Category: Guest post

Arı writes*

Global security requires collective action. The security dilemmas that realist international relation theorists emphasize are essentially cases of more complex prisoner’s dilemmas, i.e., a “common security” where one state’s security depends on both friends and foes. In simpler words, “I cannot feel secure if my neighbor or my enemy feels insecure.” This definition contradicts the realist idea of security as a zero sum game, which also means that collective action can produce a win-win outcome. Sadly, this common security approach ignores the profits of war.

Revenues from the top 100 arms firms totaled $632 billion in 2023. These revenues belong to private military companies situated around the world who have no interest in maintaining global security but every incentive to promote conflict.

The companies that profit from war also lobby for state policies that increase arms sales. For example, in the US, private military companies have spent $2.5 billion on lobbying and $285 million on election campaigns in the past two decades. Most of these lobbyists have occupied powerful positions in the government from Pentagon to the White House. The arms companies’ back door to policy makers is against the best interest of  citizens and global security. Most US arms sales go to allies, such NATO members, which may not destabilize security, but sales to Philippines, Saudi Arabia, the UAE, Egypt, and Nigeria fuel instability in conflict-prone regions.

Profiting from war also takes place in countries that are actively involved in conflicts, such as Russia and Israel. In 2023, the top two defense companies in Russia saw a 40% increase in their combined revenues that totaled $25.5 billion. Three arms companies in Israel sold $13.6 billion in weapons. These profits create incentives to sustain conflicts.

Bottom Line: As revenues grow, arms dealers have even more leverage to promote policies that increase instability, conflict and profits. Their free riding weakens global security and destroys the lives of people experiencing conflict.

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* Please help my Real Donut Economics** students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

** Why “Real”? In short, because (a) Raworth’s claims to being a “21st century economist” denies that all of her ideas were presented by others in the 20th century and (b) she presents no viable mechanisms (besides “be nice”) for achieving equality and sustainability. My students are more realistic. In long? Read this.

Sara writes*

Pittsburgh and Detroit, known as Rust Belt cities because of their proximity to areas of heavy manufacturing, were two of the wealthiest American cities in the 20th century (Warda, 2016). Yet today, while one city is said to be a model for re-emerging sustainable cities (Mewawalla, 2024), the other is referred to as the worst case of urban decay in US history (Warda, 2016). The cities have comparable origins, and both attribute their wealth to specialisation, so what has led them down such different trajectories? What went wrong? Or perhaps more importantly, what went right?

Pittsburgh grew in the 1900s due to its favourable location at the confluence of two rivers, making it a unique trading hub with access to the Atlantic coast and the Midwest (Wikipedia, 2025). Eventually, thanks to Andrew Carniege, Pittsburgh became the “Steel City”, home to U.S. Steel, and produced close to half of America’s steel at the time (Mewawalla, 2024). However, as the city experienced deindustrialisation in the 90s, Pittsburgh was forced to diversify (Wikipedia, 2025).

Detroit, on the other hand, specialised in the automotive industry in the early 20th century and became known as the “Motor City” (Briscoe, 2024), home to the “Big Three” of car manufacturers, General Motors, Ford and Chrysler (Wikipedia, 2025). However, faced with foreign competition in the 50s and 60s, car manufacturers began relocating their factories to minimise production costs, while up and comers gained market share (Warda, 2016). Meanwhile, being the most segregated city in America from the 50s to the 70s, racial tensions contributed to declining social cohesion in Detroit (Briscoe, 2024).

So how have the Rust Belt cities fared, since being confronted with the dilemma of diversification? Put simply, only one managed to diversify in time. The Steel City diversified, becoming a frontrunner in health care, education and AI (Wikipedia, 2025) while embracing its “industrial heritage” (CityTalk, 2017) and modelling partnerships between the public and private sector (Fineman, 2010). In fact, Pittsburgh enjoys the title of being one of the most liveable cities in the US (Wince-Smith, 2014). Contrastingly, the Motor City, having failed to diversify in time, lags behind. The decline of the automotive industry induced high levels of unemployment and emigration (Briscoe, 2024), leading to a 61.4% decrease in the city’s population from the 1950 to 2010 and hence, a declining tax base (ELGP, n.d.). These factors, among others, contributed to the city having to declare an 18 billion USD bankruptcy in 2013 (Briscoe, 2024).

