Donald Trump's security policy document presents a misguided view of Europe. The document asserts that open-border policies and so-called "progressive" policies represent an existential threat to European civilization. However, this argument is based on a fundamental misreading of the situation. The actual danger facing Europe is not societal but technological and economic backwardness.
A Glaring Economic Gap Separating Europe and the US
Statistics reveal a stark contrast. Between 2008 and 2023, US GDP surged by eighty-seven percent, compared to a mere 13.5% increase for the EU. During this period, European income per person fell from over three-quarters to just 50% of the American figure. Strikingly, even the poorest US state now boasts a higher per capita income than major European economies like Italy and France.
Today, roughly 50% of the world’s top fifty technology firms are American, while only four are European.
The Technological Deficit: The Core Problem
The growing disparity is driven by stronger efficiency gains in the US, fueled by technological innovation and better use of resources. The landscape of world technology dominance is overwhelmingly US-centric. Over the past five decades, hundreds of American startups have grown into enterprises valued at over $10bn, versus just 14 in the European continent.
This disparity prompts a pressing issue: As the competition for future industries like semiconductors, AI, and fusion energy, where does Europe stand? Most analysts concede it is largely a two-horse race between the United States and China, with European nations starting at a clear handicap.
Underlying Factors of Europe's Technological Lag
A number of key reasons account for this technological divide.
- Financing Ecosystem: The United States has a much more robust and agile system for funding startups. The EU still lacks a true capital markets union, a factor that limits the growth potential of new firms.
- Regulatory Fragmentation: Excessive and fragmented regulation hamper European business. A American entrepreneur can launch a service under a single set of laws to access a consumer base of over 330 million. The EU, despite a larger population size, is divided among 27 different national regimes, creating huge internal barriers.
- Cultural Attitudes: Views on entrepreneurial failure differ sharply. In some EU nations, a startup's collapse was historically viewed with stigma, whereas in the US, it is often considered a badge of experience.
- Military Investment: The US benefits from a tightly woven innovation pipeline linking defense and academia. The continent's chronic underinvestment in military capabilities has eroded its ability in pioneering research.
A Path Forward: Grounds for Cautious Optimism
In spite of these hurdles, one can find causes for hope. Policymakers are increasingly aware of the severe threat and have started to advance serious reform. Notable analyses on European competitiveness and the internal market highlight the necessity of sweeping changes.
With the right policies and regulatory reforms, these assets could support far greater levels of commercial innovation.
The continent retains considerable strengths: high-quality human capital, top-tier schools and universities, and world-class research institutions. Coupled with a vast domestic consumer base and substantial household savings, these foundations have the potential to trigger a surge of venture creation.
Importantly, even if Europe does not take the lead in creating cutting-edge technologies, it can still dramatically increase economic output by implementing and tailoring advancements from other regions.
A Critical Juncture
The European Union now faces a critical crossroads. To paraphrase a famous line, economic erosion often happens "slowly, then all at once". To date, the continent's technological decline has been steady. But, if it fails to take bold steps to address its deep-seated problems, today's slow erosion could give way to a rapid and permanent decline in world influence.
