>Europe has fallen behind America and the gap is growing
>From technology to energy to capital markets and universities, the EU cannot compete with the US
>The Ukraine war has revived the transatlantic alliance. But the relationship between the US and its European allies is increasingly lopsided. The US economy is now considerably richer and more dynamic than the EU or Britain — and the gap is growing. That will have an impact well beyond relative living standards. Europe’s dependence on the US for technology, energy, capital and military protection is steadily undermining any aspirations the EU might have for “strategic autonomy”. In 2008, the EU and the US economies were roughly the same size. But since the global financial crisis, their economic fortunes have dramatically diverged. As Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations point out: “In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $25tn, whereas the EU and the UK together had only reached $19.8tn. America’s economy is now nearly one-third bigger. It is more than 50 per cent larger than the EU without the UK.”
>The aggregate figures are shocking. Underpinning them is a picture of a Europe that has fallen behind — sector by sector. The European technology landscape is dominated by US firms such as Amazon, Microsoft and Apple. The seven largest tech firms in the world, by market capitalisation, are all American. There are only two European companies in the top 20 — ASML and SAP. Whereas China has developed domestic tech giants of its own, European champions are often acquired by American companies. Skype was bought by Microsoft in 2011; DeepMind was bought by Google in 2014. The development of AI is also likely to be dominated by American and Chinese firms.
>The leading universities that feed the pipeline of tech start-ups in the US are lacking in the EU. The Shanghai and THE rankings of the world’s top universities both have only one EU institution in the top 30. (Britain does better — courtesy of Cambridge, Oxford, Imperial and others.) In 1990, Europe made 44 per cent of the world’s semiconductors. That figure is now 9 per cent; compared with 12 per cent for America. Both the EU and the US are rushing to build up their capabilities. But while the US is expected to see 14 new semiconductor plants come on stream by 2025, Europe and the Middle East will add just 10 — compared with 43 new facilities in China and Taiwan. Both the US and the EU are looking to turn this situation around with ambitious industrial policies that provide public finance and incentives for chip manufacturers and producers of electric vehicles. But the dollar’s status as the world’s reserve currency gives the Americans the ability to finance their ambitions, without spooking the markets. As one European industrialist puts it: “They can just swipe the credit card.” The EU, by contrast, has a much smaller budget and has only just begun issuing common debt.
>Private capital is also much more readily available in the US. Paul Achleitner, chair of the global advisory board at Deutsche Bank, says that Europe is now “almost totally dependent on US capital markets”. He tells me that Europe has very few of the large pension funds that give depth to the US capital markets, adding that: “If you want to get anything sizeable done — whether it is an acquisition or an IPO — you always go back to American investors.” The EU has spoken a lot about creating a “capital markets union” to give Europe some of the scale of the US. But progress has been feeble. Unlike Europe, the US also has plentiful and cheap domestic supplies of energy. The shale revolution means that America is now the world’s largest producer of oil and gas. Meanwhile, energy prices in Europe have soared. The Ukraine war and the loss of cheap Russian gas mean that European industry typically pays three or four times as much for energy as their American competitors. Gloomy European bosses say this is already leading to factory closures in Europe.
>Some in Britain may be tempted to see all this as proof that, inside the EU, Britain was “shackled to a corpse” and that Brexit was a good move. But, outside the European single market, Britain suffers from an exaggerated version of the problems of scale that are hobbling the EU itself. British industry is already falling behind, as a result. So are there really no areas where Europe is a world leader? Some point proudly to the fact that the size of the EU single market means that companies all over the world have had to adopt European regulations — the so-called “Brussels effect”. But it would clearly be better to lead the world in creating wealth, rather than regulating it. Europe does outperform in “lifestyle” industries. Almost two-thirds of the world’s tourist arrivals are into Europe. The luxury goods market is dominated by European companies. Football, the world’s most popular sport, is dominated by European teams — although many of the biggest clubs are now owned by Middle Eastern, American or Asian investors. Europe’s dominance of lifestyle industries underlines that life in the old continent is still attractive for many. But perhaps that is part of the problem. Without a greater sense of threat, Europe may never summon the will to reverse its inexorable decline in power, influence and wealth.
Painful but no denying it’s true
No crap. While the U.S. economy is accelerating, China’s economy is also slowing down. Redditors might benefit from reading some quarterly reports rather than just the le popular narrative z.
Still most social indicators are better in the EU.
[deleted]
>But it would clearly be better to lead the world in creating wealth…
>Europe does outperform in “lifestyle” industries.
Some people live to work, others work to live.
Meanwhile, the US is going to shit with guns and drugs. No thanks, I’ll stay in Europe.
