Tag: economy

The AI Economy And The Public Risk Few Are Willing To Admit

Artificial intelligence is being sold as the technology that will “change everything.” Yet while a handful of firms are profiting enormously from the AI boom, the financial risk may already be shifting to the public. The louder the promises become, the quieter another possibility seems to be:

What if AI is not accelerating the global economy – but masking its slow down?

The headlines declare that AI is transforming medicine, education, logistics, finance, and culture. But when I speak with people in ordinary jobs, a different reality emerges: wages feel sluggish, job openings are tightening, and the loudest optimism often comes from sectors most financially invested in the AI narrative.

This raises an uncomfortable question: Has AI become a true engine of prosperity — or a financial life-support system?

The Mirage of Growth

Recent economic data suggests that a significant portion of U.S. GDP growth is being driven not by broad productivity, but by AI-related infrastructure spending — especially data centers.

A study from S&P Global found that in Q2 of 2025, data center construction alone added 0.5% to U.S. GDP. That is historic. But what happens if this spending slows? Are we witnessing genuine economic expansion — or merely a short-term stimulus disguised as innovation?

This pattern is not new. In Ireland in 2008 — before the housing collapse — construction boomed, GDP rose, and skepticism was treated as pessimism. The United States experienced something similar the same year: real estate appeared to be a pillar of prosperity — until it wasn’t. On paper, economies looked strong. In reality, fragility was already setting in.

Today, echoes of that optimism are returning — except this time, the bubble may be silicon, data, and expectation.

The Productivity Paradox

AI has been presented as a labor-saving miracle. But many businesses report a different experience: “work slop” — AI-generated content that looks polished yet must be painstakingly corrected by humans. Time is not saved — it is quietly relocated.

Studies reflect the same paradox:

  • According to media coverage, MIT found that 95% of corporate AI pilot programs show no measurable ROI.
  • MIT Sloan research indicates that AI adoption can lead to initial productivity losses — and that any potential gains depend on major organizational and human adaptation.
  • Even McKinsey — one of AI’s greatest evangelists — warns that AI only produces value after major human and organizational change. “Piloting gen AI is easy, but creating value is hard.”

This suggests that AI has not removed human labor. It has hidden it — behind algorithms, interfaces, and automated output that still requires correction.

We are not replacing work. We may only be concealing it.

AI may appear efficient, but it operates strictly within the limits of its training data: it can replicate mistakes, miss what humans would notice, and often reinforce a consensus version of reality rather than reality itself. Once AI becomes an administrative layer — managing speech, research, hiring, and access to capital — it can become financially embedded into institutions, whether or not it produces measurable productivity.

As I explore in the book Staying Human in the Age of AI at that point, AI does not enhance judgment — it administers it. And then we should ask:

Is AI improving society — or merely managing and controlling it?

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Germany Has, for All Intents and Purposes, Committed Itself to An Economic Implosion Due to Its Failed Energiewende

Doug Sheridan analyzes the fall of Germany due to its Energiewende, European peer pressure and a nasty case of the green virtual signalling syndrome:

The FT writes, Germany, Europe’s largest economy, is stuck in its fourth year of stagnation. Six months after Friedrich Merz took office, “the crisis in German engineering is gaining momentum at force”, says Dirk Pfitzer at Porsche Consulting. It’s “very clear” the slump is not cyclical and “won’t just disappear” in the next upswing.

Industrial production sits at the 2005 level even after a partial rebound in Sept. “Many of Germany’s economic core strengths have turned into vulnerabilities,” says Marcus Berret of Roland Berger. Those include a large industrial base that’s hard to decarbonise, a high dependence on exports, and a mighty auto industry having to write off 140 years of internal combustion engine expertise.

Meanwhile, Trump tariffs have hit German exporters hard. Over the first nine months of the year, their US exports plunged by 7.4%. But the prospects in China are if anything even bleaker, creatinga “China shock” that is now biting into the bottom lines of globally successful German companies.

In addition, for about two decades up to the pandemic, Chinese demand for German engineering goods and cars was seemingly insatiable, fueling the Merkel-era growth in corporate profits, employment and economic activity. Since the pandemic, however, China is “increasingly beating Germany at its own game”, says Spyros Andreopoulos of Thin Ice Macroeconomics.

Germany is now running a trade deficit in capital goods with China over a rolling 12-month period—a first since records began in 2008. Chinese machinery exports to Europe roughly doubled to around €40bn in over six years and may reach €50bn this year.

