Currently urgent integrated Economics: Problems, Recession, DownTurn
YouTube video: https://www.youtube.com/watch?v=0u-GZ1oZUVE
Part 2: Solutions: How Western Countries can thrive!
Primary sources (detailed article with the same content on all platforms):
Substack: https://open.substack.com/pub/potentialismpcf/p/currently-urgent-integrated-economics-2be
YouTube video: https://www.youtube.com/watch?v=l4H2QtT8bag
The entire EU, especially Germany is not doing well economically, especially when one considers that the true inflation regarding vital goods like food and energy is much higher than reported.
Many factors concern international competition, e.g. against China, lack of entrepreneurial spirit, i.e. a lack of willingness to invest, to innovate and of customers to pay well enough to recover and grow with these, but also other factors and such that are applicable to other regions of the world.
Happiness with life has dropped sharply in many Western countries according to Gallup[1], e.g. to 45% in Germany (rank 20).
The following is a summary of latest economic science analyses, insights and suggestions based on speeches and articles by the professors Krubasik and Sinn, Dr. Weimer and our own research.
[Key problems and complaints]
Investments in Germany and much of the EU are only being made opportunistically only if they are cheap and represent a big opportunity. The EU has become a junk store and nevertheless even in 2024 won’t reach 2019 economic levels while corruption explodes and after the EU has made it legal to pay millions of Euros of bribes in big bags of money as around the Qatar scandal or dozens of billions as in the COVID-19 vaccine ordering scandal. Investors demand a risk prime due to Germany having a higher risk beta — instead of previously a risk discount due to stability. Economically speaking, the EU is on the way to becoming a developing country. Top companies are making only a small fraction of their revenue in the EU or Germany and — what is much worse — an even lower part of their profits in Germany due to the socio-economic circumstances. Most top companies have moved much of their business into the USA due to the inflation reduction act, much lower bureaucracy, corruption and much higher profit opportunities. However, the USA is adding a trillion dollars[2] of new debts for that which is highly unsustainable and will quickly bring about high interest payments and probably soon a debt collapse. Slightly similar, France had some success with its industrial politics but at the price of high debt rates. Many types of daily costs are becoming unaffordable to normal citizens which could cause protests, strikes, riots, breakdowns or die-offs: Healthcare, mental care, housing, university, vacations, healthy food, good working conditions, etc.
The EU and especially Germany seem to be hiding always more corruption and nefarious agendas in big amounts of bureaucracy and that way severely negatively impact most of our lives in terms of money, opportunities and dull frustrating bureaucratic work that kills off the creative and constructive energies.
Good international “long” investors have a “fatalistic” view on the EU: If you carry on like this, we will continue to avoid you: You no longer believe in growth yourselves or have already taken the degrowth path and a “regulatory compass” is missing. The EU and Germany lack political leadership, strategy and are losing their virtues. In Asia, Germany is seen as being on the way to becoming an “old economy” like Japan.
To invest at all in Germany, people not officially accredited as investor or manager need to fill out 40 pages of forms with a big risk of being denied at all from investing.
Germany in 2024 is not only regarding economic growth or lack thereof last among the industrialized countries but also continuing to fall behind and it doesn’t look like politics is going to improve the situation but instead trying to manipulate statistics and the public opinion.
EU and German politicians are not acting along scientific insights or optimized strategies but along unscientific incompletely thought-through green ideologies or evil corrupt agendas and all scientific briefings or discussions with them have proven to be futile.
The EU has ruined the automotive industry and Germany at the bottom of the growth table of industrialized countries — and that is spite of official inflation statistics which are far lower than practical inflation, especially around food and energy. CO2 targets have driven the industry into a “false corner” from which it can no longer escape. After green ideologists banned combustion engines, Western countries stopped research and now China has become the Diesel technology leader with big steps ahead (while also being the EV tech leader): China developed Diesel engines with more than 53% energy efficiency[3] (technically called BTE- brake thermal efficiency) while all others stay at 40–48%. This will save billions as up to 13% less fuel will be needed for them. It is quite improbable that the West will provide a competitive alternative for heavy equipment within the next decades, especially not with the ideologically mandated electricity or hydrogen technology. In previous decades companies like Daimler or VW came up with such innovations and built prosperity around them — but they shifted to Diesel and thermal window fraud innovations instead.