Where the Europeans at? Someone needs to be taking notes on how to improve. So far i have ready made ice cubes and giant refrigerators
True, but there’s more to living than economic growth. And living is without a doubt better in the EU and will stay so for the forseable future.
Yeah, at least in Europe workers enjoy rights and they are not forced to work 60h/ week, at least our lives do not revolver around work only… Europeans at least can distinguish between a country and a continent…
If you thought that was bad take a look east.
China is set to eclipse the EU economy in about 30 years time.
And set to overtake the EU as Africa’s largest trade partner by 2030, which means less influence in Africa by Europe.
The social and financial inequality within the US is exploding though
> From technology to energy to capital markets and universities, the EU cannot compete with the US
Why does it have to compete and win? Surely as long as it’s providing an economy that gives a decent standard of living to it’s citizens, somewhere safe to live their lives etc why does it matter if Europe is ahead of the USA or not?
***“In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $25tn, whereas the EU and the UK together had only reached $19.8tn. America’s economy is now nearly one-third bigger. It is more than 50 per cent larger than the EU without the UK.”***
But this is just using selective measurements, ones that purposefully overplay US dominance. Using nominal GDP is fucking stupid, especially for developed countries that have industrial power, who do not export much of their products overseas. Germany and California might have a similar nominal GDP but Germany can outproduce California in basically every sector if it wanted to.
The only way this is true, is if you genuinely are stupid enough to believe that every developed economy in the world has suffered a ‘lost decade’ and only the mighty US economy has grown.
We are sort of missing a big point here and why this article is inherently bullcrap. I’m not suggesting the article doesn’t make some valid points, it does but it’s kind of ridiculous to equate the EU economy to the U.S. economy for a couple of reasons.
1. there is massive differences between the EU states economically. I live in the Netherlands, arguably one of the states that keeps up with the US in terms of economic development and availability of capital, but not all states are like that. Let’s look at the expansion in 2004, these were all former communist states with pretty piss poor economic conditions when we took them in. They improved but have a long way to go. But look at a country like Poland economically. Drastically improved over the last 20 years and is not slowing down (leave the social issues for now purely talking economics). The EU economy has expanded over the last 2 decades and is still expanding , the U.S. economy has been at least solidified for the last 8 decades if you look at statehood and probably more if you look at just territories. If we take in Ukraine as well we get another country that is massive and just pretty poor. That is something inherent to the EU economy and shows the EU economy as a whole as falling behind but that is only because we have countries in there that still have to develop, whereas the US doesn’t have that and will not gain that. Arguing Missouri is like a poor EU state is also bad faith because the US has transfer regimes in the federal tax code. We don’t even have federal taxes and the EU budget is hardly 1% of a countries GDP.
2. capital mobility in Europe is not that good still. This mostly has to do with short sighted national interest in northern EU states. We refuse to invest in southern economies (ie fiscal expansive policy) because we don’t trust them. This is due to Greece cooking the books (this has caused fundamental damage to economic trust) and the knee jerk reaction of imposing harsh austerity. This was just plain stupid because we went after Ireland, Spain and Italy the same way we went after Greece, Eventhough the conditions were vastly different. Because the north refuses to invest in the south, the south has to accrue more debt and the ECB has to keep lower interest rates but if they do that, the north starts bitching about competitiveness. This means our monetary policy is slow compared to that of the fed and if we genuinely wanna grow the eurozone hard (which we are perfectly able to do) we need to accept that yes the south needs to reform drastically (I’m sorry but Italy has some subsidy programs for renovating housing which are just plain irresponsible) and the north has to be fiscally expansionist instead of treating all countries like their small secluded island. This is because of the transfer regime in the US impossible because it is one single country, which the EU is not.
3. It’s simply not true that Europe is only leading in lifestyle industry. If you look at green tech, most innovations come from Europe. Yes the US is also making fast progress there but most of the energy transitioning is happening in Europe. Look at geothermal energy, solar, wind and hydrogen and the EU is pretty solid there and quite possibly one of the big winners there. This is one of the key areas for wealth and influence in my opinion alongside tech and monetary power
4. Let’s not pretend that the US growth is built on anything sustainable. It’s financed by the power of the US dollar but that’s kinda it. Their budgets are insane and can only be managed until a tipping point is reached, which will be reached in the next 20 years. A lot of this progress is gonna implode if the USD loses ground and the debt becomes unmanageable. And in what economists expect right now, that is exactly what’s going to happen. I’d rather not follow the American example of basically turning the entire economy into a massive bubble built on consumer credit and risky loans.
In conclusion, yes the US is leading in some key areas and some of that is worrying, but overall it’s just bad faith to compare the entirety of the EU to the entirety of the US and sort of glossing over stuff like the Cold War, post Soviet states integration and the extreme power the USD accrued and that the American growth is largely dependent on that power. It’s no point in arguing it’s all a bubble in the US, it isn’t and there are hyper successful companies. But this article is a caricature of reality and above all shows a shocking lack of understanding about the EU and its economics.