While German premium car brands like AUDI AG, Porsche AG and Mercedes-Benz AG were the first to feel the pain, capital goods makers have started to get similarly pounded. “As a country, the Chinese have been in the last years much better, more proactive, more consistent in going after the big technologies and conquering them,” said Klaus Rosenfeld, CEO of Schaeffer.

Oliver Richtberg of VDMA is sceptical of improvement. “Do we really have other sectors that can pick up the slack?” he asks. Domestic politicians have not yet internalized just how bad things are, he adds. “There’s still a lingering public perception that we enjoy high margins and a strong competitive position. But we no longer have those margins.”

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“Nearly Every City in Germany Is Going Bankrupt”: How Globalist Mass Migration Policies Are Turning Germany Into a Third-World Welfare Colony

Germany’s cities are collapsing under a €30 billion deficit in 2025, and even mayors of the neoliberal, pro-mass migration, ‘center right’ party, the Christian Democratic Union, are finally admitting the globalist system they helped create has driven the Europe’s strongest economy straight into the wall.

The mayor of Essen, a large city in the western part of Germany, recently admitted that almost every single German city is on the brink of bankruptcy, with only a handful managing balanced budgets, BILD reported.

North Rhine-Westphalia, the country’s biggest state, has just 10 solvent municipalities out of 396, and the rest of Germany, tragically, looks exactly the same.

For the first time, even once-wealthy cities are imposing total spending freezes, and the era of endless Merkel-style handouts is officially dead..

Essen itself went from expecting a tiny surplus to a €123 million black hole in a single year—proof that globalist open-border policies, combined with Germany’s exceedingly generous social welfare programs, have destroyed the nation’s finances overnight.

The main culprit? The unrelenting stream migrants, the majority of whom are welfare-dependent military-aged men. So-called ‘refugee’ housing, welfare, and integration efforts alone devour at least €50 billion a year nationwide, and that’s the official low-ball figure.

Add in exploding costs for schools, hospitals, prisons, and psychiatric wards filled with foreign nationals, and the real bill is heading toward €20 trillion if the catastrophic status-quo is maintained and borders stay open.

In Essen, over a third of primary-school kids now have a migration background and require expensive extra classes that native German children pay for.

Nationwide, 63% of welfare recipients have foreign roots despite being a minority—German workers are forced to fund their own replacement.

Berlin’s “rescue package” for cities is a sick joke: Essen gets €28 million a year, barely enough for two schools while costs skyrocket.

The globalist elite in Berlin drown cities in bureaucracy and then toss crumbs, pretending they’ve solved the disaster they created.

Hardworking Germans are now drowning in personal debt too—5.7 million are over-indebted for the first time in years as rents and energy prices explode.

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Trump’s tariffs expected to bring in $1 trillion less than expected – and that could drastically change his $2,000 check plan

President Donald Trump’s aggressive tariffs program will cut the national deficit by $3 trillion over the next decade, $1 trillion less than expected, according to a new estimate from the Congressional Budget Office.

The tariffs imposed in the first year of Trump’s second term in the White House would cut primary U.S. deficits by $2.5 trillion if they are left in place as they are until 2035, by the CBO’s reckoning.

Such a reduction would also mean a massive decrease in borrowing, saving the country a further $500 billion in interest and bringing the total to $3 trillion, which is still well short of the $4 trillion the office forecast in August and would make only a relatively small dent in the total national debt, which currently stands at $38 trillion.

White House spokesman Kush Desai reacted to the downgrade in expectations by saying, “The fact of the matter is that President Trump is set to raise trillions in revenue for the federal government with tariffs – whose costs will ultimately be paid by the foreign exporters who are reliant on access to the American economy, the world’s biggest and best consumer market.”

But the revised forecast threatens to complicate the president’s plan to send out tariff dividend checks worth “at least” $2,000 to American citizens, even as the U.S. Supreme Court is still weighing up whether the tariffs are even legal in the first place.

Trump said in a Truth Social post on November 10 that only “FOOLS” opposed his tariffs and declared: “We are now the Richest, Most Respected Country In the World, With Almost No Inflation, and A Record Stock Market Price.

“We are taking in Trillions of Dollars and will soon begin paying down our ENORMOUS DEBT, $37 Trillion. Record Investment in the USA, plants and factories going up all over the place. A dividend of at least $2000 a person (not including high income people!) will be paid to everyone.”

