. Archive Berlin Tempelhof Schöneberg.

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Betrayal Politics

Most economists would hold that in free market economics there is no room for moral statements. Betrayal, therefore, is left out of most standard text book economics courses. However, more advanced courses that include strategies based on so-called “game theory”, where actors may breach prior commitments, betrayal has entered economic science. A “tit-for-tat” strategy is frequently the best “game-theoretic” solution to such strategic behavior to deter also repetition of defecting on agreed rules or bargaining outcomes. For real world applications beyond the simple strategic advice, the maths involved are quite challenging. We’ll check soon, how AI is changing that game.
Another popular economic theory is one of “gift exchange”. You gift a sum of money (or weapons for self-defense to a country) with no explicit consent that the money should be repaid (through rare earths) in peace time. A betrayal occurs, if a country suddenly asks things in return for the previous gifts. For politicians that understand themselves as “market marker” and “deal maker”, there will be a tendency to claim back a gift in order to come to some kind of gift exchange rather than an altruistic donation.
William A. Galston wrote in the WSJ (2025-2-26) naming the US political action of the 2nd Trump administration a “betrayal of Ukraine and American values”.
If free markets mean making ruthless use of “tit for no possible tat” and “gifts are always a gift exchange”, we move back to mercantile and medieval practices, where settles could claim land at gun point.
What way out of this? Adam Smith, champion of classical economics, wrote before his famous book on “The Wealth of Nations” a lesser known, precursor book on “The Theory of Moral Sentiments”. Actually, he was convinced that the one would not work without the other.
Maybe, going back to classical economics is much better than a Trump administration version of neo-classical economics in a new era of political economy 3.0.

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More BRICS

The move towards a multipolar world order is in full swing. With the USA retreating from a primordial international role discarding UN institutions and the defense of major elements in the fight for individual freedom, the diplomatic order of the last 80 years has changed. The liberation of the concentration camps in Germany and the 80 years of the end of the 2nd World War on 1945-5-9 had forged an alliance in which the common enemy was defeated and the the next major confrontation in Europe or on the globe had to be warded against. 

The evolution of peace in Europe has been marked by the Cold War and a bipolar world order which confronted the USA and Russia at various places. The rollback of Russia has seen its high time with the Northern and Eastern extension of the EU and NATO. This goal of US strategic interests has been largely accomplished. 

In the shadow of this bipolar relationship the BRICS have moved towards greater economic power and therefore influence in the international arena. Economic data on the biggest economies in the world over the last years show the rise of the BRICS, bit mainly China and India. Their population sizes create enormous and largely shut off internal markets. All these developments create new challenges to the previously relatively stable world order. Technological advances have been narrowing more rapidly than before since the access to the best available knowledge spreads fast and more equally across the globe through the internet. 

The ugly face pf imperialism is returning front stage and attempts to change the previous versions of imperialism into a new hegemonic world oder. Updated views of economic power and influence zones let us look with a rational perspective on the new power play. Due to the containment of Russian influence, the USA has China as the major power to confront, a major shift as of the 2020s. The China-driven Silk road project with strategic landing points across the globe has „trumped“ American efforts to align BRICS to human rights values over the last decades. European diplomacy will have to recognize that we entered another phase of „Realpolitik“ due to major economic shifts over several decades. (Image: extract from Max Klinger, The walkers, ambush, 1878 in Berlin SPK).

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Sustainable Food

Climate change has a severe impact on sustainable food production. The OECD reports annually on the evolution of volumes of production and monitors the resources and subsidies allocated to the agricultural sector of the economy. The sector and the whole nutrition chain are frequently perceived as a major driver of shrinkflation, greedflation and cheatflation.
Changes need to be introduced with a medium and long-term perspective in order to allow for smooth adaptations of the sectors involved and to avoid so-called hog cycles.
Most economic debate is focused on the quantity of production. The loss of production due to climate change and Russia’s war in Ukraine has been and continues to be substantial causing starvation and premature deaths. Another issue is the lower quality of food due to droughts. Repeated events call for adaptations. Certainly the adaptation of more resistant crops is part of the answer. However, the other side of the same coin consists in the consumer’s readiness to buy products that suffered during a drought. Just as the reduction of fertilizers and less water in the production of droughts reduces the size of fruit, for example, we, the consumers will be systematically challenged in our purchasing habits of fresh food.
Price-sensitive consumers will have to choose the products that have reduced prices due to drought quality loss. Other consumers may choose the drought affected product if a “resilience message” is attached to such products. Solidarity with climate affected farmers, just like bio-farmers’ products in ecological production, opens up another perspective to more sustainable consumption and farming.

