> Europe is stuck in a static industrial structure with few new companies rising up to disrupt existing industries or develop new growth engines. In fact, there is no EU company with a market capitalisation over EUR 100 billion that has been set up from scratch in the last fifty years, while all six US companies with a valuation above EUR 1 trillion have been created in this period.
> The problem is not that Europe lacks ideas or ambition. We have many talented researchers and entrepreneurs filing patents. But innovation is blocked at the next stage: we are failing to translate innovation into commercialisation, and innovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations.
> For example, we claim to favour innovation, but we continue to add regulatory burdens onto European companies, which are especially costly for SMEs and self-defeating for those in the digital sectors. More than half of SMEs in Europe flag regulatory obstacles and the administrative burden as their greatest challenge.
Worth a read. Probably not what the self patting EU clowns were expecting. The disconnect between the introduction and the actual report is especially hilarious.
I don't know who you have in mind with "self petting EU clowns" but in general people are very aware of what's going on. A lot of companies have been giving this feedback for a long time.
But what can people do? It seems to me that the EU government can do whatever they like. Or is it like what people say about the US politics: the politicians do what voters want, and it's just that a minority of people don't like EU's policies?
The politicians.
> A lot of companies have been giving this feedback for a long time.
Yeah, still got ignored as the report suggests.
Are Europeans happier due to all of the reasons you listed? Do you enable wealth to grow at the expense of the happiness of its residents if you implement the reforms needed to “move fast and break things”? Are Americans happier due to this wealth and entrepreneurship? I don’t think so, they seem pretty miserable right now. Overconsumption and having too much has made this generation have a lower life expectancy than the last, a stunning result.
It would be unwise to pass these changes and enrich a few wealthy Europeans at the top and instill serfdom again and wealth inequality.
The careful approach may have brought as pretty far. But isn't working anymore. It hasn't worked since 2008 at least.
But the inability to capitalise on the tech sector, difficult regulations as barrier to entry, and a lot of changing rules regarding innovation, making things “green” and environmental and consumer safety does give a high burden to industry when competing with entities like China and the USA which do not have these restrictions.
I think a long-term plan regarding regulations which are clear upfront and don’t constantly change, as well as massive tax benefits to new corporations could provide an economical boost.
Having said that, I am not an economist, so I’d love someone with more knowledge to give their 2 cents. (Tax free, of course)
Pavel Durov was arrested because he didn't police his platform sufficiently or whatever, or so France claims.
That alone is unsettling. It's been discussed among techies on Twitter. Why would anyone smart enough to create something want to start a company in the EU?
Why risk your neck to start a startup in such an environment?
Telegrams CEO was arrested because the company didn't properly cooperate with law enforcement. Every democratic first-world country would have done the same.
am i dumb? does this not include nordo novisk?
It is also curious to me that the US and China are seen as examples of what to aim for, rather than as cautionary tales of what can happen with an excessive focus on growth. It is not clear to me that the general happiness of people in the US or China exceeds that of people in Europe. On the contrary, it seems that those two countries are almost constantly dealing with some horrible externality of unbridled focus on stock prices, revenues, growth etc, to the detriment of the broader social good. Housing crises, homelessness, rampant privacy violations, the expansion of police states to maintain the boundary between haves and have-nots, debt crises, long working hours and bad conditions — these are all phenomena that seem more prevalent in countries with a higher focus on "competitiveness". What good does it do a middle-class worker to make twice the absolute salary when they are spending half of it correcting for the deficiencies of their society?
If the regulatory burden prevents local businesses from getting off the ground because only foreign businesses have the deep pockets to comply ("The net effect of this burden of regulation is that only larger companies – which are often non-EU based – have the financial capacity and incentive to bear the costs of complying."), then in some sense these regulations work against the goal of issues being addressed at a local level.
He says, on an American website, that he accessed through a browser made by an American company, that's running on an operating system made by an American company (or maybe Linux! Although even Torvalds moved to the US), running on a device... Well, it gets complicated. All the relevant options and combinations are non-European though.
ASML is like the only relevance of Europe here and they got started because of the US.
Why is there no European Intel, AMD, Nvidia, Google, Apple, Samsung, Amazon, Tencent, Sony etc? All the stuff is foreign, which means that we're constantly following foreign rules based on their culture. And slowly they have more become our rules and culture, because there were no real European alternatives.
