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The recent US security policy document presents a misguided view of Europe. It claims that unrestrained immigration and so-called "progressive" agendas pose an grave risk to European civilization. However, this argument is based on a fundamental misinterpretation of the situation. The actual danger confronting Europe is not cultural but technological and economic backwardness.

A Glaring Economic Divide Between Europe and the US

The data paint a sobering contrast. Between 2008 and 2023, American economic output grew by 87%, compared to a paltry 13.5% increase for the European Union. During this period, European income per person dropped from 76.5% to just 50% of the US level. Remarkably, even Mississippi now boasts a greater average income than several leading European economies like Italy and France.

Today, roughly half of the world’s 50 largest tech companies are American, while a mere four are from Europe.

The Technological Shortfall: A Critical Problem

This widening disparity stems from superior productivity growth in the United States, largely due to breakthroughs and better use of resources. The landscape of global tech leadership is overwhelmingly American. In the last fifty years, 241 US firms have scaled into companies valued at over ten billion dollars, versus only fourteen in Europe.

This gap prompts a pressing question: In the race for future industries like semiconductors, AI, and quantum computing, what is Europe positioned? Experts widely concede it is essentially a contest between two involving the United States and China, with European nations entering at a significant disadvantage.

Underlying Factors of Europe's Technological Lag

A number of key factors account for this technological divide.

• Financing Ecosystem: The US boasts a much more robust and more dynamic system for financing new ventures. The EU still lacks a genuine unified investment market, which caps the scale of new firms.
• Bureaucratic Hurdles: Complex and divided regulation hinder Europe. A American entrepreneur can introduce a service under a single set of laws to access a consumer base of hundreds of millions. The EU, despite a bigger population size, is divided among twenty-seven different national systems, creating huge market obstacles.
• Cultural Attitudes: Views on risk-taking differ sharply. In parts of Europe, a startup's collapse was historically viewed with stigma, whereas in the US, it is often seen as a badge of experience.
• Military Investment: The US benefits from a deeply integrated academic-military-industrial complex. Europe's long-term lack of spending in military capabilities has weakened its capacity for breakthrough innovation.

A Path Forward: Grounds for Hopefulness

Despite these challenges, there are reasons for hope. European leaders are increasingly aware of the severe threat and have started to propose substantial change. Notable reports on EU competitiveness and the internal market highlight the necessity of major changes.

With the right incentives and rule changes, these assets might enable much higher levels of business-led breakthroughs.

Europe still possesses considerable advantages: high-quality workforce, excellent education systems, and premier research institutions. Alongside a large internal market and high savings rates, these elements have the potential to trigger a surge of investment and entrepreneurship.

Importantly, even if the EU does not take the lead in developing next-generation technologies, it can still significantly increase economic output by adopting and adapting innovations from elsewhere.

A Critical Juncture

The European Union now faces a critical crossroads. To paraphrase a famous line, decline often happens "slowly, then all at once". To date, Europe's technological decline has been gradual. But, if it fails to take decisive action to tackle its structural weaknesses, today's slow erosion could turn into a sudden and irreversible decline in global economic relevance.