Currently urgent integrated Economics: Consequences and Solution Ideas
YouTube video: https://www.youtube.com/watch?v=l4H2QtT8bag
I have described the problem analysis in the last part:
LinkedIn: https://www.linkedin.com/pulse/currently-urgent-integrated-economics-problems-thomas-poetter-3fjde
Substack: https://potentialismpcf.substack.com/p/currently-urgent-integrated-economics
YouTube video: https://www.youtube.com/watch?v=0u-GZ1oZUVE
Consequences without changing:
As we’ve laid out in our previous video, without bigger changes most Western countries, especially the EU will see dramatic economic decline and fall dramatically back regarding high-tech and thus also regarding living standards and consumer buying powers. This will lead to even more mental health issues, rip-off, crime, destitution and possibly even riots or uprising due to the cost-of-living crisis, recession, and inequalities that are in many countries bigger than in France just before the French revolution. Healthcare as a whole or at least many treatments will become unaffordable, thus probably shortening life expectancies, possibly even leading to triage situations where people cannot be treated, i.e. be left to their fate or receive morphine overdoses to then die — as during the pandemic. That means we could run into a situation where the elderly get killed, many are unemployed and the youth won’t have a real chance anymore due to high debts, interest payments and depleted resources — and all this without even factoring in any war or arms race.
Common solution ideas by Scientists:
Western countries, especially Germany, according to the experts should turn from a “big government” to private economy, i.e. one which is not driven by the state but by powerful private entrepreneurs investing in high-tech. I.e. government ratios in the overall economy should be reduced. Ideologically, their narrative is trying to protect everyone against everything — but they are constantly failing badly due to bureaucracy, inefficiencies, hacking, agendas and corruption, i.e. in the end they are mostly just further enriching the super-rich.
It would help to discuss problems openly, completely and honestly among entrepreneurs and true practical experts without bans on thinking or censorship to allow to actively seek solutions and create optimal strategies.
Lower taxes on investments and less bureaucracy, create high-tech friendly politics like in France, Silicon Valley or Singapore and especially focus on creating innovation hotbeds like in Silicon Valley. This with ample financing and other things could create a better mood and dynamic of not emigrating but solving problems innovatively locally and resisting the EU bureaucracy and patronization. “He who pays, creates” — thus Germany as biggest net payer could do much more in general and much more positively influence EU economics and innovation politics. Germany must no longer have a worse business system than countries like France or be considered as such. It cannot be that Germany fails at reducing governmental spending requests by 3.5% — while each company must achieve 3.5% of true annual cost cuts to survive — that’s ridiculous. There is enough capital in and for Germany available — it is just volatile and finds much better conditions elsewhere and that is the key point where the government needs to start fixing. The new innovation hotbeds should focus on the top-of-the-line SOTA (state-of-the-art) investments, not for second-best or mediocre low-cost tech. Germany would need corresponding conditions and then a good equity story for that. The EU is also too strict regarding anti-trust laws, e.g. defining minimal markets on which it sees a company with just a few million Euros annual revenue as dominating and causes gigantic bureaucratic hassles. Tesla has transformed the car industry by building a car around the software innovations while others have treated software step-motherly with bad uncompetitive working conditions and failed. There are 3 major trends in software-related employment: Near-shoring, far-shoring (having to hire 2 people essentially to get one to work) and now remote-shoring (people working from home around the world but wanting to be paid like in the highest-paying countries). All of these are failing.
The number of so-called “right populists” is not such much a problem but rather the low credibility of politicians after many evil agendas, lying, fraud and collapsed narratives. The supply chain laws are nearly impossible to adhere to as there are so many suppliers and in many categories supply is already dominated by Chinese companies: The law might be designed to push companies into buying more from EU companies, but it comes too late as there is not competitive EU supply in many categories and with non-EU companies the laws are nearly impossible to adhere to.
Energy costs must come down which means non-ideological energy politics which e.g. doesn’t outlaw things like getting gas from Russia (like Austria has been doing all along), fracking or nuclear energy. We must create more energy supply to bring down prices and not turn the rare electricity into expensive hydrogen but instead turn natural gas into hydrogen (blue hydrogen) and store the CO2. Women should have more incentives to work, people shouldn’t be incentivized to stop working at lower ages but to work longer e.g. by taxing that less. There is probably no alternative to adapt rent payments to life expectancy if that might become higher or become medically more costly after life expectancy has become lower due to more sickness, perhaps due to the COVID vaccinations. There should be fewer school and college dropouts and maybe support teams for highly qualified immigrants, maybe even one-stop-administrative shops for them while avoiding immigration into the social systems (as otherwise social systems and financial support of demographic developments will break down). More flexibility is needed e.g. regarding working times. There should be more excellence initiatives, especially around universities/tech clusters, venture labs and one-stop-shops for all important target groups: Not just for immigrants but also for investors, startup entrepreneurs, etc.