Treasury Secretary Scott Bessent was not much clearer about the practicalities during an interview with ABC News’s This Week around the same time, saying only that the “$2,000 dividend could come in lots of forms, lots of ways.”

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Socialism Is A Political Doctrine, Not An Economic One

The doctrines of socialism have been with us for more than 150 years, but no one had really tried it in a total way until the advent of the Soviet Union from the 1920s to the early 1990s. During that period, a number of communist/socialist revolutions occurred in Asia, Cuba, and Africa, all of which provided a laboratory to observe how these socialist economies would perform.

The socialist economies failed spectacularly, as Ludwig von Mises had predicted. His works on socialism published in 1920 and in 1923 show that, as an economic system, it was doomed before it ever was implemented because it had no practical system of economic calculation. Despite the propaganda beamed at people both from socialist governments and the western media that socialist economies were lifting vast numbers of people from poverty, the reality of socialism was what Mises had predicted.

By 1989, even die-hard socialists like Robert Heilbroner had to admit that socialism had been a huge failure. Indeed, by the mid-1990s, the only countries attempting to continue with the socialist experiment were Cuba and North Korea, and neither economy was one to be envied. Heilbroner wrote in The New Yorker:

The Soviet Union, China & Eastern Europe have given us the clearest possible proof that capitalism organizes the material affairs of humankind more satisfactorily than socialism: that however inequitably or irresponsibly the marketplace may distribute goods, it does so better than the queues of a planned economy…. the great question now seems how rapid will be the transformation of socialism into capitalism, & not the other way around, as things looked only half a century ago.

Yet, Heilbroner—echoing Joseph Schumpeter’s belief that capitalism could not survive in the modern age—was not convinced that a capitalist economy would do well under the cultural and political assaults coming from academic, social, and government elites that would always demand more from it than it could produce. Heilbroner admitted that Mises was right, that a socialist economy lacked the necessary economic calculation to flourish, but he could never get himself to endorse the capitalist system itself.

Today, when we see poverty, prices of goods increasing, housing shortages in New York City, or high food prices, the usual suspects blame capitalism, and they blame what has become the overriding symbol of capitalism—the billionaire. It does not matter that the housing problems are caused by rent control and other supply-restricting government interventions, that inflation is a government-caused phenomenon, and that Federal Reserve policies of creating financial bubbles have created a lot of on-paper billionaires, as the critics will blame free markets no matter what. Their arguments do not need to be coherent or logical to have an effect. As I recently wrote, many of the most economically-illiterate people in our midst have become wealthy by making public statements on economics. In our modern media age, even the most ignorant sage is considered an “expert” if one has the “correct” politics.

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Obamacare Is A Disaster, Just As Expected

Just over 15 years ago, when the Democrat-controlled House and the Democrat-controlled Senate were debating the healthcare proposals offered by the Democrat president, nearly everyone on the political right was unified in opposition. It may well have been the last time the right was united on anything, but it was indeed unified and resolute.

Congresswoman Michelle Bachmann (MN) warned that “This monstrosity of a bill will not only destroy the private healthcare market, it will lead to massive increases in premiums and rationed care.” Congressman (and eventual vice-presidential nominee and Speaker of the House) Paul Ryan (WI) complained that “This bill is a fiscal Frankenstein. It’s a government takeover that will explode costs and kill jobs.” Senator (and Republican Leader) Mitch McConnell (KY) insisted that Americans “want reforms that lower costs, not a trillion-dollar government experiment.”

Right-leaning commentators like George Will and Charles Krauthammer agreed, not only with each other but with Republicans in Congress as well. Krauthammer, in particular, argued that President Obama’s promise to “bend the cost curve” down was pure, unadulterated, and extensively documented fantasy. National Review, much maligned among Trump supporters these days, dedicated most of an issue to exposing and forecasting Obamacare’s fiscal absurdities and the likelihood that it would result in lower quality of care, increased taxes, and exploding insurance premiums. Even the Heritage Foundation—in the news lately for purportedly exacerbating rifts in the conservative coalition—likewise agreed with everyone in the movement, insisting that Obamacare was a disaster waiting to happen and would keep none of the promises that it made, all while destroying what was good and valuable in the private insurance market.

