Donald Trump's national security strategy offers a misguided view of the European Union. The document asserts that open-border policies and so-called "woke" policies pose an grave threat to European civilization. However, this argument rests on a serious misreading of the reality. The actual danger confronting Europe is not cultural but technological and economic lag.
A Glaring Growth Gap Separating Europe and the US
The data paint a stark picture. Between 2008 and 2023, US GDP grew by eighty-seven percent, compared to a paltry thirteen and a half percent growth for the European Union. During this period, EU GDP per capita 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 EU nations like France and Italy.
Currently, about half of the global 50 largest tech companies are American, while only four are European.
The Technological Deficit: The Core Problem
This widening disparity is driven by stronger efficiency gains in the United States, largely due to breakthroughs and better use of resources. The landscape of world technology leadership is overwhelmingly American. Over the past five decades, 241 US firms have grown into enterprises valued at over $10bn, compared with just 14 in the European continent.
This disparity raises a vital issue: In the race for tomorrow's sectors like semiconductors, AI, and quantum computing, what is the EU positioned? Experts widely agree it is largely a contest between two involving the US and China, with European nations entering at a significant disadvantage.
Root Causes of the Continent's Technological Lag
Several major reasons explain this technological divide.
- Financing Ecosystem: The United States has a far deeper and more dynamic network for funding startups. The EU still lacks a genuine capital markets union, which caps the growth potential of emerging companies.
- Bureaucratic Hurdles: Excessive and fragmented regulation hinder European business. A US startup can introduce a service under a single regulatory framework to access a market of hundreds of millions. The European Union, despite a larger population, is split among 27 different national systems, creating significant internal barriers.
- Mindset Differences: Views on entrepreneurial failure vary greatly. In parts of Europe, business failure was historically met with stigma, whereas in the United States, it is often considered a valuable lesson.
- Military Investment: The US benefits from a tightly woven academic-military-industrial complex. The continent's long-term lack of spending in defense has eroded its ability in breakthrough innovation.
The Road Ahead: Grounds for Hopefulness
In spite of these challenges, one can find causes for optimism. Policymakers are increasingly aware of the severe threat and have started to propose substantial change. Key reports on EU competitiveness and the single market highlight the need for major reforms.
Given appropriate incentives and rule changes, Europe's strengths might enable far greater levels of business-led breakthroughs.
Europe still possesses significant strengths: skilled workforce, excellent education systems, and world-class research institutions. Coupled with a large internal market and high savings rates, these foundations have the potential to trigger a new wave of venture creation.
Crucially, even if the EU does not take the lead in creating cutting-edge tech, it can still significantly increase productivity by adopting and adapting advancements from other regions.
An Inflection Point
The European Union now faces a critical moment. To paraphrase a famous line, decline often happens "slowly, then all at once". So far, the continent's technological decline has been steady. However, without decisive action to tackle its structural weaknesses, today's gradual weakening could turn into a sudden and irreversible decline in world influence.
