plans to invest €3.6bn ($4.2bn) in the venture, which will include the purchase of 30 high-speed trains from Siemens, a German engineering conglomerate, with the option to buy 14 more. Unlike the fiery red carriages it uses in Italy, those deployed in Germany will be a sensibly conservative blue. Colours aside, the vision is largely the same. “We want to replicate in Germany what we did in Italy,” Mr Di Montezemolo tells The Economist. Ferrovie dello Stato, Italy’s state-owned railway firm, fought tooth and nail to prevent Italo, founded in 2006, from disrupting its business. Nevertheless, Mr Di Montezemolo and his co-founders prevailed in launching their service in 2012. Rail prices in Italy fell by some 40% over the following seven years. Taking on Deutsche Bahn, however, may be an even bigger challenge. Admittedly, the state-owned German company has gone off the rails in recent years. “We have a dilapidated rail network, broken switches, signal boxes dating back to imperial times, excessive bureaucracy and an oversized administrative apparatus,” said Evelyn Palla, its newish chief executive, in March. That is partly the result of decades of underinvestment. In 2004 Deutsche Bahn’s annual budget for the building and modernisation of Germany’s rail network was cut from €4bn a year to €1.5bn. Last year the government pumped a record €22bn into the company to compensate for its past stinginess, but Ms Palla reckons it will take around a decade to get the business back on track. Some argue that Germans should not be left waiting for Deutsche Bahn to pick up steam again, and that Italo should be given a chance to disrupt Europe’s biggest railway market. Yet Mr Di Montezemolo’s plan depends on obtaining access to tracks, which is handled by DB InfraGO, an arm of Deutsche Bahn. Although it is overseen by the Federal Network Agency, a regulator, to ensure it operates fairly, the tolls it charges rail operators are hefty, and it usually grants access on an annual rather than a multi-year basis. Mr Di Montezemolo says that his company is prepared to pay €250m a year for access to the tracks, but argues that it needs to be granted approval for several years in order to make its investment feasible.
Christian Böttger, a transport expert at the University of Applied Sciences in Berlin, thinks that Italo’s case is compelling, given the beneficial effect its entry had on the Italian market. But he doubts that it will get the necessary political backing for its project. Germany’s rail network is already overburdened, he says. Italo’s entry would also undermine Deutsche Bahn’s high-speed-rail service and could knock the wheels off its integrated business model, in which it makes money from lounges at train stations and the BahnCard, a loyalty programme. Ten years ago, the European Union adopted the Fourth Railway Package, which focused on opening domestic markets to competition. Some countries have followed through: in Spain, the high-speed-rail industry is fought over by Renfe, owned by the government, as well as Iryo, which is majority- owned by a subsidiary of Italy’s Ferrovie dello Stato, and SNCF, France’s national railway company. But others, including Germany, have dithered. Mr Di Montezemolo hopes to have a decision on track access this month. Without it, his plan may be derailed. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/21/can-an-italian-company-disrupt- germanys-broken-railway-industry
The benefits—and dangers—of optimism Why you should (almost) always look on the bright side of life May 21st 2026 It pays to be an optimist. Upbeat types tend to be in better health. A meta- analysis by Alan Rozanski, a cardiologist, and his co-authors found that optimism was associated with a lower risk of cardiovascular events. They also tend to be resilient. Optimists are likely to see setbacks as temporary and attributable to external circumstances, whereas pessimists regard reverses as a verdict on their own enduring weaknesses. Optimists are more likely to rise up organisational ladders as well. In a recent paper Nadine Chochoiek of Munich Business School and her co- authors surveyed founders, bosses and employees in the Netherlands, and found that entrepreneurs and managers are as upbeat as each other. Both are more optimistic than employees.