The last 20–30 years of growth were driven by internationalization and becoming up to a million times more efficient with smart digitization and automation. But the next 10–20 years will likely be driven by technology and innovation in heavy competition with China which requires big strategic investments to succeed.
If the shortage of skilled workers is more than propaganda to keep wages low with immigration, then at least only immigrants should be admitted who work, speak your language and will contribute significantly to the society and economy — and not people of which a large share will collect welfare, steal or work illegally and send it somewhere abroad: To home or to finance terror.
German military investments are done with wrong priorities, e.g. 20 billion were allocated for a kind of military Telegram app alternative. Statistically Germany is defrauding NATO by calculating pensions into the 2% military spending and Germany only has ammunition for 1–2 days, less than 200 functioning tanks, a number that is only sufficient to encircle a village.
Germany failed mostly in digital transformation, especially compared to Estonia where all administrative tasks can be done digitally by citizens, from tax declaration to voting. In Germany most administrative tasks require personal attendance, and that often means to fly around half the world to get back to Germany. Employees who want to enter other EU countries for business trips need to fill out A1 forms each time to prove they pay social contributions — which is ridiculous and costly for highly paid employees of top companies.
The EU is largely blocked due to the “German vote”, i.e. Germany voting differently and thus hindering progress, trying to lead not just economically (as under Merkel) but also politically with various unproven ideologies and questionable agendas, but now with little content due to disputes between the 3 governing parties in Germany. Even if Germany rectifies all these issues, so much in terms of trust, infrastructure and qualifications is already broken that it will take a generation until all this can be fixed again.
The EU and Germany are investing far too little regarding public, private and venture capital (VC) investments in which the USA is 10x better and also the EU’s capital market is relatively weak and small. Successful export of German companies has led to further investments in these countries e.g. in marketing, production, support or sales and thus resulting compound interest or ROIs there instead of in Germany. People in Germany are hesitant to make stock market or risky startup investments and thus get low returns and hardly any innovative companies and due to high taxes and deductions are now among the poorest in the EU.
The German industry is burning down, mainly due to wrong politics, agendas and especially forced deindustrialization. Details of Germany’s forced deindustrialization:
1. Nuclear phase-out 2023
2. Oil heating ban 2024
3. “Combustion engine” out until 2035
4. Coal phase-out 2030–2038
5. Natural gas phase-out until 2045
6. 2024: Green paper for dismantling gas grids. Rebuilding them (e.g. for hydrogen) would cost many billions.
7. Energy efficiency law 2023: Decrease in energy consumption mandated from 2008 to 2045 of 45%, even if no CO2 is emitted. I.e. if Germany succeeded in the green transition, then still a reduction of 45% were mandated.
Some energies or technologies like green hydrogen or EVs are defined to have zero emissions even though that is not true and leads to wrong conclusions.
Germany is crazily trying to transition most energies to electricity — and that fast within 20 years and even though electricity so far just in many domains just accounts for small percentages and in many of them doesn’t even make sense in terms of being competitive.
Looking closer at the oil price and production numbers shows that the producing countries are on a linear path: If one region buys less they export it to other regions, if necessary at lower prices. I.e. consuming less oil or other fossil fuels in the EU only makes them cheaper for other countries: We just subsidize these with our expensive and probably never profitable green transition. The arguments that Germany is small with 1.7% of global CO2 emissions and the EU with 8% are distracting from the demonstrated fact that the EU green transition has no effect on the global emissions — but probably only a functioning international “climate club”[4] as proposed by William Nordhaus could have one. I.e. we learn:
1. Unilateral action by countries is useless.
2. Only a widely internationally supported climate club so far has a chance to work.
As long as there is no such international solution, national proposals of subsidizing the price of electricity, faster or more write-offs, investments in infrastructure all won’t have any effect on the global environment.