Philips (mostly Signify and co, but the brand is still Philips), Airbus (top 1 airplane manufacturer), VW Group, Stellantis, reMarkable, a ton of neobanks/fintechs the US could only dream of (Revolut, Monzo, N26, Bunq, Adyen to name but a few), Doctolib, Backmarket, Spotify (top music streaming platform in the world), Dassault Systemes (top industrial CAD), Amadeus (top 2 airline booking software), Booking.com, Ericsson (top 2 5G equipment provider), SAP (top 2 ERP provider), STMicro, NXP, Infineon (top semiconductor manufacturers for everything not on the cutting edge of personal/server computing), Zeiss (top 1 optics manufacturer), etc etc etc etc
It's not that there are none, it's that the new ones (some of which are extremely good) haven't grown to super high valuations yet.
This may be the wrong crowd for such a message, though.
From all I’ve read, it looks like Americans are doing better than ever but are less satisfied due to ever-increasing expectations. My hunch is that for the vast majority of people, social media fuels this.
I do not think that is correct? This actually shows stagnation for at least 2 decades in real median household income:
https://en.wikipedia.org/wiki/Household_income_in_the_United...
Source: https://en.wikipedia.org/wiki/Household_income_in_the_United...
Or maybe the numbers are heavily cherry-picked, averaged and grouped to doctor them into prosperous metrics that aren't experienced by the large portion of the population.
All that wealth at the top is tied up in investments. It is moving through the economy; it is not a stockpile of gold coins hidden in a mountain.
This shouldn't come as a surprise.
Those three sectors you list have tremendously invasive and widespread government interference, and it has only gotten worse with time.
This government interference inherently creates various types of economic inefficiencies (such as the loss of competition, corruption, wasteful bureaucracy, diverting resources to the unproductive users, etc.) that eventually result in severe distortions throughout the entire economy.
This isn't a problem just in the US, either. It's also happening in Canada, for example, and often to a far worse degree.
Anyone who proposes more government interference as the solution to these government-created problems will inherently be making the situation worse.
> "Even though energy prices have fallen considerably from their peaks, EU companies still face electricity prices that are 2-3 times those in the US. Natural gas prices paid are 4-5 times higher. This price gap is primarily driven by Europe’s lack of natural resources, but also by fundamental issues with our common energy market. Market rules prevent industries and households from capturing the full benefits of clean energy in their bills. High taxes and rents captured by financial traders raise energy costs for our economy."
These costs percolate through the rest of the European economy, affecting everything from data centers to manufacturing plants to household budgets and consumer spending. The only real long-term fix will be to construct an energy system not reliant on imports from the rest of the world, and while some progress is being made, it'll take decades of focused effort (with China in the lead) to get off fossil fuels entirely, with the established and politicially influential fossil fuel investor class fighting it every step of the way, as has been the case in the United States ever since the late 1970s.
Even though all countries are subject to the same EU rules, and follow the same underlying technical model, each country has its own laws and regulations, and separate implementations.
So even though our software does "the same thing" in each country, it's so different that a lot of code is per-country, over 50%.
So it's several times the job of doing it once.
However, that's the easy bit, it just takes more development time. The hard part is getting access to systems, coordinate testing and all those things which require national agencies to answer. And if they have to get an answer from some EU instance, well, it's usually blind luck if we get a response.
Just as an example, it took us over a year to get test access to a new system, because access was given centrally in EU, even though the endpoint was hosted nationally. And that was for the country where we managed to get access...
I get that US state laws differ, but from my understanding it's not nearly as different as it is between member countries in the EU.
And we're just doing B2B, which I assume is easy mode.
I just don't see how we can compete when at best you can access a fraction of the users without a nightmare of red tape and whatnot.
Easy, yes, but expensive for the business and its customers. It's a silly way to do things, but it's hard to see an alternative without member states giving up massive amounts of sovereignty.
Why is this a bad thing?
While there are not many examples of employers doing it, but you will notice a pattern that many tiny innovations are born when people are unemployed or self-employed ;)
E.g. making sure all military purchases are done centrally (aka EU army).
All the text about GDP, R&D and AI is just window dressing for this goal.
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The summary on page 2 give the reasons: 1) Lack of focus (regulatory burdens + single market not implemented fully), 2) (military) spending power not made centrally, 3) policies are too cordinated and should be set top-down instead for quicker decisions.
The details on page 11 argue: 1) energy prices too high (doesn't specify why this is important in high-tech production and if this is a problem for all the datacenters in EU, just states it as a fact) 2) "pipeline from innovation to commercialisation" doesn't work 3) reduce supply line dependency from countries outside EU.
Page 12 says it almost directly: "To move forward, Europe must act as a Union in a way it never has before". I.e. EU should no longer be a union of countries but be more like union of states, likely even less power than the states in the US.
Page 21 (and 27-30) talks about AI as a silver bullet that will magically improve car production etc.
While it talks about reducing regulatory burden, it completely overlooks how difficult it is to find out what laws applies to a given area. Lack of transparency is a huge overhead.
