An ASML chipmaking machine
I’m in Europe for a few weeks, giving myself some physical (if not mental) distance from Trumpland. So I decided to take a short break from my healthcare series to write about the European economy — specifically the perception that Europe is in economic decline. According to conventional wisdom, Europe is falling far behind the United States. It has lost any dynamism it once had and is quickly becoming a museum of its former glories.
This perception is widespread: at Davos in January Howard Lutnik, Trump’s Commerce secretary, gave a speech that was so insulting toward Europe that Christine Lagarde, the president of the European Central Bank, walked out. The Wall Street Journal recently published an article under the headline “What happens when Europeans find out how poor they are?” which asserted an equivalence between the European economy and the poorest U.S. states, such as Alabama and Mississippi.
Granted, what would you expect from an Epstein pal, stablecoin profiteer, Trump minion like Lutnick? Yet smart Europeans are also concerned: in 2024 Mario Draghi, one of history’s greatest central bankers, issued a report on EU competitiveness that highlighted Europe’s lagging productivity and raised serious alarms.
But how accurate is this perception of European underperformance? While there are valid reasons to be concerned about Europe’s future, the trash talk reflects ignorance of the real issues. And even economically sophisticated, Draghi-type discussions are, I would argue, misleading. Europe is simply not poor the way Mississippi is poor. Moreover, by many measures — arguably the most important measures — Europe is, in fact, keeping up with the United States.
Europe, along with China and the United States, is an economic superpower. And, at this point in time, it is arguably the world’s only democratic superpower. However, misperceptions about its economic performance keep it from playing the global role that it should and is so desperately needed.
So while this primer is primarily informational, intended to give an overview of Europe’s long-term economic performance and how it compares to that of the U.S., it is also a wake-up call to Europeans to stop being gaslit by American triumphalism and to realize their own strengths – strengths that are critically needed in a world of encroaching authoritarianism.
Beyond the paywall I will address three questions:
1. Does Europe have a lower standard of living than the U.S.?
2. Is Europe falling behind the U.S.?
3. Has Europe failed to match its global influence with its economic power?