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Existence as Eggsistence

Artists have their own ways of hallucinating. They don’t need an AI to generate ideas beyond the normal, even allowing for 2 standard deviations off the usual. As a result of the thorny question about your existence, Ram Katzir came up with the impressive statement about his „eggsistence“ being subjected to a squeezed experience. Ever increasing shares of the labor force would subscribe to this statement about the modern workplace. Each turn of the screw risks to crack up the egg‘s shell. Rather focus on the egg, try to get a grip on the screw. There are thousands if not millions who crack up under the excessive pressure of economic and political circumstances. The new platforms of food, grocery and parcel delivery at home have become the latest example of AI-assisted and algorithmicly managed screws. What is driving your eggsistence. It is about time to  ask fundamental questions again. (Image: Eggsistence, by Ram Katzir 2021 in Brussels, Galilas Collection Belgium)

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Corridorisation Connectivity

In some cities, “I love Paris” (Jazz Song), we admire the “breath-taking” large corridors, right in the centre of the city. This has been the outcome of the urban planning in the 18th century. Haussmann designed large parts of Paris with huge corridors despite the medieval narrow streets in some of the arrondisements”. Ease of traffic, fewer riots and representative housing became the new mantra of urban planning and superb boulevards.
In the 21st century it is about time to question the notion and social process of corridorisation. This has been accomplished in a paper by Fatima Tassadq et al. (2025). Modern infrastructure like fibre-optic cables, energy or water networks are easiest to deploy in urban spaces with large corridors than the complex narrow inner cities with supposition of different kinds of network layers. The grand ideas of the 18th century should be questioned from time to time and some districts that have escaped the corridorisation might well have a particular charm about them, maybe just because they seem to escape the rational approach of making and structuring space by means of large corridors. Large corridors separate city districts and they are a major driving force of gentrification.
The rationality of corridors has some roots in maths or physics of complexity. A recent paper by Shanshan Wang et al. (2024) reports the surprising finding that the transport corridors in several cities across the globe allow for a 1.3 times the distance of transport networks compared to the so-called direct linear “bird’s flight line”. Hence, corridorisation is (has been) a rather pervasively applied model of urban planning.
Alternative approaches advocate in favor of the 15-minutes walking distance city. All amenities like shops, schools, maybe work and services should be reachable within a 15 minutes walk. This does include “walking corridors” that facilitate (social) connectivity in inner cities. Cyclists also claim their corridors or fast lanes across cities, which underlines the pertinence to take corridorisation seriously and apply the concept with care.
In any case, social connectivity is key. The big social media platforms operate similar to the traffic infrastructure in the 21st century and provide huge corridors to knowledge and people. We only realize this once a service (for example tiktok) or the internet altogether gets disconnected. We have moved from (social) categorisation to (social) corridorisation as technology and rationalisation have taken the upper hand to structure our (social) lives.

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Cheatflation

There are many ways to study inflation. You may start by looking through your collection of bills. Economists like to swear by the consumer price index or indices, if you are even more into inflation. In textbooks like “economics for dummies” we learn about rational behavior and price adjustment mechanisms through the “invisible hand” to find some sort of equilibrium.
Advanced economics courses will teach you about strategic behavior inspired by game theory and the effectiveness/ineffectiveness of cheating. For advanced economists it is, therefore, inevitable that “cheatflation” should be part of the economists’ vocabulary. Of course, a profit maximizing entrepreneur is likely to way the risk of being found out contributing to cheatflation against the potential gains.
How to cheatflate? Too easy. Any producer of a product can cheat by using, for example, other ingredients than those printed on the product label, usually cheaper ones. Instead of fruit juice (wine) you may just sell colored water with lots of sugar (ethanol) in it, but still label it fruit juice (wine) and get away with this, until a consumer protection group makes a fuzz about it. A more sophisticated way is to sell investments in ESG-rated funds, but then include dirty stocks without proper notification in the fund, which probably increases profits based on wrong labels.
There is a specific quality to cheatflation, which makes it different from shrinkflation or enshittification. The drive to “obtain unfair advantages” through cheating across a whole country or region makes cheatflation an economy-wide process and subverts general fairness rules as well as trust in a society.
(Image Saccharometer, DTM Berlin 2024)

