Tag: economics

Posted on

Premium for silence

People are willing to pay a premium on housing prices for a more silent environment. In the study Enrico Moretti & Harrison Wheeler (2025) estimate that the construction of a silencing wall near a noisy traffic junction or road will increase prices for every decibel of noise reduction by about 3%. Distances closer to the noise shields get higher increases and this mechanism works even up to 400 meters away from the isolation. The investment in decibel noise reductions (not statistical noise) meets a willingness to pay a premium on housing prices. Investment in positive environmental effects (silence) have an obvious marketable premium value. This is most likely just the obverse effect that noise nearby housing is penalized and part of the social mechanism of gentrification. Housing prices and rental costs are known to be powerful drivers of gentrification as well.

Posted on

Bulimia Capitalism

Each time a wave and speculative bubble in the economy is building up or even bursting there are thousands of people who become drawn into chaos. Let us quickly review: Oil bubbles in the 70s, financial crisis and  subprime lending in housing markets, 1st internet bubble and the year 2000 bugs, AI excesses in 2025. These boom and bust cycles resemble the medical and psychological patterns of a bulimia nervosa. The overly optimistic outlook for AI companies’ future profits and shifts in the size of office space needed for companies announce bulimic behavior when at the same time vomiting by the same companies occurs with regard to investments in nuclear energy plants even in the sites like Fukushima in Japan or Three Mile Island in the USA. Bulimia Capitalism seems to be eating its own children. The upcoming year 2026 will be full of revelations in this respect. (Image: collection of about a hundred barbies exposed on a flea market in Brussels on 5 levels).

Posted on

Robotics Hype 2026

Towards the end of 2025, it is common practice to look back on the last 12 months to summarize a year and to contribute to the “collective memory” of the year. From a “society and technology” perspective we shall not be surprised if such summaries will be full of images and praise of AI and robotics. However, large parts of the innovations that shall be declared to have marked 2025 were already around 10 years ago. It is just the timing for the new momentum and the creation of a hype around these technologies that is really remarkable (compare WSJ 2025-11-24 p 1-2 by Konrad Putzier).
It is true, playing around with robotics was reserved to universities, research institutes and some big players in industry. The public and financial markets showed little interest in these “nerdy” fields of applications. Although we were hardly able to compete with our chess computers, Watson solving math problems for us including the steps for us to follow. Video, image and textual support was provided by specialized applications already at high levels and in multilingual versions. In 2025 these techniques have enhanced with machine learning and neural network programming reaching higher speed and being able to use ever larger data sets as input.
But there are areas where the hype is coming to an end. How about all the artificial reality (AR), virtual reality (VR) applications? Many have seized to exist. Have you visited or invested in “Second Life” platforms? Opened a shop in the VR-world? Bitcoins have lost 7% of their value between 1.1.2025 and 24.11.2025 and they suffer still from high volatility rather than an uninterrupted rise.
War has fuelled the rise of shares in 2025 and “dual-use” technology benefits as well. AI has been driven by, and drives both trends.
In sum, it is much less the technological innovations in 2025 that are astonishing, but the political economy of how to orchestrate a sensational hype around the technologies.
(Image Hannover Industry Fair 2016-3-14).

Posted on

All electric again

The “all electric society” has been identified by Dan Wang and Arthur Kroeber (2025 p.48) as one of the underlying driving forces of “The real China Model”. Despite the heavy reliance and pollution caused by China’s use of coal, the large share of electricity  (30%) of energy use is unmatched by the rest of the world except Japan. Investment in electricity grids and innovative ways of mobility around electricity will allow China to buzz rather than steam ahead. Solar cells, batteries for electricity storage and innovative ways of distribution of electricity through AI enhanced “learning” devices will widen the gap between China and other countries that suffer from inefficient path dependency.
Taking the advent of the “All electric society” seriously will free resources through the focus on future-proof technologies. We should not be afraid of the sparks of a short-circuited “All electric society”, the environmental challenges ahead for all of us, particularly China, ask to shift to high voltage solutions urgently. 