Whenever this discussion pops out I get the general feeling that people just kinda expect Europe to stay rich despite these issues. Like just because Europe was rich in the past and is rich now it will always be this way, so we don’t need to worry about the economy too much.
But the reason why Europe is so rich now is because Europe has been the most economically powerful part of the world in the last 200 years. Back in the 19th century singular European countries had economies that were on par or bigger than the whole of the US or China.
If we just accept that we are falling behind on economy, technology and military, sooner or later we will no longer be this rich continent that can basically coast on our past achievements. And catching up may not be as easy when the whole world starts reaching European levels of wealth.
In my opinion, what makes living standards better in the EU is also what makes them less competitive globally. You have large Government entities, higher taxes, government safety nets, more red tape as a whole, which means less flexibility and less economic growth.
In the US it’s much easier to create wealth quickly. I have an 8th grade education and make $100,000 a year but I also realize we don’t have the safety nets Europe does so there are pros and cons to both systems.
How are living standards categorized? Is it how much the average family has or the median income? I think the average family in the US probably makes more and has more then the EU but maybe isn’t as happy? If somebody could explain that. I think the median income is 40-45,000 in the US.
And the USA has a life expectancy below China…
We are ultimately a vassal of the US at this point. We rely on their military for protection and in trade they get to conduct their business here with less restricitions. US also exports their culture here, and we are slowly but surely being integrated to their cultural sphere. The change has been particularly rapid recently due to the rise of social media platforms such as tiktok and reddit.
The only thing you find here is complacence and indulgence. People simply don’t care about their roots or culture anymore, as that’s often associated with nationalism. Nationalism for it’s part carries a lot of baggage, is associated with war, and is ultimately a thing of the past, only preserved by racists, weirdos, losers and rejects.
Article assumes wealth is about money. What’s the point of increasing wealth when people’s quality of life doesn’t go up? Of course you can get higher GDP if you epxloit your populace more efficiently, but to say you’re doing “better” is a leap in logic.
What a bland article. Quoting a few top tech companies and universities, hastily connecting this with GDP and then making some stab at how Europe only leads in “Lifestyle industries” is not helping anyone.
In terms of technical know-how, Europe is nothing to be laughed at. For example, ASML being quoted as “not even in the top 7 tech companies” is maybe something a finance guy like the writer of this article would use to conclude that it’s not as advanced as Apple or NVIDIA, but the progress in computational speed of these companies is fully limited by ASML.
Now of course, there is something to be said about the handling of European tech companies and startups. Startups not making it, or companies getting bought by big foreign tech giants is not ideal. But instead of going more in depth into this, how it can be fixed and what is already being done by the EU, the writer makes no comment.
I don’t give a fuck as long as there is enough wealth to replace the depreciated capital and to sustain the safety net.
in fact this is a great opportunity for europe to invest even bigger in renewals and new tech as these two can save us a lot of money.
we can become a leisure paradise
Hm, what about human and employee rights? Should we cancel our human and employee rights in order to exploit people and having the same size of the economy as US? If we want to compare economies we should also look at how those numbers are generated (slavery vs. dignity).
People are salty here 💀
I’m fascinated by this topic, especially when it comes to what drives human beings to be motivated and innovative. The hard pill to swallow is that I can’t personally see how socialism/equality doesn’t lead to less innovation and more complacency.
I don’t know when I see USA all I see is homeless people across downtown streets.
On the whole, demographically, Europe is a slow moving train heading towards a cliff. There’s no stopping it.
Sure I could earn twice what I have now in the US or more, but I would have almost no legal holidays or 20 days PTO, no extra days off for working 40 hours instead of 38, and no regulated overtime and no healthcare, only 4 for a gp and 40 for a specialist. I think I know where I want to live.
Also this sounds a lot like: “work harder for less european peasants, the americans do it too”
University rankings are all a bit BS imo, every university has it’s specialisation and rankings based on publication numbers don’t take into account the quality of work, only quantity, I could have tons of published P hacked studies and lead some rankings.
Funny how the US says this while the benelux holds the key in worldwide chipresearch and manufacturing.
The lack of air conditioning is a pretty embarrassing part. It’s a massive QoL improvement and these days we obviously need it.
Unpopular opinion
Europes high standard of living comes from lots of social spending that needs a strong working class and large working adult population to sustain. With young people barely making children and rejection of migrants, while things are good now- it’s not going to last much longer.
Make fun of the USA all you want; they have a future and Europe doesn’t.
I’d still take my free healthcare and zero school shootings over “being first” any day of the week!