It also thinks that patents and revenue sharing with researches will increase innovation while completely ignoring how research is hampered by "publish or perish".
It should talk about how to get Germany to invest in better internet connections for homes and how to modernize hospitals etc so the no longer use FAX machines.
Whether this is intentional by the document's authors or not doesn't matter. The outcome is likely more undemocratic centralization of power, forcing policies people do not want under the guise of competitive efficiency.
You could say it's better than rallying people against an inexistent threat. Besides, you could also argue that Europeans do not necessarily want to be more competitive.
While the relative benefits of a large market and (relative) peace are a consensus, the rest of the European project is opaque at best and only reflects the aspirations of a few people living in a bubble.
Personally I’d like to see each do more of the other. But would that hamper the thing they’re doing better at? If America regulates more will there necessarily be less innovation?
For example, there are a number of bills in the CA legislature aimed at regulating the gen ai. I know that if CA makes these things illegal, they’ll just move to jurisdiction where it’s not.
Good regulation defends the commons/the rights of the many.
Good innovation creates a better standard of living for the many.
https://european-alternatives.eu/alternatives-to
edit: updated url to be more relevant/specific.
For a taste of what is in here, see e.g., page 26 of the first document:
>Regulatory barriers constrain growth in several ways. First, complex and costly procedures across fragmented national systems discourage inventors from
filing Intellectual Property Rights (IPRs), hindering young companies from leveraging the Single Market. Second, the EU’s regulatory stance towards tech companies hampers innovation: the EU now has around 100 tech-focused
lawsxi and over 270 regulators active in digital networks across all Member States. Many EU laws take a precautionary approach, dictating specific business practices ex ante to avert potential risks ex post. For example, the AI
Act imposes additional regulatory requirements on general purpose AI models that exceed a pre-defined threshold of computational power – a threshold which some state-of-the-art models already exceed. Third, digital companies are deterred from doing business across the EU via subsidiaries, as they face heterogeneous requirements, a proliferation of regulatory agencies and “gold plating” of EU legislation by national authorities. Fourth, limitations on data storing and processing create high compliance costs and hinder the creation of large, integrated data sets for training AI models. This fragmentation puts EU companies at a disadvantage relative to the US, which relies on the private sector to build vast data sets, and China, which can leverage its central institutions for data aggregation. This problem is compounded by EU competition enforcement possibly inhibiting intra-industry cooperation. Finally, multiple different national rules in public procurement generate high ongoing costs for cloud providers. The net effect of this burden of regulation is that only larger companies – which are often non-EU based – have the financial capacity and incentive to bear the costs of complying. Young innovative tech companies may choose not to operate in the EU at all.
Which is kind of a disaster for at least GDPR - depending on the country, the enforcement and interpretation varies wildly and the lack of central authority is a (common) issue for these kind of directives.
I fail to see why it is a bad thing. We need to curb CO2 emissions which, in some wya or another, implies consuming less energy. Limiting the growth would certainly beneficial and would allow us to transition to world where growth is less central.
First page of the foreword:
> If Europe cannot become more productive, we will be forced to choose. We will not be able to become, at once, a leader in new technologies, a beacon of climate responsibility and an independent player on the world stage. We will not be able to finance our social model. We will have to scale back some, if not all, of our ambitions. This is an existential challenge. Europe’s fundamental values are prosperity, equity, freedom, peace and democracy in a sustainable environment. The EU exists to ensure that Europeans can always benefit from these fundamental rights. If Europe can no longer provide them to its people – or has to trade off one against the other – it will have lost its reason for being. The only way to meet this challenge is to grow and become more productive, preserving our values of equity and social inclusion. And the only way to become more productive is for Europe to radically change.
The report also discusses how to do this while limiting CO2 emissions.
De-growth will most likely lead to more CO2 emitted per person. Only high technology can change this.
For example the governing Liberals have been pretty bad on the economic file and will most certainly lose the election next year, but the alternatives are: 1) A Russian-propaganda fuelled Conservative party led by an obsessive culture warrior who's never known life outside politics (a 45 year old who has been an MP for 20 years) 2) a leftist party that thinks more regulation and taxes is what we need.
The "Abundance Agenda" types just don't fit in anywhere, except perhaps as a small faction of the Liberals.
The “russian” accusation does not hold. It never has. It’s only a big mixup of ideas that can’t withstand being explained rationally. For example: CNN said about 5600 times in 2019 that they had “definitive proof” that Trump was a Russian asset. Still no such proof has been shown in public.