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Californication

In a song by the „Red Hot Chili Peppers“ the term californication appeared for the first time as far as I remember. This song is rather critical of the superficial californian way of life. The belief in the dream that you may get rich quickly in California has suffered another blow wit the thousands of homes burned in the wild fires in January 2025. Dry and arid areas are spreading and the lack of water makes it very hard for firefighters to protect homes, particularly in difficult to reach valleys. Stormy weather adds to the speed of fire spreading. All these elements are predictable additional risk of climate change. Californication is the old and new word to describe a trend of acceptance of increasing climate risks by at the same time neglect of environmental precaution. Hollywood is just around the corner there and the film industry might come up with some other narratives than just the previous californian dream. Get rich fast, then run away. Sustainability is a more difficult concept and yet it keeps getting more and more attention.

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Sociolegal Circularity

At times legal systems feel like going round in circles. Legal procedures move from one stage to the next and they may get referred back to the previous instance to resolve a particular issue or restart the procedure. This has good reasons with the aim of “doing justice”. Sociolegal circularity, however, begins before the, right at the beginning and negotiation of legislation on which all legal systems are based in democracies, that is. Hence, the legal definition of waste, recycling as part of the circular economy and society is rather crucial.
Circularity is a complex sociolegal issue as the example of PFAS in plastics demonstrate. In economic theory the existence of externalities invites profit seeking of the kind like: “the sea in large part is owned by us all and there is no price attached to the (ab)use of it. Dumb PFAS into the sea, because the costs of cleaning up will be shared by all of us”. In order to limit the extent of this economic logic, we have to rely on sociolegal processes. The precise definition of property rights and liabilities beyond the PFAS issue have to be well-defined. It is an intergenerational topic as well, not only in view of deferred payments.
Parliaments have to be rather competent to look through all the complex issues of producing and recycling of materials to make sound provisions in law including future generations. Going round in circles in parliament is yet another element of necessary condition of circularity in a rather broad sense.
The air we breathe and the water we drink have become part of this “economic externality”, which is a very internal, inside of our body kind of sociolegal affair. Who is responsible for the bad air we breathe and the contaminated water we drink? Air and water have for a long time become marketable products. The more your local water is polluted, the more we are forced to buy water. The more the air in inner cities is filled with fine dust particles, the more medical doctors, hospitals and rehabilitation facilities we need to construct.
For GDP calculations these are win-win-win situations, although they make us all worse off. Society and politics are in charge to define and redefine (yes, circles again) the legal basis with a lot of precision and scientific detail. Sociolegal circularity is key. You just have to turn it in the right direction.
(Image, Palais de Justice, Brussels view from Forest district).

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Socioeconomic Circularity

Some sectors of the economy receive a lot of attention, for example sectors selling fancy cars. Other sectors, like the ones regrouped under the name of circular economy, receive much less attention and show up little in headlines. In fact, the circular economy is a great example of this. There are thousands of waste and rubbish collection, sorting and recycling centers, several hundreds of waste-to-energy plants, composting sites across the European Union. Of course, there is also a European Federation of the sector (FEAD). On the last FEAD conference in Brussels 2024 it became clear that Europe is finally waking up to the challenge of recycling costly raw materials.
The narrative concerning the sector needs to change further: what used to be subsumed as costly nuisance is in fact a potential profit center for companies and society at large. We do no longer want to import lots of raw materials from countries with dubious social and environmental records as part of our supply chains for raw materials. Time to act. This, however, is a rather complex socioeconomic challenge of circularity. The price mechanisms are not fully functional in most Member States, let alone across the EU. Additionally, the social practice to recycle varies greatly between countries. Distributional issues matter as well. It is rather obvious that dumping waste from one region/country in another one has huge implications (nuclear waste), but if one country values waste more than another one, due to innovative recycling techniques, the matter takes a marketable turn. Regulation should carefully distinguish categories of materials as we do for hazardous materials in production, consumption and for health and safety purposes of employees.
Metal, battery, cement, plastic and wood recycling pose challenges, but also opportunities to improve the European material import/export balance sheets. However, first in the circle of circularity is the use of materials. There we are clear that “less is better”. Less input of raw materials, most of which we import in the EU, reduces our dependence on other countries. This is the tricky social question of circularity. Mainstreaming of more conscious use and reuse of resources is a huge social issue, which we tend to relegate to a task for the education system. The awareness that supposed waste is also a valuable resource is spreading and the growth of the sector a business and employment opportunity for many. Circularity is the new sexy sector of the 21st century.
What have you recycled today? and myself? Well, scientific online publications. Now think of ChatGPT and the AI gold mines of 2024. There is lots of value in recycling.
(Image FEAD conference Brussels, 2024)