In seed private or VC financing many regions are not doing too badly, but financing lacks for successive stages which means that companies often fail or get sold to American or other investors who are willing to take more risks or need to have better taxation schemes to remain competitive while there is even double taxation in many cases in Germany. Also a research atlas of who works on which topics is missing as well as where companies can beneficially build dependencies. So far research in the EU is far less practical and competitive than in the USA and that should change to lead to job creation and practical improvements for society.
People should be creating and implementing concepts how regions can strategically use AI- or other high-tech-related strategic initiatives to improve their overall competitiveness, skill levels and prosperity. There exist multiple such innovative patentable unique opportunities with latest AI and other high-tech, similar to Taiwan’s semiconductor strategy and the niches it targeted a few decades ago. However, the race is on who implements which such strategies and only 1–3 such regions will prevail globally for each new high-tech direction. Without coordination but instead just letting some youngsters of which many are grifters and fight for funding will not be sufficient. Instead, systematically innovation hotbeds like Silicon Valley need to be created that get enough funding, strategically follow promising directions and implement all the latest efficiency and high-tech insights. E.g. OpenAI Qualia/Q*-like AI systems and their applications and refinements and other AI ideas along various domains and use cases are very promising.
As we see in the Ukraine, the way countries fight wars has dramatically changed. One could even use that as innovation area — questionable but definitely better than putting money into outdated tech like Germany, e.g. creating a military Telegram service for 20 billion Euro. Military innovation is around fast integrated drone warfare combined with other systems: AI-driven reconnaissance, attack/defense/evasion, radar frequency jamming and evasion, remote hacking and evasion/hardening against that. Also important are super-sonic missiles, gliding bombs and next-generation air defense systems, fast cart-like attack vehicles, etc. Except the top 3 or 4 countries, no other ones are strong in these regards and thus they are both vulnerable and uncompetitive in terms of military and economic factors as their old weapons can easily be destroyed with the new ones leaving the countries vulnerable to attacks and only some corrupt sources might order the outdated systems.
It is of top importance to reduce regulation (by the EU, Germany, etc.) as e.g. France has shown that this has led to an industry half the size of liberal Germany. If the state interferes, then only through pricing policies (lowering/raising prices) and innovation financing where it would otherwise not happen. Without such innovations leading to big profits and wages, the welfare state might have to be reduced to no longer compete with companies, i.e. paying much lower welfare rates (but adding payments to low wages of working people so much that they can survive). As a result of failures to do so, only 17% of Ukrainians who came to Germany work ~2 years later while around 70% work in the Netherlands. German citizen’s income (i.e. welfare) per recipient has increased by ~37% from the year 2020 to 2024 — that would be a high increase in normal times and also relative to the gamed official inflation statistics — but the real inflation was much higher so that these people are not better off. But German companies can’t earn that much more in international trade due to low competitiveness and innovation so that companies face more pressures from the job market as they have to pay high wages to attract and motivate people to work. Due to the disastrous German demographics of baby boomers retiring and wanting old age pensions and health care from children that don’t exist, big conflicts might break out. Perhaps a point-based immigration system similar to Canada might help, i.e. selecting those immigrants that help Germany most and not those selected by the human trafficking mafia. Also people in Germany should have more children and the state should be more supportive in that regarding the conditions, e.g. less taxes to be able to afford children, more Kindergarten places, high compatibility of family and career, higher rent payouts for people with children to incentivize having children.