More than a decade later, when it was clear that the system was in trouble and that only greater government intervention and spending could save it, Heritage (in the form of Robert Moffit, Edmund Haislmaier, and Nina Owcharenko Schaefer) took something of a victory lap, detailing Obamacare’s manifest failures and arguing that it was long past time to scrap the whole experiment.

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Albany Republicans’ $20B shame: state spending madness is their fault, too

Albany Republicans, the minority in the state Senate and Assembly for the last seven years, face a long hike back to political relevance.

They can start by answering the $20 billion question.

That’s the difference between what New York state expects to spend this fiscal year — $148 billion, excluding federal aid and borrowing — and what it would be spending if the last budget enacted with GOP support, in 2018, had kept growing only at the rate of inflation.

That amount is $128 billion.

Republicans correctly note state spending is higher than ever — and, given Albany’s reliance on a small subset of high earners, rising unsustainably.

But they can’t put the blame on the Democrats alone.

The $20 billion question isn’t about what Republicans would cut if voters again entrusted them to steer the state.

It’s a deeper challenge: It asks them to explain, to themselves especially, how they can credibly claim to be the taxpayers’ champions when they not only supported much of this fiscal bulge, but pushed to make it worse.

Most of the budget growth since 2018 has been in just two programs: Medicaid and school aid.

Republicans supposedly concerned about the state’s fiscal picture have repeatedly agitated for higher spending on both.

New York spends $4,942 per resident (enrolled or not) on Medicaid, per Empire Center’s Bill Hammond. That’s 23% more than the next-highest state, Kentucky, and double what New Jersey spends.

A credible opposition party would be hammering Gov. Kathy Hochul on this, arguing that the program is pushing up taxes, crowding out essential services and often failing the vulnerable people it’s meant to help.

But the tiny group of upstate fiscal hawks making these points are undercut by their own Republican team: Sen. Pat Gallivan, ostensibly his conference’s health care point man, last year joined 1199 SEIU, the state’s largest health care union, to demand  “Medicaid equity,” a budget-busting increase in what the state pays hospitals and other providers.

New York’s GOP can’t even credibly levy its evergreen complaint about “waste, fraud and abuse” in Medicaid.

The Consumer Directed Personal Assistance Program, a once-tiny initiative meant to help a small group of people live outside nursing homes, mushroomed into a $9 billion boondoggle that pays more than 400,000 people to care for 250,000 New Yorkers.

Republicans should have been first to sound the alarm on CDPAP — yet when Hochul proposed modest reforms by eliminating middlemen, they called her suggestion a “full-blown catastrophe” and all but ignored the fiscal hemorrhaging.

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Trump’s Republican Party insists there’s no affordability crisis and dismisses election losses

Almost two weeks after Republicans lost badly in elections in Georgia, New Jersey, Pennsylvania and Virginia, many GOP leaders insist there is no problem with the party’s policies, its message or President Donald Trump’s leadership.

Trump says Democrats and the media are misleading voters who are concerned about high costs and the economy. Republican officials aiming to avoid another defeat in next fall’s midterms are encouraging candidates to embrace the president fully and talk more about his accomplishments.

Those are the major takeaways from a series of private conversations, briefings and official talking points involving major Republican decision-makers across Washington, including inside the White House, after their party’s losses Nov. 4. Their assessment highlights the extent to which the fate of the Republican Party is tied to Trump, a term-limited president who insists the economy under his watch has never been stronger.

That’s even as an increasing number of voters report a different reality in their lives.

But with few exceptions, the Trump lieutenants who lead the GOP’s political strategy have no desire to challenge his wishes or beliefs.

“Republicans are entering next year more unified behind President Trump than ever before,” Republican National Committee spokesperson Kiersten Pels said. “The party is fully aligned behind his America First agenda and the results he’s delivering for the American people. President Trump’s policies are popular, he drives turnout, and standing with him is the strongest path to victory.”

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New foreclosures jump 20% in October, a sign of more distress in the housing market

Foreclosure filings climbed again in October, after sitting at historic lows in recent years, according to new data released Thursday.

While the numbers are still small, the persistent rise in foreclosures may be a sign of cracks in the housing market.

There were 36,766 U.S. properties with some type of foreclosure filing in October — such as default notices, scheduled auctions or bank repossessions, according to Attom, a property data and analytics firm. That was 3% higher than September and a 19% jump from October 2024, and marked the eighth straight month of annual increases, Attom said.

Foreclosure starts, which are the initial phase of the process, rose 6% for the month and were 20% higher than the year before. Completed foreclosures, the final phase, jumped 32% year over year.