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Book Value

What is the value of a book? For the author of a book each book s/he has written or sweated the value of the accomplishment is pretty high. From the publisher’s perspective a book is an investment and sometimes a very risky one. The book store makes choices and takes the risk to devote time and effort to select the bestselling books or the best one suited to the local or passing audiences. Next in line are librarians who either stock everything published in a specific language or country (legal deposit) or select from the offer according to perceived interests of their subscribers. On the way to their audience many mistakes may occur. Books miss their targets or librarians go wild in their efforts to guard or discard books. In any case, many books do not find their audience. Some sit on shelves for years and will never be touched by anybody. Other ones pass from one hand to the other rapidly with long waiting lists.
Even if many conservationists don’t like it, it is the use of books that honors books and authors. Pocket books play a specific role in this link of readers and writer. Use rather than conservation, is the prime role of these lighter versions of books. They also have to endure heavy weather, scratches and folding of persons focused on content rather than precious form.
Last but not least in line comes the market for recycled books. Re-use of read or unread books has increased over years and some readers are happy to discover a discarded book from a previous owner (public or private). The value of a book lies in most cases in the eye of the reader. This then makes it an object of competitive marketing and continuous auctioneering.
(Image: pocket books at display of Popular heritage Lost and Found at the Royal library of Belgium 2024.

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Parallel Universe

Sometimes, it might well be before during or after presidential elections, you feel like living in a parallel universe. Especially after the U.S. presidential election many people beyond the U.S. have the impression that millions of people have rather strange views of how our living on earth could be worthwhile for all, rather than a few. In a crude and rude election campaign many people in the U.S. must have been alienated from what they imagine a peaceful living together in a country or on our planet. Faced with the brutal language it is soothing and comforting to read books again. Already in 2023 adult fiction has outperformed on the book market in the U.S. “Romantasy” and narrative non-fiction (are the new bestsellers beyond travel books, cooking, children books and comics according to circana.com.
Uncertainty, complexity and plurality, apparently, have destabilised many persons to the extent that foundation texts of religions, predominantly the bible, have become bestsellers again with more than 14 million book sales in the U.S. in 2023 and up to November in 2024. Printed copies as well as specialised editions for children go to new first time readers and buyers as well as replacing older copies. The need to find simplifying answers to basic questions of humanity is on the rise again.
Some persons might wish to find the existence of a parallel universe in studying the bible, others just a retreat from the horrors of daily news on TV and social media, we all consume more than ever before. We are no longer surprised to find the first church in Switzerland, which offers an AI in church which listens and answers to your confessions. Bible apps offer detailed search functions and reading aloud in case you prefer listening.
There are even unauthorised historical translations of the bible on the market in antiques book shops, which achieve exceptional prices.
Of universes, there seem to be many, overlapping and in parallel.
(Image: Reading Magritte on surrealism)

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Passing Disasters

We live in rather cynical times. Just like the practice to scroll through hundreds of newspaper pages or social media entries we pass over the reports of of disaster after the other. Whole industries live from the reporting of disasters in a sensational manner. As the speed of reporting via social and online media has increased over the last few years the time to reflect what are the reasons for the multiple disasters has moved backstage. On the forefront are journalists and life bloggers who gain from increased reach and with the duration of their reporting of disasters. These are the first round effects. Second in line are people proposing fast fixes of what seems to be the problem at first sight. A more thorough analytical approach has little chance against the overwhelming effects of disaster imagery. Before the necessary dara and analyses have been carried out by scientists the next disaster already dominates the headlines and images. Flooding and droughts come and go faster due to climate change, but the reactions just del with reporting and capturing of attention rather than analyses. Next follows the blame game. Rather than unity to deal with consequences responsibility gets pushed from one instance to the next. Another cynical twist is the rise in insurance premiums to be paid by all, because the reporting hypes have increased the cost of repairs for insurance companies and after all more people shall seek insurance and have a higher readiness to accept higher rates for disaster insurance. Maybe this is just another more recent chapter of Sloterdijk‘s „Kritik der zynischen Vernunft“, which we witness currently. The effect of passing disasters is often a feeling of helplessness or powerlessness although we need to do just the opposite. Get together and act together after adequate analyses of underlying mechanisms. (Image Aristite Maillol Brussels, MRBAB)

