Donald Trump's security policy document presents a misguided view of the European Union. It claims that open-border policies and so-called "progressive" policies pose an grave threat to the continent's identity. However, this argument rests on a serious misreading of the situation. The actual danger facing the EU is not societal but technological and economic backwardness.
A Glaring Growth Divide Between the US and Europe
Statistics reveal a sobering picture. From 2008 and 2023, American economic output grew by eighty-seven percent, while a paltry thirteen and a half percent growth for the European Union. During this time, European income per person dropped from 76.5% to just 50% of the American figure. Remarkably, even the poorest US state now has a greater average income than several leading European economies like Italy and France.
Currently, roughly half of the global top fifty technology firms are American, while a mere four are from Europe.
The Technological Deficit: A Critical Question
The growing economic gap is driven by superior productivity growth in the US, fueled by breakthroughs and better use of resources. The landscape of world technology dominance is decidedly US-centric. In the last fifty years, hundreds of American startups have scaled into enterprises valued at more than ten billion dollars, versus only fourteen in Europe.
This disparity raises a vital question: In the race for tomorrow's sectors like AI, semiconductors, and fusion energy, where does the EU positioned? Most analysts agree it is largely a two-horse race involving the United States and China, with Europe entering at a clear disadvantage.
Root Causes of Europe's Technological Lag
Several key reasons explain this technological divide.
- Financing Ecosystem: The US boasts a much more robust and agile system for funding startups. Europe has yet to establish a true capital markets union, which caps the scale of new firms.
- Bureaucratic Hurdles: Excessive and fragmented rules hamper Europe. A American entrepreneur can introduce a service under one 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.
- Cultural Attitudes: Views on entrepreneurial failure vary greatly. In some EU nations, a startup's collapse was historically viewed with stigma, whereas in the United States, it is often seen as a valuable lesson.
- Defense Spending: The US benefits from a tightly woven academic-military-industrial complex. The continent's long-term lack of spending in military capabilities has eroded its ability in breakthrough innovation.
A Path Forward: Grounds for Hopefulness
Despite these hurdles, there are reasons for hope. European leaders are increasingly aware of the existential challenge and have begun to advance serious reform. Key analyses on EU competitiveness and the single market highlight the need for sweeping reforms.
With the right incentives and rule changes, Europe's strengths might enable far greater levels of commercial innovation.
The continent retains significant strengths: skilled human capital, top-tier education systems, and premier labs. Coupled with a large internal market and substantial household savings, these elements could unleash a surge of investment and entrepreneurship.
Crucially, even if the EU does not take the lead in developing cutting-edge technologies, it can still significantly increase productivity by adopting and adapting advancements from elsewhere.
An Inflection Point
Europe now stands at a critical crossroads. To paraphrase a famous line, decline often happens "gradually and then suddenly". So far, the continent's technological decline has been gradual. But, without decisive action to address its deep-seated problems, today's gradual weakening could give way to a sudden and irreversible decline in global economic relevance.