I like how they compare economy in dollars, but forget that the exchange rate is 44% higher today than in 2008
I think about this a lot and to me it comes down to the USA simply having better fundamentals as well as room for growth. While often considered a unit on paper Europe does not act like one when it comes to economic and military policy, with countries like the UK, Turkey and the Ukraine being good examples over the past few years – It would have otherwise been extremely easy solving challenges like the migrant crisis for example.
Due to size, population, and location constraints Europe has already peaked, while the USA still has room for growth. Look at the following factors:
1. Military environment – The USA has two significantly weaker neighbours of note in Canada and Mexico, one is too small population-wise and too US-like, the other too poor to ever consititute a threat. This means militarily at least the US will never have to spend lots of money protecting the Canadian border for example.
2. Situation – The location means less problems to have to deal with – Since Russia, China and the middle East are all thousands of miles away. The US will intervene in crises like Syria or Libya because they want to, not because they have to.
3. Demographics – The USA could easily double its 400 Million population over the next half century without too many problems – The country is the third largest in the world at the end of the day, and continues to be a highly-desired destination for migrants. This means their population will likely age slower than Europe’s for one, and that in the race to get the best talent they will win because they can “pick and choose”.
2 things came to my mind while reading this article:
1. GDP is a poor indicator for quality of life
2. what is the average citizen going to do about this? the idea that “conservative” parties are good for the economy has been debunked numerous times, but that doesn’t stop a massive amount of people from voting them in.
Lowering the quality of live just to increase the GDP seems like self-harm.
It’s going to get even bigger.
The ponzi scheme welfare state that leftists love to brag about and laugh that the US do not have, is going to collapse soon with the shrinking population and the elderly living longer. It’s not sustainable anymore. I don’t understand younger people like me who still support it, you will never have a piece of that cake, it’ll all be gone when you’re old enough to eat it.
The future of Europe is dark.
I used to believe this rankings until the pandemic hit.
If I remember correctly it was a guy from a german uni and a team at oxford who developed the vaccines. Correct me if in wrong, but With all their prestige i cant remember the ivy league doing much.
At the mere cost of living standards and life-expectancy.
We can safely say that the FT’s viewpoint is biased.
I say this as an American man, who has lived in 3 different states in the last 5 years. The social fabric of America is being torn apart for that growth. Longer work hours, more work responsibilities and not enough of a raise to keep up with crazy inflation. At the same time people are lonelier, more stressed and paranoid. I could go one but Europe has the better culture, particularly the Southern Europeans. Civilization should be to maximize the quality of life of the citizens, not sacrificing the citizens at the alter of economic growth.
Keep coping, we get nothing out of our taxes, the welfare system sucks and is unsustainable.
Shrinking population, housing crisis, healthcare crysis, energy crisis, migrants ghettos, ponsi scheme pensions, deindustrialization, workers shortage, brain drain… the future in Europe looks bleak.
That’s fine with me. As long as the gap keeps widening, the more smart and ambitious Euros immigrate here. As long as they build a middle class to upper middle class life in the U.S (which most white collar immigrants do), their standard of living is higher than in Europe. My team at work (NYC) has plenty of smart people from all over the world, mostly from Europe and Asia. Its actually pretty smart, go to European Universities for free, and make double the average European equivalent salary in the U.S. Its a win win for European immigrants.
In my opinion, we should take these articles from the US and UK with a large spoon of salt. They look at us from their distorted point of view, we look at them from our distorted point of view.
I think our universities are in general superior to theirs simply because we have far more access to higher quality education than they do. We do not end up owing tens of thousands of dollars or pounds when we graduate.
Also, our appetite for earning a shit load of money is less. Most of us live to enjoy life, not work to live. Our mentality is rather different in Europe.
What is indeed a problem is that the universities in general need to keep up with the times and shift from purely academic research to more practical ones. Thanks to computers we can simulate a lot of theoretical stuff, but the vast majority of academic education does not use. No, I am not talking about physics or chemistry or other scientific disciplines that have at least some practical applications, but fields like management, economics, finances, languages, history and even political and social sciences are pretty much exclusively focused on theory. So when you leave your university, you feel utterly lost.
Ah yes, we need to be better at providing wealth to big corporations
Thanks but I’ll keep my healthcare and 30 days a year paid leave, plus all my other benefits….
43 comments
Article without the paywall:
>Europe has fallen behind America and the gap is growing
>From technology to energy to capital markets and universities, the EU cannot compete with the US
>The Ukraine war has revived the transatlantic alliance. But the relationship between the US and its European allies is increasingly lopsided. The US economy is now considerably richer and more dynamic than the EU or Britain — and the gap is growing. That will have an impact well beyond relative living standards. Europe’s dependence on the US for technology, energy, capital and military protection is steadily undermining any aspirations the EU might have for “strategic autonomy”. In 2008, the EU and the US economies were roughly the same size. But since the global financial crisis, their economic fortunes have dramatically diverged. As Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations point out: “In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $25tn, whereas the EU and the UK together had only reached $19.8tn. America’s economy is now nearly one-third bigger. It is more than 50 per cent larger than the EU without the UK.”