Posted on

Political Economy 2025

As the global markets have moved from an international economic system based on competition to a world of protectionism based on arbitrary tariffs and restrictions, it feels strange to spot banners in Brussels in 2025-10 entitled “Competitive Europe Summit”. Participants at the conference appear to be “barking up the wrong tree”. In industries, and even more so in most services, access to markets is the necessary condition to embark on competition. No access, no competition. Tariffs or taxes are created to stifle competition.
All this has multiple reasons. One reason is to create an equal playing field among countries. Previously, we thought exchange rates of currencies and eventually purchasing power parities would shift following changes in competitiveness. This mainstream economic thinking has been disrupted through Putin’s war on Ukraine territory. The MAGA political economy narrative has impacted the competition between countries as well, (1) with its rhetoric and (2) back and forth changes in tariffs. Competition with countries which do not respect basic principles of fairness in competition can no longer be confronted with a mantra of a “competitive Europe”.
A more unified Europe could deal with the “politico-economic” fact that the global economy is much less concerned with the idea of competitiveness than in the last few decades of the last millennium (70s, 80s, 90s). Powerplay between nations maybe regarded as a kind of competition for dominance, but a sole focus on economic competition is grossly misleading nowadays after 3 years of the Russian aggression, at least with a focus on the short and middle distance run.

Posted on

Former Crypto currency

The rationale behind a Crypto currency is quite an ancient idea. In the absence of a central bank or in addition to it, people may choose to establish their own currency or currencies. The central idea is to secure assets (currently and in the future) as well as to enable an exchange between a community of people. The Museum of the National Bank of Belgium (image below) has a “Yap stone” on display which originates from the Pacific Yap Islands. Even very heavy and big stones served as wealth storage. The idealistic value of a particular stone conveyed additional value. In the true value of the word these people were banking on stone money in a way not to distant from what Crypto currency embodies today.

Posted on

AI in Central Banks

Yes of course, Central Banks will use AI, and some do so already (Kazinnik and Brynjolfsson, 2025). Beyond the standard application of AI by its employees, there are many potentials to use AI to analyse and publish data at a faster rate or in order to detect financial crimes. Similarly, data collection based on webpage harvesting might yield new indicators of inflation, expenditure for environmental risks (heat waves, flooding etc.) earlier and in addition to the normal set of indicators. Hence, Central banks might be better and faster in forecasting inflationary tendencies using more AI tools in their daily routines. Of course, it is difficult to predict a disruptive tariffs policy of a major economic player in the world economy, but the calculation of more, even hallucinatory scenarios become more feasible. It is feasible to weigh overall risks of different scenarios to the economy.
(Image: Celtic coins, Museum of the Belgian National Bank)

Posted on

Vacation money

The budget for a vacation, depending on your destination, is subject to exchange rate adjustments. If there are several months between planning and traveling the exchange rate like between the US $ and the Euro € has fluctuated recently by 10% in favor of the €uro. Nice for those receiving salaries in € and who spend their vacation in a region using the US $ as main payment currency. International tourists frequently calculate in $ and therefore might find Europe a bit more expensive than before the return of Donald Trump in the USA.
However, for all those who live in the Member States of the Euro-area and take their vacation there as well, they no longer think in exchange rate risks to their vacation budget. Additionally, there are almost no risks to be subject to fake money transactions like in unfamiliar currencies.
In the Euro area we can use for example backlight to make sure a 50€ bank note is a real one. Happy vacation! 

Posted on

Geo-politics of Electricity

Think of a society only based on electric energy. In the 21st century this energy stems from photovoltaic cells, wind and water turbines as well as geothermal energy sources. Each region of the globe and even within a country has its own kind of access to electric power specifically originating in the geographic and geologic context. This means we are returning to a phase in which “natural monopolies” of power generation have their comeback. Rather than nation wide power monopolies, the regional specificity becomes important again. Of course, this raises a lot of geopolitical issues and maybe tensions. Local economies will develop their own electricity provision. Larger and smaller companies can reorganize their power provision themselves. Energy monopolies become outdated if the infrastructure and legal frameworks are adapted to the potential of the “All electric society” conditional on new forms of “power” sharing. Electric and political power sharing will be key in the geo-politics of electricity.

Posted on

Green trade flows

The statistics on trade flows reported by the UN Department of Economic and Social Affairs have a comprehensive data base in the background. The descriptive inspection of the raw data on trade flows comprising solar panels, batteries and electric vehicles shows a stark imbalance of how future-proof the trade between countries is. The New York Times (David Gelles et al. 2025-6-30) has put this information into an impressive graphical design to show the magnitude of the imbalance of how China trades in green products with the world and how the USA is losing out on future-proof low carbon emission trade. Despite the fact that China is still heavily emitting CO2 today due to burning coal for electrical power, the investments at home and trade with the world is moving into the opposite direction. We have seen many of these industries at risk in Europe, like solar panel production, batteries and increasingly electric vehicles, without the western countries getting organized to address crucial business and economic challenges. Falling behind in these industries and trade will shift global balances in the near future. Renovation through innovation is more promising than holding on for another decade to inefficient and more polluting energy sources. Repairs of homes and buildings have long lasting effects, which we can, nevertheless, change today.