Living beyond our means: is Europe the canary in the US coal mine?

 Economist:  Europe has been living beyond its means. Now the bills are due

For decades Europe has offered its citizens an unusually comfortable level of benefits and protections. European Union countries spend 10% of GDP on public pensions, on average, nearly twice the share in America. EU countries devote nearly 30% of GDP to public social spending, compared with less than 20% in America. Angela Merkel, a German former chancellor, once noted with disapproval that Europe accounts for 7% of the world’s population, 25% of global GDP and 50% of global social spending. Europe, she concluded, “will have to work very hard to maintain its prosperity and way of life.”

BOTTOM LINE:  As ever, voters want public finances fixed, but not at their expense. A poll suggests that 85% of the French think it is urgent to curb public debt, but 56% also think the pension age should be lower. 

Armistice Day: The Challenge of Making Peace Last

On November 11, 1918, the guns fell silent on the Western Front, ending more than four years of devastating warfare. Today, many will wear a poppy to commemorate the fallen in “Flanders Field.” The armistice was more than a promise to stop fighting. Germany was required to surrender substantial quantities of weapons, withdraw from occupied territories, and accept Allied occupation of the Rhineland. These conditions were intended to prevent Germany from resuming hostilities. The Allies understood that ending a war required more than an agreement: it required making the agreement credible.

More than a century later, the same problem complicates efforts to end the war in Ukraine. Peace negotiations held this week have focused partly on security guarantees that might prevent renewed fighting. Even when both sides would benefit from ending a costly conflict, an agreement may fail if either fears that the other will violate it when circumstances change. It requires credible commitment. In business, contracts, collateral, and other commitments can make agreements more credible. In international relations, the stakes are immeasurably higher, and enforcement is much more difficult. At the very start of this war, a brave woman offered a Russian solder sunflower seeds “so at least sunflowers will grow when you all lie down here.” Perhaps, in coming times, sunflowers will replace poppies to become the symbol of the end of a war.

When Personalized Pricing Opens the Door to Bargaining

Online retailers often send discount offers to shoppers who abandon their carts without completing a purchase. Customers who buy immediately reveal a willingness to pay the posted price, while those who abandon their carts may need a discount to complete the sale. A recent Fortune article describes how retailers use these offers to recover lost sales. If buyers behave passively, the strategy makes sense. The retailer charges full price to customers with high willingness to pay and offers discounts to those who appear more price-sensitive.

But what happens when buyers figure out the strategy? A 2026 Omnisend survey found that as many as 60% of American respondents sometimes abandon shopping carts expecting a discount or reminder email. What began as price discrimination becomes bargaining: customers strategically withhold their purchases to induce a better offer. Even customers willing to pay full price now have an incentive to pretend otherwise. The retailer's attempt to identify low-willingness-to-pay customers can backfire by teaching high-willingness-to-pay customers how to get lower prices. Strategic behavior by buyers could blunt the price premiums sellers expect from personalized pricing.