>The aggregate figures are shocking. Underpinning them is a picture of a Europe that has fallen behind — sector by sector. The European technology landscape is dominated by US firms such as Amazon, Microsoft and Apple. The seven largest tech firms in the world, by market capitalisation, are all American. There are only two European companies in the top 20 — ASML and SAP. Whereas China has developed domestic tech giants of its own, European champions are often acquired by American companies. Skype was bought by Microsoft in 2011; DeepMind was bought by Google in 2014. The development of AI is also likely to be dominated by American and Chinese firms.
>The leading universities that feed the pipeline of tech start-ups in the US are lacking in the EU. The Shanghai and THE rankings of the world’s top universities both have only one EU institution in the top 30. (Britain does better — courtesy of Cambridge, Oxford, Imperial and others.) In 1990, Europe made 44 per cent of the world’s semiconductors. That figure is now 9 per cent; compared with 12 per cent for America. Both the EU and the US are rushing to build up their capabilities. But while the US is expected to see 14 new semiconductor plants come on stream by 2025, Europe and the Middle East will add just 10 — compared with 43 new facilities in China and Taiwan. Both the US and the EU are looking to turn this situation around with ambitious industrial policies that provide public finance and incentives for chip manufacturers and producers of electric vehicles. But the dollar’s status as the world’s reserve currency gives the Americans the ability to finance their ambitions, without spooking the markets. As one European industrialist puts it: “They can just swipe the credit card.” The EU, by contrast, has a much smaller budget and has only just begun issuing common debt.
>Private capital is also much more readily available in the US. Paul Achleitner, chair of the global advisory board at Deutsche Bank, says that Europe is now “almost totally dependent on US capital markets”. He tells me that Europe has very few of the large pension funds that give depth to the US capital markets, adding that: “If you want to get anything sizeable done — whether it is an acquisition or an IPO — you always go back to American investors.” The EU has spoken a lot about creating a “capital markets union” to give Europe some of the scale of the US. But progress has been feeble. Unlike Europe, the US also has plentiful and cheap domestic supplies of energy. The shale revolution means that America is now the world’s largest producer of oil and gas. Meanwhile, energy prices in Europe have soared. The Ukraine war and the loss of cheap Russian gas mean that European industry typically pays three or four times as much for energy as their American competitors. Gloomy European bosses say this is already leading to factory closures in Europe.
>Some in Britain may be tempted to see all this as proof that, inside the EU, Britain was “shackled to a corpse” and that Brexit was a good move. But, outside the European single market, Britain suffers from an exaggerated version of the problems of scale that are hobbling the EU itself. British industry is already falling behind, as a result. So are there really no areas where Europe is a world leader? Some point proudly to the fact that the size of the EU single market means that companies all over the world have had to adopt European regulations — the so-called “Brussels effect”. But it would clearly be better to lead the world in creating wealth, rather than regulating it. Europe does outperform in “lifestyle” industries. Almost two-thirds of the world’s tourist arrivals are into Europe. The luxury goods market is dominated by European companies. Football, the world’s most popular sport, is dominated by European teams — although many of the biggest clubs are now owned by Middle Eastern, American or Asian investors. Europe’s dominance of lifestyle industries underlines that life in the old continent is still attractive for many. But perhaps that is part of the problem. Without a greater sense of threat, Europe may never summon the will to reverse its inexorable decline in power, influence and wealth.
Painful but no denying it’s true
No crap. While the U.S. economy is accelerating, China’s economy is also slowing down. Redditors might benefit from reading some quarterly reports rather than just the le popular narrative z.
Still most social indicators are better in the EU.
[deleted]
>But it would clearly be better to lead the world in creating wealth…
>Europe does outperform in “lifestyle” industries.
Some people live to work, others work to live.
Meanwhile, the US is going to shit with guns and drugs. No thanks, I’ll stay in Europe.
Where the Europeans at? Someone needs to be taking notes on how to improve. So far i have ready made ice cubes and giant refrigerators
True, but there’s more to living than economic growth. And living is without a doubt better in the EU and will stay so for the forseable future.
Yeah, at least in Europe workers enjoy rights and they are not forced to work 60h/ week, at least our lives do not revolver around work only… Europeans at least can distinguish between a country and a continent…
If you thought that was bad take a look east.
China is set to eclipse the EU economy in about 30 years time.