I recommend to re-study whether those are really russian-fueled, or whether they are not just good ideas that you don’t like because they question your lifestyle at first sight.
https://www.thepeoplespartyofcanada.ca/issues
It isn't perfect (their proposed immigration rate is far too high, for example), but unlike all of the other parties, at least what they propose would generally steer Canada in a much better direction than it has been going in under the Liberals and Conservatives.
Hasn't the second part always been the case? Is there any advantage to boosting raw GDP without also increasing GDP per capita?
For EU bureaucrats there sure is: we can afford more of them and they can have higher salaries.
For Europe to replicate that is as difficult/impossible as it is for the US to undo the gravitational pull of Asian manufacturing.
As for regulation, tech is grossly under-regulated in many ways. Europe is not wrong to try and regulate it, but it is true that if the US and China don't, you get left behind.
And then we can connect the dots: capital concentrates and does so in places with the fewest hurdles.
TL;DR: "Mario Draghi's new report on EU competitiveness doesn't mince words."
Read the actual doc.
Edit: just read the foreword (what would be called the “executive summary” in an American document). Seems like the Twitter thread describes that pretty well. And since the document authors know that the foreword is what most of the readers will read, that’s pretty indicative of their views.
As Europeans, we don't need Europe to compete or even out-compete other actors. We need strong will and operational effectiveness to foster social, economical, technological and ecological progresses all together.
That's a very short and simplistic way to put it. We didn't lose Russia as a supplier. We chose to largely cut our economic ties with a nation that commits war crimes on a massive scale and that threatens the security of Ukraine and other European nations.
> If Europe cannot become more productive, we will be forced to choose. We will not be able to become, at once, a leader in new technologies, a beacon of climate responsibility and an independent player on the world stage. We will not be able to finance our social model. We will have to scale back some, if not all, of our ambitions.
At some point you need to make sacrifices, you can't have everything. The very nature of politics is to trade-off ideals. The EU has been far too used to getting its own way on everything.
The joke is that the decarbonisation never really happened, it ended up being a "anywhere but here" policy. So all of the manufacturing prowess is lost, technology is greatly dependant on dictators wanting to destroy Europe and security sacrificed as a result. The irony is, the most energy efficient manufacturing method is not to ship materials multiple times around the planet, it's to create and manufacture close to home. Supermarkets know this best.
> The problem is not that Europe lacks ideas or ambition. We have many talented researchers and entrepreneurs filing patents. But innovation is blocked at the next stage: we are failing to translate innovation into commercialisation, and innovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations.
It is made as difficult as possible for companies to be innovative in Europe. Speaking on behalf of a UK company that wanted to trade with Europe, they made it so difficult we gave up. Now we trade in other markets and there is far less restrictions.
> As a result, many European entrepreneurs prefer to seek financing from US venture capitalists and scale up in the US market. Between 2008 and 2021, close to 30% of the “unicorns” founded in Europe – startups that went on the be valued over USD 1 billion – relocated their headquarters abroad, with the vast majority moving to the US.
In exactly this situation now. US venture capital is offering double with less strings.
The rest of this is definitely a read for tonight. The problem is that in order to fix all of this they should have started 10 years ago.
Private investment in the European Union is just a fraction of what's seen in the United States. Investment across country borders, especially in Software, is practically non-existent.
Businesses in Europe often prefer to work with local companies within their own country, so the "common market" doesn’t operate as seamlessly as it does in the US. You can't scale to as many users as you could in the US.
Hiring across country borders is still pretty rare, except when companies set up subsidiaries to tap into cheaper labor markets. Oh, and each country has it's own complicated labor code. Complicating matters further, some countries have insane job-protection law (i.e. France) making it less attractive to hire there to begin with. Contrast this with the United States where a company operating out of California can easily (or more easily) hire in Minneapolis or any other US state.
Regulations in the United States can also be quite a headache. The main difference is that in the EU, you’re dealing with multiple legislative environments, which adds another layer of complexity. It's not that the regulations themselves are so terrible, but the variety across countries makes it more complicated.
Taxes are significantly higher in the EU. For example, in Lithuania, 39.5% is deducted from your salary—this includes 20% income tax, 6.98% for mandatory health insurance, and 12.52% for social insurance and pensions. On top of that, there's a 21% value-added tax (VAT) on all purchases. So, if you earn €5,000 per month, you end up with just €2,390 to spend.
Utilities are also more expensive than in the United States. In Lithuania, I pay €0.25 per kWh for electricity. Gasoline costs €1.4 per liter, which is roughly $5.67 per gallon. For businesses, it is even worse; Lithuania is considered to be one of the cheaper countries.
Software-based products mainly took off in the United States, creating a large talent pool and a high level of maturity in the field. In contrast, in many EU countries, people either concentrated on industrial applications or only began focusing on software engineering in the past 20 years.