The fact that mostly just consumers are blamed and charged for CO2 emissions instead of producers and regarding the far more dangerous climate gases like methane (84x more dangerous over 20 years), HFCs (hydro-fluoro-carbons), anesthetic gases, etc. (all many hundred times more dangerous than CO2 for climate), proves that agendas are behind this. The scientifically optimal ways to stop global warming are methane emission detection satellites and measures against the other gases, i.e. mostly making the biggest culprits, mostly factory owners, reduce their emissions. For the environment, stopping other emissions like those of PFAS and GMOs would help even more, again affecting factory owners. So, do you see which interests politicians represent and from what they and the media distract? Political scientists analyzed thousands of political decisions in the USA and found that only the interests of the billionaires were implemented and that they seem to have become complacent, risk-averse or betting on getting bailed out.
Additionally, COVID and other viruses still goes around, caused 73,000 deaths in the USA in 20223 and creates 9% long-COVID cases, a serious and often disabling condition along with a similar number and impact of vaccine adverse effects — both with a disease burden comparable to cancer or heart disease, and an economic cost several times the Great Recession, and for all of which there are no approved treatments. What’s more, each infection is associated with a substantially increased risk of health issues like cognitive dysfunction, autoimmune disease and cardiovascular problems, even for mild infections. The psychological, loneliness, overweight, exhaustion, education, innovation, frustration and work-related implications are probably even bigger. How governments dealt with COVID has ruined people’s trust massively up to not wanting to invest or even emigrating. This has led to waves of insolvencies about which the governments have not been doing much.
In AI, first the big players like OpenAI killed thousands of startups by putting many billions into massive compute to get to some first impressive results in many domains but at second glance only getting to partially useful LMMs (large multi-modal models) that continue to produce wrong answers due to the persistent hallucinations problems and some others. To be able to continue fundraising, they probably intentionally leaked aspects of a Qualia/Q* system that might not even exist as a project. That would be consistent with Sam Altman being described as “”not consistently candid” and “manipulative and conniving”[5]. What was leaked or proposed would require programming several million lines of code of highest complexity being top innovative — which is very hard to manage and even then will need many iterations to eliminate all issues. Maybe a few dozen organizations in the world can realistically be expected to work on such technologies — the rest is just waiting and investors stopped their AI funding and let existing startups die as statistics show. I.e. what Sam Altman achieved only partially with his call for quick and strict AG regulation, he achieved quite well with the Qualia/Q* leak: Fending off the competition and as adverse effect much of industrial innovation came to a halt as all are waiting for the next level of AI that will allow automatic programming, R&D, etc.
The resulting drop in net available buying powers from this, higher taxes, deductions and inflation is not just a drop in consumer demand but the great attrition — people losing interest in most things and looking for shortcuts, better ways of living or working, becoming criminal or developing mental illness, overweight and physical illness. Time and again, society pressures people not to see, hear or speak about the elephant in the room. To maintain our own “cognitive tranquility,” we tune out, malign and shoot the messenger because they remind us of what we would rather disregard and thereby even get used to them. In burying the past, we sidestep accountability for what went wrong, preserve the status quo and probably are forfeiting our right to improvement by failing to implement lessons learned from our own history.
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[1] https://www.gallup.com/analytics/349487/world-happiness-report.aspx, https://www.wiwo.de/erfolg/management/mitarbeiter-zufriedenheit-die-neue-wut-der-beschaeftigten/29844502.html
[2] https://www.msn.com/en-us/money/markets/the-us-national-debt-increases-by-1-trillion-every-100-days-reports-show/ar-BB1jcK0N
[3] https://finance.yahoo.com/news/four-world-records-set-weichai-121900285.html, https://dieselnet.com/news/2024/04weichai.php
[4] https://en.wikipedia.org/wiki/Climate_club, https://williamnordhaus.com/files/williamdnordhaus/files/p161-2020-nordhaus-clubs-foreignaffairs-2020.pdf
[5] https://arstechnica.com/ai/2023/12/openai-board-reportedly-felt-manipulated-by-ceo-altman/
[6] 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
