Donald Trump's security policy document offers a flawed assessment of the European Union. 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 serious misreading of the situation. The actual danger confronting the EU is not cultural but economic and technological backwardness.
The Stark Growth Gap Between the US and Europe
The data paint a sobering contrast. Between 2008 and 2023, American economic output surged by eighty-seven percent, while a paltry 13.5% increase for the EU. Over this period, European income per person dropped from 76.5% to just half of the US level. Strikingly, even Mississippi now boasts a higher per capita income than major European economies like Italy and France.
Today, roughly half of the global top fifty tech companies are US-based, while only four are European.
The Technological Deficit: A Critical Problem
The growing disparity is driven by stronger productivity growth in the United States, fueled by technological innovation and higher total factor productivity. The landscape of world technology leadership is decidedly American. In the last fifty years, 241 US firms have scaled into companies valued at over ten billion dollars, compared with only fourteen in Europe.
This gap raises a vital question: As the competition for tomorrow's sectors like AI, semiconductors, and fusion energy, what is Europe stand? Most analysts agree it is largely a contest between two involving the US and China, with European nations entering at a significant handicap.
Root Causes of the Continent's Innovation Gap
A number of major factors explain this technological divide.
- Financing Ecosystem: The United States has a much more robust and more dynamic network for financing new ventures. The EU still lacks a genuine capital markets union, which caps the growth potential of emerging companies.
- Bureaucratic Hurdles: Complex and divided rules hamper European business. A American entrepreneur can launch a product under a single regulatory framework to access a market of over 330 million. The EU, despite a bigger population, is divided among twenty-seven different national regimes, creating significant internal barriers.
- Cultural Attitudes: Attitudes toward entrepreneurial failure differ sharply. In some EU nations, business failure was once viewed with stigma, whereas in the United States, it is often seen as a badge of experience.
- Military Investment: The US benefits from a deeply integrated academic-military-industrial complex. The continent's long-term lack of spending in defense has eroded its ability in breakthrough innovation.
A Path Forward: Grounds for Hopefulness
In spite of these challenges, one can find reasons for hope. European leaders are growing more conscious of the existential challenge and have started to propose substantial change. Notable analyses on European competitiveness and the single market point to the necessity of major changes.
With the right incentives and rule changes, Europe's strengths could support much higher levels of business-led breakthroughs.
The continent retains significant strengths: high-quality workforce, excellent education systems, and premier research institutions. Alongside a vast domestic consumer base and high savings rates, these foundations have the potential to trigger a surge of venture creation.
Importantly, even if Europe does not take the lead in developing next-generation tech, it can still dramatically increase productivity by implementing and tailoring advancements from other regions.
A Critical Juncture
The European Union now faces a decisive moment. As the saying goes, decline often happens "gradually and then suddenly". So far, the continent's technological decline has been steady. However, without decisive action to address its structural weaknesses, today's gradual weakening could give way to a sudden and irreversible decline in world influence.
