The recent US security policy document presents a misguided view of the European Union. It claims that open-border policies and so-called "woke" agendas pose an existential risk to the continent's identity. However, this argument rests on a fundamental misreading of the situation. The actual danger confronting Europe is not societal but technological and economic lag.
The Stark Growth Divide Between the US and Europe
Statistics reveal a stark picture. Between 2008 and 2023, US GDP grew by 87%, while a mere 13.5% growth for the European Union. During this time, EU GDP per capita dropped from 76.5% to just half of the American figure. Remarkably, even the poorest US state now has a higher per capita income than several leading EU nations like Italy and France.
Currently, about 50% of the global 50 largest tech companies are American, while only four are from Europe.
The Technological Shortfall: The Core Problem
This widening disparity is driven by superior productivity growth in the US, largely due to breakthroughs and better use of resources. The landscape of world technology leadership is overwhelmingly American. In the last five decades, hundreds of American startups have grown into companies valued at over ten billion dollars, compared with just 14 in Europe.
This gap raises a pressing question: As the competition for tomorrow's sectors like semiconductors, AI, and fusion energy, what is Europe positioned? Most analysts concede it is essentially a two-horse race involving the US and China, with European nations starting at a clear handicap.
Root Causes of the Continent's Technological Lag
A number of major reasons account for this technological divide.
- Venture Capital: The United States has a far deeper and more dynamic network for funding startups. The EU still lacks a genuine unified investment market, a factor that caps the scale of new firms.
- Bureaucratic Hurdles: Excessive and fragmented regulation hamper Europe. A American entrepreneur can introduce a product under a single regulatory framework to access a consumer base of hundreds of millions. The European Union, despite a larger population size, is divided among twenty-seven different national regimes, creating significant market obstacles.
- Cultural Attitudes: Attitudes toward entrepreneurial failure differ sharply. In parts of Europe, business failure was historically viewed with penalties, whereas in the US, it is often considered a badge of experience.
- Military Investment: The United States enjoys a tightly woven academic-military-industrial complex. Europe's long-term lack of spending in defense has eroded its ability in breakthrough innovation.
A Path Forward: Grounds for Hopefulness
Despite these challenges, there are causes for hope. Policymakers are increasingly aware of the severe threat and have begun to propose serious reform. Notable analyses on EU competitiveness and the single market point to the need for sweeping changes.
Given appropriate policies and regulatory reforms, these assets might enable much higher levels of commercial innovation.
Europe retains significant advantages: high-quality workforce, excellent schools and universities, and premier labs. Coupled with a vast domestic consumer base and substantial household savings, these elements could trigger a surge of venture creation.
Crucially, even if Europe does not become the leader in developing cutting-edge technologies, it can still significantly increase economic output by implementing and tailoring advancements from other regions.
A Critical Juncture
Europe now stands at a decisive moment. To paraphrase a famous line, decline often happens "slowly, then all at once". So far, the continent's technological decline has been steady. But, without decisive action to address its deep-seated problems, today's slow erosion could turn into a sudden and irreversible loss of global economic relevance.
