The recent US security policy document offers a misguided view of the European Union. The document asserts that open-border policies and what it terms "progressive" policies pose an grave threat to European civilization. However, this argument is based on a serious misinterpretation of the reality. The true danger confronting the EU is not societal but technological and economic backwardness.
A Glaring Economic Divide Between Europe and the US
The data reveal a stark picture. From 2008 and 2023, US GDP grew by eighty-seven percent, compared to a paltry thirteen and a half percent growth for the EU. During this time, European income per person fell from 76.5% to just half of the US level. Remarkably, even Mississippi now boasts a greater average income than several leading European economies like Italy and France.
Currently, about half of the world’s 50 largest tech companies are US-based, while only four are from Europe.
The Innovation Shortfall: A Critical Question
The growing economic gap is driven by stronger productivity growth in the United States, largely due to technological innovation and better use of resources. The landscape of global tech dominance is decidedly American. In the last fifty years, 241 US firms have scaled into companies valued at over ten billion dollars, compared with just 14 in Europe.
This gap prompts a pressing question: As the competition for tomorrow's sectors like semiconductors, AI, and quantum computing, where does the EU stand? Experts widely agree it is largely a two-horse race between the United States and China, with Europe entering at a significant disadvantage.
Root Causes of the Continent's Technological Lag
Several key factors explain this technological divide.
- Venture Capital: The US boasts a far deeper and more dynamic system for funding startups. Europe has yet to establish a true unified investment market, which limits the growth potential of emerging companies.
- Regulatory Fragmentation: Excessive and fragmented regulation hamper European business. A US startup can introduce a service under a single set of laws to access a consumer base of hundreds of millions. The EU, despite a larger population, is split among twenty-seven different national systems, creating significant internal barriers.
- Cultural Attitudes: Views on risk-taking differ sharply. In some EU nations, a startup's collapse was once viewed with penalties, whereas in the US, it is often considered a badge of experience.
- Defense Spending: The United States enjoys a deeply integrated academic-military-industrial complex. Europe's chronic underinvestment in defense has weakened its ability in pioneering research.
The Road Ahead: Grounds for Cautious Optimism
In spite of these hurdles, one can find causes for hope. European leaders are increasingly aware of the existential challenge and have begun to propose serious reform. Key reports on European competitiveness and the internal market highlight the need for sweeping reforms.
Given appropriate policies and rule changes, Europe's strengths could support much higher degrees of commercial innovation.
Europe still possesses significant strengths: skilled human capital, excellent schools and universities, and premier labs. Alongside a vast domestic consumer base and high savings rates, these elements could unleash a surge of venture creation.
Crucially, even if Europe does not become the leader in developing cutting-edge tech, it can still dramatically boost economic output by implementing and tailoring advancements from elsewhere.
A Critical Juncture
Europe now stands at a critical moment. To paraphrase a famous line, decline often happens "slowly, then all at once". So far, Europe's technological decline has been gradual. But, if it fails to take bold steps to address its structural weaknesses, today's gradual weakening could give way to a rapid and permanent loss of world influence.