Since then, Pittsburgh has continued to grow as a hub for high-tech innovation (Wince-Smith, 2014), but Detroit’s rebirth is also on the horizon, with its population having grown for the first time in 66 years in 2023 (Harding, 2024). Still, urban renewal has been slow, as investment has flowed primarily from the private sector (Ager, n.d.), been limited to downtown (ELGP, n.d.), and revitalisation programs do not effectively represent the needs of the most vulnerable populations (Hill, n.d.).

So how could the present prosperity of two historically similar cities be reconciled? Can Detroit learn from Pittsburgh’s success?

Bottom line: Economic diversification exhibits a make-or-break point for the economies of Pittsburgh and Detroit, while other factors like the balance between public and private investment, and the cities’ ability to encourage entrepreneurship contribute to their successes in revitalisation.

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* Please help my Real Donut Economics** students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

** Why “Real”? In short, because (a) Raworth’s claims to being a “21st century economist” denies that all of her ideas were presented by others in the 20th century and (b) she presents no viable mechanisms (besides “be nice”) for achieving equality and sustainability. My students are more realistic. In long? Read this.

Emil writes*

Today everybody talks about AI and many students use large language models (LLMs) such as ChatGPT. The wide-scale release of LLMs and generative AI has spurred the public discourse about the impacts of AI on society and especially on how AI might threaten democracy.

AI-generated synthetic content is flooding the public arena with false or misleading information. One infamous example is Trump’s posting of a fake image of Taylor Swift endorsing his election campaign. But generated content is only one example of how AI is threatening our democratic institutions. It is also expected to heavily disrupt the labour market, shift the balance between autocracies and democracies, and enable mass surveillance on unprecedented scales.

One of the core issues is that the speed and scale of new AI tools greatly outpaces governmental oversight and society’s ability to manage the consequences. To better assess the impacts of AI on democracy, let’s turn to Jungherr’s conceptual framework.

The definition of democracy itself might be contested, but it surely involves the idea of a government by the people and for the people. Democratic institutions are supposed to act on behalf of the people through different forms of electoral power delegation. Some people might be representatives, but the overall system is supposed to take everybody (or all eligible members of a state) equally into account.

Based on this, 4 different levels can be identified on which AI exerts different kinds of impact:

On the individual level, AI impacts both the ability of people to self-rule and the idea that self-rule is superior to other forms of decision-making processes. Self-rule here refers to the normative idea that all individuals govern themselves together without external interventions. A society without self-rule would for example be a dictator or Plato’s philosopher kings. The legitimacy of self-rule roots itself in the idea that the individual citizens can make informed decisions for themselves and their respective communities. This idea can be questioned in both directions by AI development. On one side, AI systems can lower the threshold to information access. On the other hand, AI-generated content can interfere with informed decision making. AI thus directly affects the informational foundations of self-rule. Beyond this rapid AI development might lead people to question if self-rule is the best way to govern society.

On the group level, AI impacts equality. While in reality no democracy achieves true equality, it is nevertheless a very foundational ideal. AI systems can be (mis)trained to reproduce societal biases or create new ones. The availability and kind of data play a central role in this creation of biases. After all, only what was measured in the past can be extrapolated into the future. Beyond this, the labour market impacts of AI technology can greatly increase or decrease equality depending on how the gains through AI advancement will be distributed. Here economic inequality and subsequent political disadvantages go hand in hand.

On the institutional level, AI-fuelled misinformation plays again a big role. AI systems can influence elections like never before. With such powerful systems, a group of few can try to game the institutional system meant to represent the will of the people. Another threat of AI is that it could eliminate the public perception of uncertain election results. The idea here is that institutionally a certain uncertainty is needed so that parties compete genuinely and that the public trusts the electoral process.

Lastly, on the system level, AI can reshuffle the relationship between democratic systems and other systems of governance. Here considerations about different possibilities of development and deployment of extensive AI systems matter greatly. AI can be integrated well into democracies and for example make democratic bureaucracies more efficient. However, autocratic systems can benefit immensely from the greater leeway they have concerning the privacy rights of their citizens. Autocratic leaders can collect extensively all the data they want and then use AI systems to leverage this data to tighten their grip on power and control.

Bottom Line: AI development will disrupt and impact democracy in many ways. To study these impacts is therefore vital. Untangling the different dimensions of this impact is a first and essential step for future research towards a better understanding of AI’s impact on democracy.

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* Please help my Real Donut Economics** students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

** Why “Real”? In short, because (a) Raworth’s claims to being a “21st century economist” denies that all of her ideas were presented by others in the 20th century and (b) she presents no viable mechanisms (besides “be nice”) for achieving equality and sustainability. My students are more realistic. In long? Read this.

