Politics and business are deeply intertwined. However, this close relationship is far from a balanced one. Politicians have historically leveraged the economic strength of their countries to support government functions.
This imbalance is reflected in modern tax policy, a system devised for one party to take what the other does not want to give. The coercive nature of this relationship is hard to ignore.
However, this system is nothing new. It’s been around for centuries. Its predecessor was the imperial aggressor state. Think back to ancient Rome and colonial era England, which sustained themselves by exploiting their colonies.
Peter Sloterdijk © Anne HufnaglAs philosopher Peter Sloterdijk writes in "The Taking Hand and the Giving Side," these plunderings constituted "the first mode of state enrichment.”
Today, states are no longer content with this system. They want more. Their goal is to transform the economy into an operating base for the military.
A militarized economy should:
Wage economic wars.
Act as a civilian auxiliary force.
Inflict casualties on adversaries without sending tanks out of the barracks.
Geostrategist Ian Bremmer, founder of the Eurasia Group think tank, advocates for the "weaponization of finance," which involves using financial markets, government tenders and export-import regulations to weaken adversaries.
This militarization of the economy has become the new normal.
Eine Infografik mit dem Titel: Globalization: The Story of Interdependence
Exports of the four largest economies to their most important trading partners in 2022, in billions of US dollars
#1 USA First
Trumpism without Trump: Democrats and Republicans no longer differ in their use of economic means to deal with China and Russia. What began under President Donald Trump continues under his Democratic successor.
Donald Trump on a dollar bill © The PioneerThe Ukraine conflict provided the impetus for the most extensive package of sanctions against Russia. Since then, all NATO partners have been banned from buying oil and gas from Russia. With its vast liquefied natural gas reserves and oil wealth in Texas, America is enjoying a politically induced surge in demand.
Eine Infografik mit dem Titel: USA: The Oil Boom
US oil production since 2010, in millions of barrels per day
Eine Infografik mit dem Titel: The Rise and Fall of Russian Gas
Share of German gas imports from Russia in total gas imports, in percent
#2 China's Counteroffensive
Washington keeps imposing new sanctions on Chinese companies for national security reasons. Their high-tech products are supposed to be replaced by U.S. products.
If America can do it, so can China: The People's Republic has just issued a new directive to remove American microprocessors from Intel and AMD from government computers and servers.
Joe Biden and Xi Jinping © The PioneerA complex legislation has emerged that specifically targets American chip, computer and software manufacturers, and attempts to drive Apple and Microsoft out of the Chinese market. They too are to be replaced by domestic providers.
The "China Information Technology Security Evaluation Center" has published a list of "safe and reliable processors and operating systems." All 18 government-approved manufacturers, including Huawei and Phytium, are from China.
Xi Jinping on a dollar bill © The PioneerNo surprise: both companies are banned in America.
#3 Russia Sanctions and Consequences
Nuclear power? Yes, please!: Following Russia's cut in gas supplies to Europe, there was a strong call for nuclear energy among Europeans. The French, who have 56 nuclear reactors, were especially pleased.
Ursula von der Leyen on a dollar bill © The PioneerRejoicing too soon: Nuclear technology in Europe cannot do without Russian uranium. Around 30 percent of the enriched uranium used in Europe comes from Russia. Belgian Prime Minister Alexander De Croo told the Financial Times:
Belgian Prime Minister Alexander De Croo at the Nuclear Energy Summit © imagoChanging the supply chains, especially for nuclear energy, is complicated, but we have to do it as soon as possible (...), we have to get rid of Russian nuclear fuel.
#4 Republican Investments
The Republican Party's campaign against BlackRock continues under more challenging conditions and with severe consequences for the world's largest asset manager. The idea of the "weaponization of finance" has thus found its way into domestic politics.
Republicans think BlackRock has committed a crime by not solely evaluating investments based on profitability but also considering ecological criteria in accordance with the ESG standard.
The result: The so-called "red state investment funds," all state investment firms from Republican-dominated states in the USA, are gradually withdrawing their investment funds from BlackRock – totaling $13.3 billion so far.
Republicans believe that ecological considerations and return expectations are incompatible. They urge Americans to also withdraw their funds. This is where the domestic economic war becomes dangerous for BlackRock founder Larry Fink.
#5 Habeck Calls for Patriotic Investments
German Economics Minister Robert Habeck seems to be mocking the concept of "using business as a weapon." He is not pleased with the German Soccer Association's (DFB) choice to switch their sponsorship from Adidas, a German company, to Nike, an American one.
As a result, Habeck has arranged meetings with the management of the DFB to advocate for "local patriotism" in their business decisions.
