Donald Trump's security policy document presents a flawed assessment of the European Union. The document asserts that open-border policies and so-called "progressive" agendas represent an grave risk to European civilization. However, this argument is based on a fundamental misinterpretation of the reality. The actual danger facing the EU is not cultural but economic and technological lag.
The Stark Growth Gap Between Europe and the US
The data paint a sobering contrast. From 2008 and 2023, American economic output surged by eighty-seven percent, compared to a paltry 13.5% increase for the European Union. Over this period, European income per person dropped from 76.5% to just half of the US level. Strikingly, even Mississippi now has a higher per capita income than major European economies like Italy and France.
Today, about half of the global top fifty technology firms are US-based, while a mere four are European.
The Technological Shortfall: A Critical Problem
This widening disparity is driven by stronger efficiency gains in the United States, largely due to technological innovation and higher total factor productivity. The scene of global tech leadership is decidedly US-centric. In the last five decades, hundreds of American startups have grown into companies valued at more than $10bn, compared with only fourteen in Europe.
This gap raises a pressing issue: In the race for future industries like AI, semiconductors, and fusion energy, where does the EU stand? Most analysts concede it is essentially a contest between two involving the United States and China, with Europe entering at a clear disadvantage.
Underlying Factors of the Continent's Technological Lag
Several key factors account for this technological divide.
- Financing Ecosystem: The United States has a far deeper and agile network for funding startups. Europe still lacks a true capital markets union, which limits the scale of new firms.
- Bureaucratic Hurdles: Complex and divided regulation hamper Europe. A US startup can introduce a service under a single set of laws to access a market of hundreds of millions. The European Union, despite a larger population, is divided among twenty-seven separate regimes, creating significant internal barriers.
- Mindset Differences: Views on entrepreneurial failure differ sharply. In parts of Europe, a startup's collapse was once met with stigma, whereas in the US, it is often considered a valuable lesson.
- Defense Spending: The US benefits from a tightly woven innovation pipeline linking defense and academia. The continent's long-term lack of spending in military capabilities has eroded its ability in breakthrough innovation.
The Road Ahead: Grounds for Cautious Optimism
In spite of these challenges, one can find causes for hope. European leaders are growing more conscious of the severe threat and have begun to propose substantial change. Notable analyses on EU competitiveness and the single market point to the necessity of sweeping changes.
Given appropriate incentives and rule changes, Europe's strengths might enable much higher levels of commercial innovation.
The continent still possesses considerable strengths: skilled workforce, top-tier schools and universities, and world-class research institutions. Alongside a vast domestic consumer base and high savings rates, these foundations have the potential to unleash a new wave of venture creation.
Crucially, even if the EU does not take the lead in creating next-generation technologies, it can still dramatically boost productivity by implementing and tailoring innovations from other regions.
A Critical Juncture
Europe now stands at a critical moment. To paraphrase a famous line, economic erosion often happens "slowly, then all at once". So far, the continent's technological decline has been gradual. But, without decisive action to address its structural weaknesses, today's gradual weakening could turn into a sudden and irreversible loss of world influence.