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Sunny Trade

Some countries or regions struggle with trade deficits or trade surpluses, which cause worries to their partners. Eurostat publishes regularly the latest trade figures for the EU with external partners. The EU as a whole has a trade surplus in September in 2024 of € 12 billion. From January to September in 2024 the surplus accrues to 140 billion already. Overall, this is a rather sunny picture of EU trade. As we import raw materials and fossil energy mainly, the rest of the world is largely appreciating what we do with the imports, at least in an economic sense, environmental concerns tend to be neglected in such considerations.
The import statistics and figures do not capture the contribution of the sun to our energy balance sheets. We import energy from the sun almost on a daily basis and our trade statistics to not capture this, despite their huge impact on production and the fossil energy trade imbalance we report each month. Imported energy, the largest negative position in our sunny trade balance, in the EU amounts to € 20 billion per month. Harvesting more wind and solar energy as well as geothermal sources and energy storage require huge investments, but millions of Europeans are willing to contribute to this effort. With rising protectionism we should act now to avoid years of structural trade deficits in the coming years. There should already be more sun in the still sunny trade balance. To keep it that way more sunny trade will do the trick.
(Image from Eurostat, 2024-11-18, Euro area trade balance by product group in billions of €, original states in %, retrieved 2024-11-29)

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On Uncertainty

Uncertainty is a catchword for all sorts of undetermined occurrences, which we might have to confront. We associate economic uncertainty with the difficulty to forecast or predict the economic evolution of key indicators like inflation, GDP, CO2-emissions, energy and raw materials’ prices and availability. Even factors like increases in greed of CEOs, psychological factors like insecurity about external or internal conflicts drive these macroeconomic indicators. Micro-level features of your own stage or evolution of the life course have an impact on and will be affected by uncertainty. Employment, housing, family, or household composition are subject to high levels of uncertainty. These micro- and macro- level factors are, of course, not limited to the domain of economic phenomena. Most recently, political uncertainty has reentered the international and national sphere with the re-election of Donald Trump as president of the United States. This election outcome of the U.S. is perceived by many as increasing the overall uncertainty due to the unpredictability of political decisions and even previous treaties with the U.S. or where the U.S. is a major partner in the agreement. These economic and political uncertainties are accompanied with a perception of growing legal uncertainty even in very personal spheres of life. Last, but not least uncertainty about climate changes like heating up of the planet and more devastating flooding and droughts contribute to increased uncertainty about future developments and the need to initiate adjustment processes and the financing of those.
The individual and societal ways to cope with increased uncertainty are one of the major economic, political, legal and social issues for the coming years. The answers are likely to be found in mutual, cooperative and risk sharing arrangements. The social in society will be a major part of dealing with increased uncertainty. (Image: Extrait of Paul Klee, Seiltänzer 1923)

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Happy Employee

The research on happiness, subjective well-being or overall satisfaction with your life is also an empirical question. Analyses of being happy donot only focus of overall happiness, but look much more into the details of happiness. Beyond the tricky longitudinal observations of happiness it is common scientific practice to deal with subdomains of happiness like satisfaction of employees with their job, satisfaction with one’s job beyond the honeymoon and hangover effect, best known from family studies.
Each of those subdomains has a significant effect on overall happiness. The novel “Happy Life” by David Foenkinos is an interesting example which focuses mainly on the subdomains of job satisfaction, satisfaction with private and romantic partners as the major domains of a happy life. As developed in the novel, people make job changes to re-orientate professional careers or reset their private life. A low point on the happiness scale in one domain might be compensated by higher levels in another domain. These impact from one domaine to another might have substantial time lags involved as well. More drastic resets (à la Foenkinos) can be avoided through focus on other subdomains of overall happiness as well.
How happy are you with your housing situation, neighborhood, your pet, your physical health? There a multiple +/-spill-over effects to overall happiness. Reading a novel might be one as well, just take time reserved to yourself.(Image BnF expo “women in sport”, 20024)