Robert Habeck on a dollar bill © The PioneerThe partnership between Adidas and the DFB has existed since 1950, with all 17 World and European Championships in soccer being won by men and women wearing jerseys with the three Adidas stripes.
Germany First: According to Habeck, this should remain the case. He no longer believes that business should solely be conducted within the realm of business, but rather that strategically significant decisions such as the jersey selection of German players should pass through German ministerial desks and ultimately through German textile machines.
Eine Infografik mit dem Titel: Adidas vs. Nike
Adidas and Nike share price performance since the beginning of 2023, in percent
Conclusion: the invisible hand of the market, of which Adam Smith once spoke, is being replaced by the iron fist of the state. The trend towards using the economy as a weapon is troubling for both economic growth and global peace. Historically, having somewhat separate economic and political spheres provided a safety net during political crises.
Today, the state demands not only money from the economy but also militarization. Sometimes, it feels like the old James Dean classic is being remade with a political twist: "For they know not what they do.”
Rafael Laguna de la Vera, Director of the Federal Agency for Innovation, talks about Germany’s potential for growth.
Larry Fink, the founder and CEO of the world's largest asset management company BlackRock, warns of a pension crisis in his annual letter to investors.
125 years ago today, engineer Guglielmo Marconi succeeded in creating the first wireless telegraph at the age of 22.
Entrepreneur and venture capitalist Rafael Laguna de la Vera founded his first software startup at 16. Since then, he has founded and run several technology companies. Now, he enjoys complete financial security.
Today, the former serial entrepreneur serves as the director of the Federal Agency for Innovation. In today’s episode of the Pioneer Podcast, I asked Laguna what exactly defines a ‘ground-breaking innovation.’ He explained:
"It divides the world into before and after. Without it, nothing would be the same.
Lamenting Germany's lack of innovation, Laguna notes:
We have become innovation-poor in the Federal Republic. Unfortunately, we've hardly made any significant leaps since the founding period in 1870. Pharmaceuticals, chemicals and automobiles were the game changers and we are still benefiting from those leaps today.
In contrast, Silicon Valley is a hotbed of ground-breaking innovations. What is Germany missing? How can Germany foster a culture of innovation?
Click here to listen to today’s episode of the Pioneer Podcast.We need good leadership with lots of potential, people who can build and inspire teams. People who say, 'I'm doing this because I'm passionate about it. Without them, it won’t be possible.
Tune in to today's episode of the Pioneer Podcast, to learn more about how the spirit of innovation can be revived in Germany and which policies can support this comeback.
Claus Weselsky has succeeded: The number of weekly working hours for locomotive drivers will be decreased from the current 38 hours to 35 hours. This change will be accompanied by a full wage adjustment, which will be phased in by the year 2029. Both parties have reached an agreement on raising the general monthly salary by €420.
Weselsky said:
With this collective agreement, we have achieved a historic breakthrough and set an example for other unions in the country.
Larry Fink is the founder, chairman and CEO of the world's largest asset management firm, BlackRock. In his annual letter to investors, Fink warns of a looming retirement crisis:
"We are making considerable efforts to extend people's lives. Yet only a fraction of that effort is directed at helping individuals afford those extra years.
His solution:
Capital markets are the key to solving two of the most significant economic challenges of the 21st century.
He criticizes:
It's no wonder that younger generations, the Millennials and Generation Z, are economically anxious. They believe that my generation, the baby boomers, focused on our financial well-being to the detriment of those who came after us. And when it comes to retirement, they are right.
Eine Infografik mit dem Titel: Less Workers to Support Pension Systems
Percentage of working-age individuals within the total population of selected countries
His demand is clear:
In America, the message that the government and corporations send their employees about retirement is: You're on your own. Before my generation is entirely out of leadership positions in business and politics, we have a responsibility to change that.
Conclusion: Just because Larry Fink is rich doesn't mean he's wrong.
Engineer Guglielmo Marconi was just 22 years old when he developed the first working telegraph. Using radio technology, the Italian succeeded in sending a wireless signal across the English Channel 125 years ago.
Two years later in 1901, Marconi communicated by radio wave across the Atlantic - a feat that some of the most prominent mathematicians of the time considered impossible.
Guglielmo Marconi at work © imagoA true pioneer: Marconi's success earned him the title "Father of the Radio," and in 1909, he was awarded the Nobel Prize in Physics. His inventions played a crucial role in maritime navigation. For example, the Titanic was equipped with Marconi Company radios. They were used to send SOS signals, which ultimately saved the lives of 712 passengers when the ship sank in 1912 - a feat largely credited to Marconi.
A controversial title: Over the years, several other researchers have attempted to dispute Marconi's invention of the radio. However, unlike others, Marconi patented his discovery.
Wishing you a wonderful start to your day. Stay informed. Stay with me.
Best wishes,