🔗 Share this article

The recent US security policy document offers a flawed view of the European Union. It claims that open-border policies and what it terms "progressive" policies represent an existential threat to European civilization. Yet, this perspective is based on a fundamental misreading of the situation. The true danger confronting the EU is not cultural but economic and technological lag.

A Glaring Economic Gap Between the US and Europe

The data paint a stark picture. Between 2008 and 2023, American economic output grew by eighty-seven percent, compared to a paltry 13.5% increase for the EU. Over this period, EU GDP per capita fell from over three-quarters to just half of the US level. Strikingly, even Mississippi now boasts a higher per capita income than several leading European economies like Italy and France.

Currently, roughly half of the global 50 largest tech companies are US-based, while only four are from Europe.

The Technological Shortfall: The Core Problem

The growing economic gap is driven by stronger efficiency gains in the United States, largely due to breakthroughs and better use of resources. The scene of global tech dominance is overwhelmingly US-centric. In the last fifty years, hundreds of American startups have scaled into companies valued at more than $10bn, versus only fourteen in the European continent.

This gap prompts a pressing issue: In the race for tomorrow's sectors like AI, semiconductors, and quantum computing, where does the EU stand? Most analysts agree it is essentially a contest between two between the United States and China, with Europe starting at a significant disadvantage.

Underlying Factors of the Continent's Technological Lag

Several major reasons account for this technological divide.

• Venture Capital: The US boasts a much more robust and more dynamic system for financing new ventures. The EU has yet to establish a true unified investment market, a factor that limits the scale of new firms.
• Bureaucratic Hurdles: Excessive and fragmented regulation hamper Europe. A American entrepreneur can launch a product under a single set of laws to access a consumer base of hundreds of millions. The European Union, despite a larger population, is split among twenty-seven different national systems, creating significant internal barriers.
• Mindset Differences: Attitudes toward risk-taking vary greatly. In parts of Europe, a startup's collapse was once met with stigma, whereas in the United States, it is often considered a valuable lesson.
• Defense Spending: The US benefits from a deeply integrated academic-military-industrial complex. The continent's chronic underinvestment in defense has weakened its capacity for pioneering research.

The Road Ahead: Reasons for Hopefulness

Despite these challenges, one can find causes for optimism. European leaders are growing more conscious of the existential challenge and have begun to propose serious reform. Key analyses on European competitiveness and the single market highlight the need for major changes.

Given appropriate incentives and regulatory reforms, these assets might enable far greater levels of business-led breakthroughs.

Europe still possesses significant advantages: skilled human capital, top-tier education systems, and world-class labs. Coupled with a vast domestic consumer base and substantial household savings, these elements could unleash a surge of venture creation.

Crucially, even if the EU does not become the leader in developing next-generation tech, it can still dramatically increase economic output by adopting and adapting advancements from other regions.

A Critical Juncture

Europe now faces a critical moment. To paraphrase a famous line, economic erosion often happens "gradually and then suddenly". So far, the continent's slide in innovation has been steady. But, without decisive action to address its deep-seated problems, today's slow erosion could give way to a sudden and irreversible loss of global economic relevance.