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Fiscal Union

European Integration is slow and hard to come by. For others it is moving too fast (Brexit). Cultural diversity is a real asset of the EU. The economy or the economies are powerful on an international scale. Nevertheless, the diversity concerning the tolerance of fiscal deficits is still widely spread across the Member States of the EU (see image below). Some states seem to play it cool and run relatively high deficits compared to the EU averages. In OECD comparisons most of the above average fiscal deficits are closer to or even below OECD averages over time (link to pdf-file OECD, 2024). Within the EU differences in government expenditure as % of GDP or the indicator of Gross public debt according to the Maastricht Criteria range from 20% to 160% as percentage of GDP. This entails a different level of resilience to future crises. After we managed to leave the previous 3 crises (financial, Covid-19, energy) it is time to prepare for what might come next in terms of challenges. Preparing public deficits to be able to soften economic shocks is essential to be able to sustain yourself and support others. We seem to be a bit off-target to coordinate fiscal deficits across the Union. Eastern and Northern countries have suffienct scope to support expansionist fiscal policies, be it in the realm of a defence union or to address climate change. Southern Europe will find it more difficult to raise additional funds to prepare now for future challenges. Fiscal deficits might even be not only an economic phenomenon, but a cultural one as well. If we compare Japan with a deficit running at 240% with South Korea with 50% Asia is showing even larger diversity in terms of fiscal preparedness.
An economist’s stance on fiscal policy and fiscal union might depend much more on her/his region or country of origin than economists might want to believe.
Images: OECD Economic Surveys: Belgium 2024, OECD Publishing, Paris, https://doi.org/10.1787/c671124e-en. p.17.

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freight transport

The transport of goods is an important and crucial economic sector to achieve reductions in CO2 emissions. According to statistics from Eurostat Total Road Freight Transportation increased by an annual 0.6% percent between 2019 and 2023. Considering the slack during the Covid-19 economic restrictions this is a remarkable development. Most people agree that more freight on rail could allow a much better performance concerning CO2 emissions. This needs substantial investments in infrastructure and intelligent solutions for optimised and accessible freight loading points. The logistics of the last mile for delivery has found many innovative solutions with battery-supported e-vehicles. The tough issue seems to be the production of e-lorries at competitive prices to the Diesel-engines. Considering the legal obligations to take breaks to ensure sufficient concentration of lorry drivers, the battery charging infrastructure has to be planned accordingly. Ports and airports a certainly key infrastructure for freight transport as well. Industry has additional key locations with high freight frequencies and tonne-kilometres. Eurostat data show that EU-wide empty running vehicles account for about 22%. Scope for optimization is, therefore, a continuous challenge for the sector.
E-transportation is high on the agenda in the sector and production of e-lorries a big challenge. There a many positive signs that the sector has taken up the challenge as there are an estimated 100.000 € per year cost advantage of battery-driven lorries compared to traditional ones (Le Monde 2024-9-24 p.16). This is simply a long-term survival issue for the sector. Smart transport solutions add to the productivity potential of the sector in combination with electrification.

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Sufficient

What do we mean by sufficient? Sufficient of what? French philosophers currently debate the topic under the French notion of sobriété (sobriety). They give as English translation sufficiency, but the notions do not match exactly in the usual understanding of the words. In breaking with the economic rationale of more is always better, the idea of having sufficient food, room to live in or social contacts to not feel lonely, the notion of sufficiency hints towards a rethinking of our customary lifestyles. How many trousers are sufficient? Well, as with shoes there might be gender differences or more generally interpersonal differences or preferences to come to the conclusion of how many is sufficient. If we bring in the notion of sobriety in additional, we allow another social and/or ecological dimension. This may redefine what is sufficient based on judgments how much our planet can handle (emissions) and distributional judgments. The western lifestyle of the last 100 years is no role model for other countries to follow. It is urgent to rethink our growth based economic model to develop new socially viable ways of production and consumption. It seems to be a necessary condition to reconsider the notion of wellbeing and wealth from a sufficiency perspective. It is a sobering thought, isn‘t it?