Causality works both ways. Power itself is a source of optimism. It’s easier to feel better about the future if you have an ability to shape it. One reason why bosses have a more positive attitude towards AI than workers is surely that they have more control over what will happen. But optimism also propels people onwards and upwards. Optimists are more likely than pessimists to be entrepreneurs. Low expectations of success and a decision to found a business tend not to go together. Daniel Kahneman, a Nobel- prizewinning psychologist, described “delusional optimism” as an engine of capitalism. Confidence, justified or not, is a big part of why people are chosen for bigger jobs within organisations. The standard psychological test for measuring how optimistic or pessimistic people are is a short questionnaire called the Revised Life Orientation Test, which features statements like “If something can go wrong for me, it will”. Would you follow someone who strongly believes that they are cursed? Optimism can plainly go too far. In an influential paper published in 2007, Manju Puri and David Robinson of Duke University used the gap between individuals’ own longevity expectations and actuarial assumptions as a proxy for people’s level of optimism. They found that extreme optimists were more likely to smoke than moderate optimists, and to keep a great share of their personal wealth in illiquid assets. Within organisations, too, excessive optimism often causes trouble. Unrealistic starting expectations make it more likely that projects will miss budgets and deadlines, for instance. Optimism also makes it less likely that failing projects will be canned; decision-makers have a habit of assuming better outcomes than originally planned to justify ploughing on. A lot depends on the context. “What could possibly go wrong?” sounds much more worrying on the lips of a pilot than a podcaster. A study by Damiano Silipo of the University of Calabria and his co-authors quantified optimism at American banks by looking at how much money they set aside to cover future loan losses. Optimism prevailed among bankers in the run-up to the 2007-09 financial crisis. Then, suddenly, it didn’t. There are plenty of ideas on how to counter optimism bias. Processes can help—in a “pre-mortem”, for example, people deliberately imagine the
failure of a proposed initiative and identify the most likely causes. Team composition also matters. A paper by Ulrike Malmendier of the University of California, Berkeley and her co-authors found that overoptimism on the part of the CFO is more predictive than a cocksure CEO when it comes to a preference for debt over equity. But the same paper found that overconfident CEOs tend to hire overconfident CFOs. If it’s optimists all the way down, you have a problem. Yet it is also possible to lean too far in the other direction. In his new book, “The Four Principles”, Adrian Gore, founder of the Discovery Group, a big South African financial-services firm, argues that ingrained pessimism is a widespread problem in business. People are conditioned to look for negative signals, reckons Mr Gore. Explaining why things might go wrong is seen as more sophisticated than believing that things will turn out well. Loss aversion, a strong behavioural bias against giving up what you already have, means that the scales are already tipped against risk-taking. Mr Gore thinks that the trope of learning from failures is overdone; successes teach you more. Performance appraisals ought to focus on putting people in positions that play to their strengths rather than trying to fix their weaknesses. Pessimism has its place, but it is optimism that makes things happen. ■ Step inside the world of work with our Bartleby newsletter. Each week our white-collar oracle muses on the agonies of office life. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/21/the-benefits-and-dangers-of-optimism
How much is Donald Trump costing America’s economy? The insurers on the hook for war in Iran The other China shock Economics lessons from Home Depot Where expat escapees from Dubai end up Investors fear another surge in inflation How should economists treat morality?
Finance & economics | The MAGA tax How much is Donald Trump costing America’s economy? We calculate the drag on growth from fitful presidential policymaking May 21st 2026 SINCE DONALD TRUMP took office in January last year, America’s economy has continued to be the envy of the world. In 2025, while Britain, France and Japan eked out annual GDP growth of around 1%, and Germany all but stood still, American output grew by 2.1%. In the past 15 months American stockmarkets have broken record after record. And all this even as the president has unleashed seemingly anti-growth policies like mass deportations of migrant workers and chaotic trade wars. Observers who had predicted economic disaster are left scratching their heads. Perhaps, some now whisper, the policies are not as destructive as economists had assumed. Others wonder what might have been. For all its
strength, America’s economy could, on this interpretation, be doing even better. But how much better? Put another way: how big is the “MAGA tax”? One way to arrive at a figure is to imagine what America’s economy would look like in this levy’s absence. Mr Trump inherited an economy that was growing strongly. It has since had three boosts, which The Economist has roughly quantified. First, the artificial-intelligence boom. Capital expenditure by just four AI- giants—Alphabet, Amazon, Meta and Microsoft—topped $350bn in 2025 and should hit roughly $700bn in 2026. The binge has unleashed a wave of spending on data centres, chips, cooling systems and software. In 2025 real investment in information-processing equipment, software and data centres grew by more than 15%. In gross terms, this surge contributed nearly one percentage point to annualised GDP growth, accounting for about half of the economy’s expansion. This figure, though, overstates AI’s true contribution to growth. Roughly two-thirds of data-centre spending is on equipment, much of it imported from Asian manufacturers like South Korea and Taiwan. When American firms buy this, most of the economic activity occurs abroad. To estimate how much the spending contributes to American GDP, we subtracted the rise