Fundamental German and EU problems and corresponding solutions are:
Insufficient separation of powers, especially politicians should be isolated from all abuse of power and corruption potential (or directly be replaced by objective experts or AIs). The EU needs minimized taxes and duties, better education — not just turning people into uncritical un-innovative cheap labor but using latest learning techniques like brain-centric-design (BCD) and flow learning to impart comprehensive knowledge without gaps, especially not regarding economic principles, correlations and relationships. There should be minimal subsidies except truly practical research to minimize corruption and market distortions. National debt should be kept low and be used only as a last resort in crises to not advance in the overall debt cycle as described by Ray Dalio in his Principles book as high debts and high interests choke economies and inevitably lead to economic collapse. Energy supply should be relatively cheap and dependable to keep an industry competitive. The subsidiarity principles must be upheld, i.e. that all decisions that can be made locally are actually made there where people know best what’s going on. That can also be part of the next principles: Reducing bureaucracy and increasing planning security by establishing long-term principles and sticking to them instead of introducing many new agendas and corresponding laws, regulations and bureaucracy. No fight against the economic backbone: Small and often very innovative companies. Don’t introduce big challenges for them e.g. in having to complying with hard-to-adhere-to supply chain law with negative impacts on the economy. Small and medium-sized businesses suffer over-proportionally from bureaucracy, high costs and taxes, while big corporations benefit due to internationalization, automation and evasion. In Germany, 20% (~15 million people) finance the other 80% and the numbers have been developing unfavorably: Many refugees, foreigners and increasingly Germans who maybe had a low or medium income job after the inflation earn so little that in the end they have less than what they would get paid as welfare when they didn’t work. Of those 20% who are net payers, around half will retire over the next 10 years and from the other half, a million per year do emigrate (along with around 16% of the companies) and Germany is by far the biggest net payer in Europe regarding EU, refugees, Ukraine war, costly agendas (green transition, defaulting (corrupt) guarantees, corrupt subsidies) and many other things while mostly not innovating but exploding bureaucracy and corruption. Without reversing these trends, Germany and several other EU countries are going down to the level of developing countries which by the way aren’t really developing positively.
Discussions should go around facts and strategies instead or opinions or ideologies.
An interesting such strategy would e.g. if the EU adopted a similar but ideally more attractive, efficient and competitive strategy to the US “Inflation Reduction Act” with a slightly different focus, maybe focusing a bit more on specialty AIs instead of mostly infrastructure and production capabilities. Governments could create many innovations hotbeds as innovation clusters, e.g. in different fields of AI and its applications and source the best ideas from innovation and startup contests for that in a truly meritocratic way.
What to do personally and regarding your Investments if not much positive Change can be achieved
This is not investment advice: Always do your own research!
Avoid the highly corrupt, bureaucratic and innovation-averse EU except for some great opportunities (most just available under corrupt circumstances).
SAP is still good, but software can be created in 1–3 years at 1% of the costs of before. That will create a new level of competition around most types of software as attackers can quickly and efficiently come up with new solutions that incorporate all the best ideas with little cost in short time spans!
NVIDIA is only good regarding graphics cards and deep learning which has run into several hitherto unsolvable fundamental problems like hallucinations, data rights, data labeling and training costs. When other fields of AI gain more importance, it will drop again.
Similarly, EVs are only a partially useful technology and only for people who live next to a green power plant as the nearest power plant always delivers the electricity. Thus also companies like Tesla or BYD might go down.
Generally just invest in just top innovators or companies with pricing power in these inflation times and the fabulous 7 when it makes sense chart-wise and fundamentally from their valuations. If you’re audacious and a bit naughty, try to benefit from agendas like wars, pandemics, social media harm, need for more medicines, etc.
What we do
We created a concept how different regions can strategically use AI-related strategic initiatives to improve their overall competitiveness, skill levels and prosperity. There exist multiple such innovative patentable opportunities, similar to Taiwan’s semiconductor strategy and the niches it targeted a few decades ago. Such initiatives can then create lasting innovation hotbeds like Taiwan or Silicon Valley, even if single companies fail: The competence stays, i.e. the brain power stays in the area and will be used by related companies in the field.
Our extended Research and Solutions from Potentialism
We as Potentialism see these additional systematic problems in the EU and especially Germany: Many agendas, especially using narratives of having to help pretty much everybody in the world, mostly as excuse to in the end mostly funnel money to the super-rich. Exploding bureaucracy to hide corruption is another key mechanism that also leads to big frustrations. A key problem and frustration are the now minimal perspectives of youngsters achieving similar buying powers as their parents due to high debt, unfavorable demographics, little innovation and many scarcities regarding minerals/resources, accommodations, university education, healthcare, etc.
The key things we would change are creating optimized open public strategies supported by AI to for the first time really solve the key problems actively while leaving no room for corruption and fighting it actively. We would optimize all incentives towards optimal long-term outcomes for society. Decision makers would be held accountable.
It is high time to become active![1] Good ideas don’t spread themselves, especially when there are so many false narratives and beliefs. Thus please help us by liking, subscribing and sharing our content and joining our communities, see the links in the description or profile.
We have probably the most comprehensive analysis and the most comprehensive solutions of today’s top problems called Potentialism:
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[1] Jesus‘ parable about 3–10 servants and that we as God’s servants should be as active and efficient as possible: https://www.biblegateway.com/passage/?search=Matthew%2025%3A14-30&version=CEV Matthew 25:14–30, https://www.biblegateway.com/passage/?search=Luke.19.11-Luke.19.27&version=CEV Luke 19.11–27
