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The recent US security policy document offers a flawed view of Europe. It claims that open-border policies and so-called "progressive" agendas represent an grave threat to European civilization. Yet, this perspective rests on a serious misinterpretation of the reality. The true danger confronting Europe is not societal but technological and economic lag.

A Glaring Economic Divide Separating Europe and the US

Statistics paint a stark picture. Between 2008 and 2023, US GDP surged by 87%, compared to a paltry 13.5% increase for the European Union. During this time, EU GDP per capita fell from 76.5% to just 50% of the US level. Remarkably, even Mississippi now boasts a higher per capita income than major EU nations like Italy and France.

Today, about 50% of the global 50 largest technology firms are US-based, while a mere four are from Europe.

The Technological Deficit: The Core Question

This widening disparity is driven by superior productivity growth in the US, fueled by technological innovation and better use of resources. The scene of global tech leadership is overwhelmingly US-centric. In the last five decades, hundreds of American startups have scaled into companies valued at more than ten billion dollars, compared with only fourteen in Europe.

This gap prompts a pressing issue: In the race for future industries like AI, semiconductors, and fusion energy, what is the EU stand? Experts widely concede it is largely a contest between two between the United States and China, with European nations entering at a significant handicap.

Underlying Factors of Europe's Technological Lag

A number of major factors explain this technological divide.

• Financing Ecosystem: The United States has a much more robust and more dynamic system for financing new ventures. Europe still lacks a true capital markets union, a factor that caps the growth potential of emerging companies.
• Regulatory Fragmentation: Complex and divided rules hinder European business. A American entrepreneur can launch a service under one set of laws to access a market of over 330 million. The EU, despite a bigger population size, is divided among 27 separate systems, creating significant market obstacles.
• Cultural Attitudes: Views on entrepreneurial failure differ sharply. In some EU nations, a startup's collapse was once viewed with penalties, whereas in the United States, it is often considered a valuable lesson.
• Defense Spending: The United States enjoys a deeply integrated academic-military-industrial complex. Europe's chronic underinvestment in defense has eroded its capacity for pioneering research.

The Road Ahead: Grounds for Hopefulness

Despite these hurdles, there are causes for optimism. European leaders are increasingly aware of the existential challenge and have started to propose substantial change. Notable analyses on European competitiveness and the internal market point to the need for major reforms.

With the right incentives and rule changes, Europe's strengths might enable much higher levels of business-led breakthroughs.

The continent still possesses significant advantages: skilled human capital, top-tier education systems, and premier research institutions. Coupled with a vast domestic consumer base and substantial household savings, these elements could unleash a surge of investment and entrepreneurship.

Crucially, even if the EU does not become the leader in developing next-generation tech, it can still significantly increase productivity by adopting and adapting advancements from other regions.

A Critical Juncture

Europe now stands at a critical moment. To paraphrase a famous line, decline often happens "slowly, then all at once". To date, the continent's technological decline has been steady. But, without bold steps to address its structural weaknesses, today's slow erosion could give way to a rapid and permanent decline in global economic relevance.