Donald Trump's security policy document offers a misguided view of Europe. It claims that open-border policies and what it terms "woke" policies pose an existential risk to European civilization. However, this perspective is based on a fundamental misreading of the situation. The true danger confronting Europe is not societal but economic and technological lag.
A Glaring Growth Gap Separating the US and Europe
The data paint a stark picture. Between 2008 and 2023, US GDP grew by 87%, while a paltry 13.5% growth for the European Union. During this period, European income per person dropped from 76.5% to just 50% of the American figure. Strikingly, even the poorest US state now has a higher per capita income than several leading European economies like Italy and France.
Today, about half of the global top fifty tech companies are US-based, while a mere four are from Europe.
The Technological Shortfall: A Critical Question
The growing economic gap stems from stronger efficiency gains in the US, largely due to technological innovation and better use of resources. The scene of global tech leadership is decidedly American. In the last five decades, 241 US firms have grown into enterprises valued at over ten billion dollars, versus just 14 in Europe.
This gap raises a vital issue: As the competition for future industries like semiconductors, AI, and quantum computing, where does Europe stand? Most analysts agree it is essentially a contest between two between the US and China, with Europe entering at a significant disadvantage.
Underlying Factors of the Continent's Technological Lag
Several key factors explain this technological divide.
- Financing Ecosystem: The US boasts a far deeper and agile network for funding startups. The EU still lacks a true unified investment market, a factor that limits the scale of emerging companies.
- Bureaucratic Hurdles: Complex and divided rules hamper Europe. A US startup can introduce a service under a single set of laws to access a consumer base of hundreds of millions. The European Union, despite a bigger population size, is divided among 27 separate systems, creating significant market obstacles.
- Cultural Attitudes: Attitudes toward entrepreneurial failure vary greatly. In some EU nations, business failure was once met with penalties, whereas in the US, it is often considered a badge of experience.
- Military Investment: The United States enjoys a deeply integrated academic-military-industrial complex. The continent's long-term lack of spending in military capabilities has weakened its capacity for pioneering research.
The Road Ahead: Reasons for Cautious Optimism
In spite of these hurdles, there are causes for hope. Policymakers are growing more conscious of the severe threat and have started to propose serious reform. Key reports on EU competitiveness and the internal market highlight the need for sweeping reforms.
With the right incentives and regulatory reforms, Europe's strengths could support far greater levels of business-led breakthroughs.
The continent retains considerable strengths: high-quality workforce, excellent education systems, and world-class labs. Coupled with a large internal market and substantial household savings, these foundations have the potential to unleash a new wave of venture creation.
Crucially, even if Europe does not become the leader in developing next-generation tech, it can still significantly increase economic output by implementing and tailoring advancements from other regions.
A Critical Juncture
The European Union now faces a critical moment. To paraphrase a famous line, decline often happens "slowly, then all at once". So far, Europe's technological decline has been steady. But, if it fails to take bold steps to tackle its structural weaknesses, today's gradual weakening could give way to a rapid and permanent loss of world influence.