“Even with these increases, activity remains well below historic highs. The current trend appears to reflect a gradual normalization in foreclosure volumes as market conditions adjust and some homeowners continue to navigate higher housing and borrowing costs,” said Attom CEO Rob Barber in a release.

Florida, South Carolina and Illinois led the nation in state foreclosure filings. On a metropolitan area level, Florida’s Tampa, Jacksonville and Orlando had the most filings, with Riverside, California, and Cleveland rounding out the top five.

Looking specifically at completed foreclosures, Texas, California and Florida had the most, suggesting those states will see more inventory coming on the market at distressed prices. There is still very strong demand for homes, especially in lower price ranges, so it is likely those foreclosed properties will find buyers quickly.

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Why Are Things Unaffordable?

With the election of Zohran Mamdani as Mayor of New York, much conversation has been made of his appeal to “affordability.”

As I’ve written previously, this is a noble conversation, but one that has been dishonestly framed (by Democrats and media) to date.  I will use Mamdani’s comment in his acceptance speech to re-frame the debate.

We will prove that there is no problem too large for government to solve, and no concern too small for it to care about.

Mamdani and the Democrat party have effectively defined a binary choice: Should government or “the market” control affordability?  The Democrats are seemingly all in on expanding the size and scope of government, to the point of eventually seizing the means of production.

First let’s look at the role that government has already played and its effect on affordability.  What areas in the economy have seen the greatest increase in costs for the consumer?  Education, housing, healthcare, and food.  Ironically, these are all areas of the economy that the government has interjected itself in the form of subsidies, regulations, government-backed loans, and transfer payments.  

In the 1960s, tuition costs were a reasonable expense.  The best and brightest pursued advanced degrees and had good-paying high-skilled jobs available upon graduation.  Government-backed loans were buffeted by a competitive “private loan” market.

In 2010, Obama eliminated the federal guaranteed loan program, which had let private lenders offer student loans at low interest rates.  Now the Department of Education is the only place to go for such loans.

Private lenders (prior to 2010) would lend money based on a risk model, where student loans could be obtained with the lender determining their degree of risk associated with repayment. It didn’t serve their interest to make loans to a large swath of students that might likely not repay the loan.  Tuition was mostly held in check, as students and lenders evaluated the cost-benefit analysis of higher education.  Universities couldn’t raise tuitions beyond what “the perceived market” for return on investment would support.

Eliminating the private lending market placed government as the sole provider of student loans.  The government abandoned risk-benefit analysis and effectively provided loans to anyone and everyone who wanted to attend university.  This act ballooned the number of people (qualified and unqualified) who obtained government-backed student loans and removed the “market” pressure on tuitions, causing tuition rates to rise exponentially.

Housing unaffordability has three distinct (government-created) problems.

One: Rent control.  New York offers us a glimpse at the impact of rent control programs on price and availability.  Controlling rents on some subset of housing creates hyperactive demand on the balance of housing in a generalized area.  Wherever rent control has been instituted, rents throughout said market rise above and beyond where “the market” might otherwise settle.

Two: Supply and demand (price controls and regulations).  Wherever rent controls have been instituted, local governments (i.e., New York, San Francisco) alternately impose strict regulations on the building and upkeep of housing within said market.  These regulations, as we see playing out in Pacific Palisades in California, make it near impossible to rebuild and repair, and they discourage private investment.

Three: Illegal immigration.  Unfettered illegal immigration has placed extreme demand for housing above and beyond what the market might otherwise require.  Cost supports (transfer payments) to illegal aliens, like government-backed student loans (above), removes some cost pressure against entry for many, causing prices to rise above what the market might otherwise demand, making housing unaffordable in many, primarily urban markets.    

Obamacare, or the inaptly named Affordable Care Act, we were told, was necessary to “bend down the healthcare cost curve.”  Conservatives, Republicans, health care industry analysts, and economists warned that the opposite would occur, with costs rising and care becoming rationed to curb hospital outlays.  This is exactly what occurred, as we see with the debate over Obamacare subsidies as part of the Democrats’ rationale for shutting down the government.  Temporary Obamacare subsidies implemented by Democrats in 2021, expiring at the end of 2025, are necessary, say Democrats; otherwise, Americans (and non-Americans) will see a doubling or tripling of their health insurance premiums.

If only someone had warned Democrats that this might occur.

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