Bente writes*

Income inequality in the Netherlands in 2017 was around 0.55, as measured by the Gini coefficient (CBS). However, the Netherlands implemented many policies to reduce this income inequality such as a progressive tax system and unemployment benefits. As a result, after taxes and benefits, the Gini coefficient for disposable income is only 0.29 (CBS). This shows the effectiveness of policies in the Netherlands to reduce income inequality. However, this is not yet the case for capital inequality in the Netherlands as the Gini coefficient for capital [a subset of wealth] was 0.79 in the Netherlands in 2017 (CPB) — a troubling figure that needs to be reduced.

Currently, households with more capital have a higher chance of getting an inheritance (Centraal Planbureau). In the Netherlands, the 10% highest capital owners receive 35% of gifts and 26% of inheritances, and they own 63% of net capital (Centraal Planbureau). Inheritance taxes start at 10% for the deceased’s partner and children and rise to 18% for other family members, on amounts below €154,000. Above that sum, the tax is 20% (belastingsdienst erfbelasting).

The average inheritance tax in 2015 was around 12%; the average on gifts was only 6% (Centraal Planbureau). Compare those figures to the lowest income tax: roughly 36% on incomes up to €38,000 (Belastingdienst inkomstenbelasting). This disparity shows the effort the Netherlands made to reduce income inequality, and how comparatively little has been done to mitigate capital inequality. In the Netherlands, only 0,51% of tax revenues come from inheritance taxes.

The inheritance tax must rise to reduce capital inequality (Geron), but such increases are not politically popular. Many citizens view inheritance taxes as an unfair double taxation, so politicians avoid them to protect their votes.

Action is needed to increase the inheritance tax in the Netherlands, to reduce capital inequality and possibly reduce wealth inequality. Wealth inequality remains higher than income inequality. Increased inheritance tax might reduce wealth inequality by creating a more balanced distribution of capital and wealth over generations (CPB). However, in the literature, a consensus has not been reached on whether inheritance increases or decreases wealth inequality (Elinder). This also results in discussions on the possible impact of increasing the inheritance tax (Elinder). In the Netherlands, research showed that inheritance did not cause an increase in wealth inequality between 2007 and 2015 (Centraal planbureau). This was because large inheritances were given from older wealthy people to less wealthy generations (Centraal planbureau). Furthermore, although lower-wealth households receive smaller inheritances, these inheritances represent a relatively higher increase in wealth for the lower-wealth households (Centraal planbureau vermogensongelijkheid). Considering these findings, the key question remains whether increasing the inheritance tax will help decrease wealth inequality in the Netherlands.

Bottom line: Higher inheritance taxes will reduce capital inequality in the Netherlands. Further research is needed to see if they will also reduce wealth inequality.

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* Please help my Real Donut Economics** students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

** Why “Real”? In short, because (a) Raworth’s claims to being a “21st century economist” denies that all of her ideas were presented by others in the 20th century and (b) she presents no viable mechanisms (besides “be nice”) for achieving equality and sustainability. My students are more realistic. In long? Read this.

Philippine writes*

In 2018, France replaced the Impôt de Solidarité sur la Fortune (ISF) with the Impôt sur la Fortune Immobilière (IFI), significantly altering the taxation of wealth (Service-Public, 2025). While it is too early to assess the environmental impact of such a taxation amendment in statistical terms, I argue that the reform’s changes in incentives are likely to lead to detrimental environmental consequences.

Increased financial investments, more emissions
The ISF previously taxed both financial and real estate assets, while the IFI only applies to real estate holdings (Bach, 2021). This shift incentivized wealthy individuals to move their investments from real estate to financial assets – many of which support high-emission industries – or move their investments to mobile polluting assets such as yachts (Bonneau, 2020). However, the CO2 emissions related to the financial assets of the wealthiest already have a massive environmental impact. A report revealed that the combined wealth of 63 French billionaires generates as much CO2 as 50% of the country’s population due to their investments in polluting industries (Oxfam, 2023). Accordingly, by eliminating taxation on financial wealth, the state is eliminating barriers for the wealthiest to allocate their capital to high-emission sectors, further exacerbating climate change.

Decreased real estate sustainable investments, more emissions
Furthermore, by taxing real estate more heavily than financial assets, the IFI is expected to discourage investment in the renovation and insulation of buildings (Bonneau, 2020). This, in turn, could slow critical efforts to reduce energy waste and lower carbon emissions. (Bonneau, 2020). The government justified the shift from the ISF to the IFI by arguing that taxing financial wealth less would stimulate economic growth. However, in practice, this change has disincentivized sustainable investments in real estate, further delaying necessary environmental adaptations in the housing sector.

