Category: Economy and society

Economy and society

The Mental Model as a Prediction Machine: How Sapiens Invented the Tool That Converts Uncertainty into Risk

We believe we describe the world; in fact, we predict it. Every judgment we make – about a colleague, a customer, an organization – is an implicit bet on what will happen next. This mechanism, invented by Sapiens to convert uncertainty into risk, explains both our extraordinary capacity for action and our current disarray: our prediction machines are still running, but they predict less and less well.

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decision making, Economy and society, uncertainty

Profit? Superprofit? TotalEnergies and the Forgotten Lessons of Economists Knight and Demsetz

In these times of soaring energy prices, the profits of companies in the sector are causing controversy. This is particularly true for TotalEnergies. Every time it releases its earnings, the same scenario plays out. Profits are labeled “superprofits,” the term circulates unquestioned, and the conclusion is self-evident: they must be taxed. The reasoning seems obvious. Yet it rests on a questionable understanding of what profit is, economically speaking. Two little-known economists, Frank Knight in 1921 and Harold Demsetz in 1973, offered explanations that deserve to be revisited in light of the current debate.

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Economy and society, entrepreneurship, innovation, Society

Disruptive Innovation: Ignore the Elite, Bet on the Underdogs

History is full of unfortunate predictions. However, the New York Times’s claim in 1903 that human flight would not be possible for another one to ten million years is one of the most striking examples. Is this a classic case of pessimism from an era unable to anticipate technological progress? Not quite. The story is far more interesting. It’s about an elite that uses its own failure as proof of impossibility while underdogs persist in trying and ultimately succeed.

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Economy and society, innovation, Management

AI and Productivity: The Key Lesson from the Textile Industry

The rapid advances in artificial intelligence should lead to significant productivity gains. Yet, this is not always the case. Why? Technology alone is not enough. There is no direct, linear relationship between technological use and performance gains. In some cases, technology can hinder productivity. It all depends on how technology is integrated and used. To better understand the challenges of AI, it is helpful to look back at the introduction of mechanical looms in the 19th century.

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Economy and society, Society

Progress versus the environment: the toxic belief that condemns Europe

The causes of a society’s decline are often internal. It declines because it maintains or adopts beliefs that prevent it from adapting to a changing world. When a crisis weakens its model, it is tempted to adopt external beliefs that promise an easy solution. These can prove fatal. This is what happened to Europe. Over the past twenty years or so, it has convinced itself that it must sacrifice its industry and agriculture and abandon technological progress to save the environment. This belief is toxic and must be reconsidered if Europe is to halt its decline.

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Economy and society, entrepreneurship, innovation, Society

Europe’s competitiveness: the missed opportunity of the Draghi report

Electroshock. Emergency call. Existential threat. The report on Europe’s competitiveness that Mario Draghi, former head of the European Central Bank, presented to the President of the European Commission on September 9 has caused quite a stir, to say the least. The report marks a salutary awakening to Europe’s decline, the symptoms of which it clearly identifies. But the proposed remedies remain conventional – a plan, a loan and an industrial policy. It’s a missed opportunity, or almost.

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Economy and society, entrepreneurship, innovation, Society

In praise of indirection, or how problems aren’t always solved by problem solving

Problem solving is a universal paradigm, and a very dangerous one. We believe that the world is full of problems and that we can solve them if we really try. But this is not true. Many problems are solved indirectly, thanks to a solution that was not imagined by those who faced them. That’s why it’s important to allow free innovation, i.e. solutions without problems, no matter how absurd they may seem.

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Economy and society, uncertainty

The Pitfall of Assumptions in Forecasting: Lessons from “Losing the War with Japan”

In the realm of economic and geopolitical forecasting, the pitfalls of assumptions can prove both humbling and enlightening. A striking example of this can be found in the Frontline report titled “Losing the War with Japan,” which takes us back to a moment in 1991 when prevailing beliefs about Japan’s economic supremacy and America’s decline were pervasive.  

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