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Health GDP

A report by the WHO and the World Bank (2023) on universal health coverage and financial hardship has emphasized the difficulties to reach the goals defined by the strategic development goals (SDGs) by 2030 in this policy field. Moreover, the paper by Mazzucato and Ghebreyesus (2024) invites us to reconsider the importance of health in the overall assessment of development and progress. The authors ask us to “rethink the narrow focus on growth in gross domestic product (GDP) that typically dominates economic decision making”. There is of course a long debate on the status of health, GDP or wellbeing as major policy issues or even foundations of the a state’s major objective. For economists the question has been answered for decades to favor GDP growth and more or less the other objectives can be achieved with a time delay. Recently social scientists have highlighted the overall importance of wellbeing or happiness rather than GDP as stated in some constitutions. Health as an overall objective is another challenge to the existing economic framing of societies. In a traditional economic perspective the health sector is part of the GDP increasing public and private sector of the economy with insurers, equipment and persons contributing to it. On the other hand, health enters into the distribution or consumption part of the economy. Each country strikes its own balance between production and consumption. Put simply, in form of an equation where production equals consumption, health enters on both sides of the equation in each country. On the global, scale the distribution between costs and benefits of health have not narrowed over the past. The challenge for the world population remains steep. Considering unequal population growth across continents, the situation might get worse before it hopefully gets better. We still have to continue huge efforts to increase overall health on earth for example through large scale vaccination programs. (Image The tombstone of Molière in Paris 2024)

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Olympic Medals

The distribution of Olympic medals across continents reveals the persistent inequality of rewards across the globe. The first African country in the overall ranking of countries by Olympic medals is Kenya on 17th place. All 11 medals including 4 gold medals were obtained in athletics and in running disciplines 800m and more. The financial resources needed to practice running as high level sport are probably the lowest one of all disciplines. Ethiopia is another African country with this tradition of high level long distance runners on the African continent. Equipment and coaching in other disciplines than athletics involves more infrastructure and becomes more costly and the possibility to reserve infrastructure for elite athletes of a country is more difficult if the infrastructure for the population at large is rather limited compared to the population size. Therefore, the Olympic tradition has to confront the challenge of unequal access to many disciplines of the Olympic Games also in Paris 2024. Being a very good athlete is just not enough if you lack the coaches, training and facilities to be able to compete with the well-equipped countries. The knowledge about the best details of a specific technique or optimization potentials are part of the Olympic challenges as well. The Americas, Europe and Asia might be confronted with new forms or another criticism of imperialist strategies, this time in the domain of sport. The winner or medalists take all. Country rankings appear a bit like the football device “money buys goals”. (Image, Fondation Louis Vuitton, Paris, Extrait of Omar Victor Diop “Diaspora” 2014-2015).

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Olympic Flame

The Olympic Games 2024 have started to attract attention long before the actual games. The arrival of the flame on the many stops on the way to Paris is each time an event of its own. The choice of persons who carry the flame and the parcour are carefully chosen and sponsors contribute to finance the ceremonies. With the tradition of the “Tour de France” which started in 1905 in Montgeron, the city in the vicinity of Paris knows how to organize popular events. Like for a marathon large crowds are waiting and watching along the track. Police and life guards watch over participants and spectators. Many volunteers participate to make the event an enjoyable experience for all. The sports competitions of the very specialized athletes make much more sense if many people are encouraged to exercise as well. It is fun and the spirit of the Olympic Games should encourage more people to stay fit. Just a little bit at times helps to improve your health. Daily exercise is a challenge but even more beneficial. The idea of a relay is also stimulating continuity.

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Credit donations

“credit” stems from the original latin word “cedere”. In the 1st person you write “credo”, which means I believe. If said in a religious building or church you show with this pronunciation that you believe tbe narrative of the religious community. In the 3rd person “credit” stand for s/he/it believes. In the financial sense it is the receiver of money from your credit card who believes or trusts you that you made an honest payment. Now, banks take commissions from each of these exchanges of trust. You are credit worthy or not. In some churches you now make donations using your credit card to facilitate business. Credit card companies also charge you on your donation. Win win situation we call this. I keep asking myself, whether I still “believe in angles” or only business angles. (Image Église Notre Dame des Victoires Brussels 2024-7)