Donald Trump's national security strategy offers a flawed assessment of the European Union. The document asserts that open-border policies and so-called "woke" agendas pose an existential risk to European civilization. Yet, this argument rests on a fundamental misreading of the reality. The actual danger facing the EU is not societal but technological and economic lag.
The Stark Economic Gap Separating Europe and the US
The data reveal a stark contrast. Between 2008 and 2023, US GDP surged by 87%, compared to a paltry 13.5% increase for the European Union. Over this period, EU GDP per capita fell from 76.5% to just half of the US level. Strikingly, even the poorest US state now boasts a higher per capita income than several leading EU nations like France and Italy.
Currently, roughly 50% of the world’s 50 largest technology firms are American, while only four are European.
The Technological Shortfall: A Critical Question
This widening economic gap stems from superior efficiency gains in the US, fueled by breakthroughs and higher total factor productivity. The landscape of world technology dominance is overwhelmingly American. Over the past five decades, 241 US firms have grown into enterprises valued at more than ten billion dollars, compared with only fourteen in the European continent.
This disparity raises a pressing question: As the competition for future industries like AI, semiconductors, and fusion energy, where does Europe stand? Experts widely concede it is largely a contest between two between the United States and China, with Europe entering at a clear disadvantage.
Root Causes of the Continent's Technological Lag
Several key reasons account for this technological divide.
- Venture Capital: The United States has a much more robust and agile system for financing new ventures. Europe still lacks a genuine unified investment market, which caps the growth potential of emerging companies.
- Bureaucratic Hurdles: Excessive and fragmented rules hinder Europe. A US startup can launch a service under one regulatory framework to access a market of over 330 million. The European Union, despite a larger population, is divided among 27 different national regimes, creating significant market obstacles.
- Cultural Attitudes: Attitudes toward entrepreneurial failure vary greatly. In parts of Europe, business failure was once viewed with penalties, whereas in the US, it is often considered a valuable lesson.
- Defense Spending: The US benefits from a tightly woven academic-military-industrial complex. The continent's long-term lack of spending in military capabilities has eroded its capacity for pioneering research.
A Path Forward: Reasons for Hopefulness
In spite of these challenges, one can find causes for hope. Policymakers are increasingly aware of the existential challenge and have started to propose serious reform. Key reports on EU competitiveness and the internal market point to the need for sweeping reforms.
With the right policies and regulatory reforms, Europe's strengths might enable much higher degrees of commercial innovation.
The continent still possesses considerable advantages: skilled workforce, excellent education systems, and premier labs. Alongside a large internal market and high savings rates, these foundations could unleash a new wave of venture creation.
Crucially, even if Europe does not become the leader in creating next-generation tech, it can still significantly increase economic output by adopting and adapting advancements from other regions.
A Critical Juncture
The European Union now faces a critical moment. To paraphrase a famous line, decline often happens "gradually and then suddenly". So far, the continent's technological decline has been gradual. But, if it fails to take bold steps to tackle its deep-seated problems, today's gradual weakening could give way to a rapid and permanent loss of global economic relevance.