Reduced fiscal resources for green transition
Beyond shifting investments toward carbon-intensive industries, the transition from ISF to IFI also resulted in a significant loss of government revenue. These losses are estimated to exceed 5 billion euros by Thomas Piketty. This drastic reduction in tax revenue also means fewer public funds available for financing the green transition. A report commissioned by the French Prime Minister in May 2023 estimated that achieving the country’s net-zero emissions goals would require approximately €70 billion by 2030 (France Stratégie, 2023). While the direct causal link between the tax reform and decreased environmental funding is complex, the reduction in fiscal capacity due to the tax reform should make it more challenging to secure the necessary public investment to embrace Green Transition effectively.
A proposed solution to counter these challenges is a climate wealth tax, which would consider both wealth level and carbon footprint to determine taxation (Oxfam, 2023). This approach could incentivize wealthy individuals to decarbonize their financial portfolios, steering investments toward greener assets.

Bottom Line: From an environmental perspective, the shift from the ISF to the IFI should have severe negative consequences. By favoring financial investments over real estate, it has increased capital flows into high-emission industries, discouraged sustainable housing investments, and reduced government funding for climate initiatives.

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* Please help my Real Donut Economics** students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

** Why “Real”? In short, because (a) Raworth’s claims to being a “21st century economist” denies that all of her ideas were presented by others in the 20th century and (b) she presents no viable mechanisms (besides “be nice”) for achieving equality and sustainability. My students are more realistic. In long? Read this.

Sarah writes*

Since WWII, consumer culture has exploded (Kerryn Higgs, 2021). With big advertising shaping societal norms, individuals now equate their identity with purchasing power. Our desires have expanded under the illusion of fitting in, feeling safe, or staying comfortable. While identity has long been tied to material representation, whether fashion or dining habits, the information age has accelerated this phenomenon. Why keep one trend for a year when you can switch four times? The eating habits of the ’90s pair well with Shein’s latest skinny jeans. Thin is in.

Markets have expanded and industries must evolve. Thus, maximization and efficiency drive production. But it’s not just our bodies that have to adapt; our environment and its inhabitants do too.

We are constantly hungry (or so we believe). Per capita meat consumption has roughly doubled in some regions (Ritchie, Rosado & Roser, 2023). Yet, we justify our extraction of resources from other species under the illusion of intellectual superiority. Speciesism—the assumption that human interests are worth more than those of other species—sustains the bio-industry, which slaughters billions annually, contributing massively to climate change and environmental destruction [related post].

Scientific advancements have repeatedly debunked myths about a lack of animal sentience and pain perception. Still, we dismiss the suffering of farmed animals, failing to acknowledge that their stress translates to our own.

You see, big advertising isn’t just about fashion or technology brands. It also pushes for meat and dairy consumption. EU-subsidized campaigns promote increased pork intake despite well-documented health, animal welfare and environmental risks (Boffey, 2020) . In the Netherlands, like many countries, children are introduced to milk at an early age, ingraining dietary habits before they can critically assess them. It is almost as if advertising erodes personal reflection. Because if corporations do the thinking for us, and if so many people trust them, what could go wrong?

Quite a lot. Despite the Netherlands producing vast amounts of meat, the majority of it is exported (CBS, 2021). Meanwhile, Dutch citizens bear the consequences. Negative externalities, especially excessive nitrogen emissions from livestock, strain their environment. And rather than implementing a gradual transition, such as scaling down animal production through subsidies, the government hesitates, as political concerns dominate sustainability. EU regulations on sustainability threatened to raise costs to farmers. In response the Dutch government offered to buy out farmers rather than making proactive reforms.

Those buyout offers created  financial and emotional burdens on the frustrated and unheard farmers, who took to the streets, flying inverted flags in protest. Their demands resonated with the BBB, an opposition party that used its new popularity to partially overturn key regulations.

The result? A delayed response that exacerbates environmental degradation and inflates future costs.

So, cheers to big advertising, cognitive dissonance and politicians working for their voter base. Nothing has changed, and the crisis will only get worse.

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* Please help my Real Donut Economics** students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

** Why “Real”? In short, because (a) Raworth’s claims to being a “21st century economist” denies that all of her ideas were presented by others in the 20th century and (b) she presents no viable mechanisms (besides “be nice”) for achieving equality and sustainability. My students are more realistic. In long? Read this.