And set to overtake the EU as Africa’s largest trade partner by 2030, which means less influence in Africa by Europe.
The social and financial inequality within the US is exploding though
> From technology to energy to capital markets and universities, the EU cannot compete with the US
Why does it have to compete and win? Surely as long as it’s providing an economy that gives a decent standard of living to it’s citizens, somewhere safe to live their lives etc why does it matter if Europe is ahead of the USA or not?
***“In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $25tn, whereas the EU and the UK together had only reached $19.8tn. America’s economy is now nearly one-third bigger. It is more than 50 per cent larger than the EU without the UK.”***
But this is just using selective measurements, ones that purposefully overplay US dominance. Using nominal GDP is fucking stupid, especially for developed countries that have industrial power, who do not export much of their products overseas. Germany and California might have a similar nominal GDP but Germany can outproduce California in basically every sector if it wanted to.
The only way this is true, is if you genuinely are stupid enough to believe that every developed economy in the world has suffered a ‘lost decade’ and only the mighty US economy has grown.
[here](https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2022&locations=GB-US-EU-CA-AU-JP&start=2007) you can see in nominal GDP – apparently only the US has grown, no other developed economy has.
[here](https://data.worldbank.org/indicator/NY.GDP.MKTP.PP.CD?end=2022&locations=GB-US-EU-CA-AU-JP&start=2007) you can see in PPP terms. Growth since 2008 is as follows: US 76%, EU 78%, Canada 74%, Australia 113% and Japan 27%.
We are sort of missing a big point here and why this article is inherently bullcrap. I’m not suggesting the article doesn’t make some valid points, it does but it’s kind of ridiculous to equate the EU economy to the U.S. economy for a couple of reasons.
1. there is massive differences between the EU states economically. I live in the Netherlands, arguably one of the states that keeps up with the US in terms of economic development and availability of capital, but not all states are like that. Let’s look at the expansion in 2004, these were all former communist states with pretty piss poor economic conditions when we took them in. They improved but have a long way to go. But look at a country like Poland economically. Drastically improved over the last 20 years and is not slowing down (leave the social issues for now purely talking economics). The EU economy has expanded over the last 2 decades and is still expanding , the U.S. economy has been at least solidified for the last 8 decades if you look at statehood and probably more if you look at just territories. If we take in Ukraine as well we get another country that is massive and just pretty poor. That is something inherent to the EU economy and shows the EU economy as a whole as falling behind but that is only because we have countries in there that still have to develop, whereas the US doesn’t have that and will not gain that. Arguing Missouri is like a poor EU state is also bad faith because the US has transfer regimes in the federal tax code. We don’t even have federal taxes and the EU budget is hardly 1% of a countries GDP.
2. capital mobility in Europe is not that good still. This mostly has to do with short sighted national interest in northern EU states. We refuse to invest in southern economies (ie fiscal expansive policy) because we don’t trust them. This is due to Greece cooking the books (this has caused fundamental damage to economic trust) and the knee jerk reaction of imposing harsh austerity. This was just plain stupid because we went after Ireland, Spain and Italy the same way we went after Greece, Eventhough the conditions were vastly different. Because the north refuses to invest in the south, the south has to accrue more debt and the ECB has to keep lower interest rates but if they do that, the north starts bitching about competitiveness. This means our monetary policy is slow compared to that of the fed and if we genuinely wanna grow the eurozone hard (which we are perfectly able to do) we need to accept that yes the south needs to reform drastically (I’m sorry but Italy has some subsidy programs for renovating housing which are just plain irresponsible) and the north has to be fiscally expansionist instead of treating all countries like their small secluded island. This is because of the transfer regime in the US impossible because it is one single country, which the EU is not.
3. It’s simply not true that Europe is only leading in lifestyle industry. If you look at green tech, most innovations come from Europe. Yes the US is also making fast progress there but most of the energy transitioning is happening in Europe. Look at geothermal energy, solar, wind and hydrogen and the EU is pretty solid there and quite possibly one of the big winners there. This is one of the key areas for wealth and influence in my opinion alongside tech and monetary power
4. Let’s not pretend that the US growth is built on anything sustainable. It’s financed by the power of the US dollar but that’s kinda it. Their budgets are insane and can only be managed until a tipping point is reached, which will be reached in the next 20 years. A lot of this progress is gonna implode if the USD loses ground and the debt becomes unmanageable. And in what economists expect right now, that is exactly what’s going to happen. I’d rather not follow the American example of basically turning the entire economy into a massive bubble built on consumer credit and risky loans.
In conclusion, yes the US is leading in some key areas and some of that is worrying, but overall it’s just bad faith to compare the entirety of the EU to the entirety of the US and sort of glossing over stuff like the Cold War, post Soviet states integration and the extreme power the USD accrued and that the American growth is largely dependent on that power. It’s no point in arguing it’s all a bubble in the US, it isn’t and there are hyper successful companies. But this article is a caricature of reality and above all shows a shocking lack of understanding about the EU and its economics.
Whenever this discussion pops out I get the general feeling that people just kinda expect Europe to stay rich despite these issues. Like just because Europe was rich in the past and is rich now it will always be this way, so we don’t need to worry about the economy too much.
But the reason why Europe is so rich now is because Europe has been the most economically powerful part of the world in the last 200 years. Back in the 19th century singular European countries had economies that were on par or bigger than the whole of the US or China.
If we just accept that we are falling behind on economy, technology and military, sooner or later we will no longer be this rich continent that can basically coast on our past achievements. And catching up may not be as easy when the whole world starts reaching European levels of wealth.
In my opinion, what makes living standards better in the EU is also what makes them less competitive globally. You have large Government entities, higher taxes, government safety nets, more red tape as a whole, which means less flexibility and less economic growth.
In the US it’s much easier to create wealth quickly. I have an 8th grade education and make $100,000 a year but I also realize we don’t have the safety nets Europe does so there are pros and cons to both systems.
How are living standards categorized? Is it how much the average family has or the median income? I think the average family in the US probably makes more and has more then the EU but maybe isn’t as happy? If somebody could explain that. I think the median income is 40-45,000 in the US.
And the USA has a life expectancy below China…
We are ultimately a vassal of the US at this point. We rely on their military for protection and in trade they get to conduct their business here with less restricitions. US also exports their culture here, and we are slowly but surely being integrated to their cultural sphere. The change has been particularly rapid recently due to the rise of social media platforms such as tiktok and reddit.
The only thing you find here is complacence and indulgence. People simply don’t care about their roots or culture anymore, as that’s often associated with nationalism. Nationalism for it’s part carries a lot of baggage, is associated with war, and is ultimately a thing of the past, only preserved by racists, weirdos, losers and rejects.
Article assumes wealth is about money. What’s the point of increasing wealth when people’s quality of life doesn’t go up? Of course you can get higher GDP if you epxloit your populace more efficiently, but to say you’re doing “better” is a leap in logic.
What a bland article. Quoting a few top tech companies and universities, hastily connecting this with GDP and then making some stab at how Europe only leads in “Lifestyle industries” is not helping anyone.
In terms of technical know-how, Europe is nothing to be laughed at. For example, ASML being quoted as “not even in the top 7 tech companies” is maybe something a finance guy like the writer of this article would use to conclude that it’s not as advanced as Apple or NVIDIA, but the progress in computational speed of these companies is fully limited by ASML.
The guy clearly also has no idea how university rankings function. [These rankings are by no means a good measure for quality of education](https://www.forbes.com/sites/robertfarrington/2021/09/27/is-it-time-to-ignore-college-rankings-experts-weigh-in/). Of course, larger universities with a big name attract more talent, but that doesn’t mean a university with a ranking of 200 is worse at educating students than one in the top 10.
Now of course, there is something to be said about the handling of European tech companies and startups. Startups not making it, or companies getting bought by big foreign tech giants is not ideal. But instead of going more in depth into this, how it can be fixed and what is already being done by the EU, the writer makes no comment.
I don’t give a fuck as long as there is enough wealth to replace the depreciated capital and to sustain the safety net.
in fact this is a great opportunity for europe to invest even bigger in renewals and new tech as these two can save us a lot of money.
we can become a leisure paradise
Hm, what about human and employee rights? Should we cancel our human and employee rights in order to exploit people and having the same size of the economy as US? If we want to compare economies we should also look at how those numbers are generated (slavery vs. dignity).
People are salty here 💀
I’m fascinated by this topic, especially when it comes to what drives human beings to be motivated and innovative. The hard pill to swallow is that I can’t personally see how socialism/equality doesn’t lead to less innovation and more complacency.
I don’t know when I see USA all I see is homeless people across downtown streets.
On the whole, demographically, Europe is a slow moving train heading towards a cliff. There’s no stopping it.
Sure I could earn twice what I have now in the US or more, but I would have almost no legal holidays or 20 days PTO, no extra days off for working 40 hours instead of 38, and no regulated overtime and no healthcare, only 4 for a gp and 40 for a specialist. I think I know where I want to live.
Also this sounds a lot like: “work harder for less european peasants, the americans do it too”
University rankings are all a bit BS imo, every university has it’s specialisation and rankings based on publication numbers don’t take into account the quality of work, only quantity, I could have tons of published P hacked studies and lead some rankings.
Funny how the US says this while the benelux holds the key in worldwide chipresearch and manufacturing.
The lack of air conditioning is a pretty embarrassing part. It’s a massive QoL improvement and these days we obviously need it.
Unpopular opinion
Europes high standard of living comes from lots of social spending that needs a strong working class and large working adult population to sustain. With young people barely making children and rejection of migrants, while things are good now- it’s not going to last much longer.
Make fun of the USA all you want; they have a future and Europe doesn’t.
I’d still take my free healthcare and zero school shootings over “being first” any day of the week!
I like how they compare economy in dollars, but forget that the exchange rate is 44% higher today than in 2008
I think about this a lot and to me it comes down to the USA simply having better fundamentals as well as room for growth. While often considered a unit on paper Europe does not act like one when it comes to economic and military policy, with countries like the UK, Turkey and the Ukraine being good examples over the past few years – It would have otherwise been extremely easy solving challenges like the migrant crisis for example.
Due to size, population, and location constraints Europe has already peaked, while the USA still has room for growth. Look at the following factors:
1. Military environment – The USA has two significantly weaker neighbours of note in Canada and Mexico, one is too small population-wise and too US-like, the other too poor to ever consititute a threat. This means militarily at least the US will never have to spend lots of money protecting the Canadian border for example.
2. Situation – The location means less problems to have to deal with – Since Russia, China and the middle East are all thousands of miles away. The US will intervene in crises like Syria or Libya because they want to, not because they have to.
3. Demographics – The USA could easily double its 400 Million population over the next half century without too many problems – The country is the third largest in the world at the end of the day, and continues to be a highly-desired destination for migrants. This means their population will likely age slower than Europe’s for one, and that in the race to get the best talent they will win because they can “pick and choose”.
2 things came to my mind while reading this article:
1. GDP is a poor indicator for quality of life
2. what is the average citizen going to do about this? the idea that “conservative” parties are good for the economy has been debunked numerous times, but that doesn’t stop a massive amount of people from voting them in.
Lowering the quality of live just to increase the GDP seems like self-harm.
It’s going to get even bigger.
The ponzi scheme welfare state that leftists love to brag about and laugh that the US do not have, is going to collapse soon with the shrinking population and the elderly living longer. It’s not sustainable anymore. I don’t understand younger people like me who still support it, you will never have a piece of that cake, it’ll all be gone when you’re old enough to eat it.
The future of Europe is dark.
I used to believe this rankings until the pandemic hit.
If I remember correctly it was a guy from a german uni and a team at oxford who developed the vaccines. Correct me if in wrong, but With all their prestige i cant remember the ivy league doing much.
At the mere cost of living standards and life-expectancy.
We can safely say that the FT’s viewpoint is biased.
I say this as an American man, who has lived in 3 different states in the last 5 years. The social fabric of America is being torn apart for that growth. Longer work hours, more work responsibilities and not enough of a raise to keep up with crazy inflation. At the same time people are lonelier, more stressed and paranoid. I could go one but Europe has the better culture, particularly the Southern Europeans. Civilization should be to maximize the quality of life of the citizens, not sacrificing the citizens at the alter of economic growth.
Keep coping, we get nothing out of our taxes, the welfare system sucks and is unsustainable.
Shrinking population, housing crisis, healthcare crysis, energy crisis, migrants ghettos, ponsi scheme pensions, deindustrialization, workers shortage, brain drain… the future in Europe looks bleak.
That’s fine with me. As long as the gap keeps widening, the more smart and ambitious Euros immigrate here. As long as they build a middle class to upper middle class life in the U.S (which most white collar immigrants do), their standard of living is higher than in Europe. My team at work (NYC) has plenty of smart people from all over the world, mostly from Europe and Asia. Its actually pretty smart, go to European Universities for free, and make double the average European equivalent salary in the U.S. Its a win win for European immigrants.
In my opinion, we should take these articles from the US and UK with a large spoon of salt. They look at us from their distorted point of view, we look at them from our distorted point of view.
I think our universities are in general superior to theirs simply because we have far more access to higher quality education than they do. We do not end up owing tens of thousands of dollars or pounds when we graduate.
Also, our appetite for earning a shit load of money is less. Most of us live to enjoy life, not work to live. Our mentality is rather different in Europe.
What is indeed a problem is that the universities in general need to keep up with the times and shift from purely academic research to more practical ones. Thanks to computers we can simulate a lot of theoretical stuff, but the vast majority of academic education does not use. No, I am not talking about physics or chemistry or other scientific disciplines that have at least some practical applications, but fields like management, economics, finances, languages, history and even political and social sciences are pretty much exclusively focused on theory. So when you leave your university, you feel utterly lost.
Ah yes, we need to be better at providing wealth to big corporations
Thanks but I’ll keep my healthcare and 30 days a year paid leave, plus all my other benefits….