The Former President's Progressive Warning Overlooks Europe's True Danger: Economic Decline.

Donald Trump's security policy document offers a misguided view of the European Union. It claims that open-border policies and what it terms "progressive" policies pose an existential risk to European civilization. Yet, this argument rests on a serious misreading of the situation. The true danger facing the EU is not societal but economic and technological backwardness.

A Glaring Economic Divide Between Europe and the US

Statistics paint a stark contrast. From 2008 and 2023, American economic output grew by eighty-seven percent, compared to a mere thirteen and a half percent growth for the EU. During this period, European income per person dropped from over three-quarters to just 50% of the US level. Remarkably, even the poorest US state now boasts a greater average income than major European economies like Italy and France.

Today, roughly half of the global top fifty technology firms are US-based, while a mere four are from Europe.

The Innovation Shortfall: The Core Question

The growing disparity stems from superior productivity growth in the US, largely due to breakthroughs and higher total factor productivity. The scene of global tech leadership is decidedly US-centric. In the last fifty years, hundreds of American startups have grown into companies valued at more than $10bn, versus only fourteen in Europe.

This disparity raises a pressing issue: As the competition for future industries like semiconductors, AI, and fusion energy, what is the EU positioned? Most analysts agree it is largely a two-horse race involving the US and China, with Europe entering at a clear disadvantage.

Underlying Factors of Europe's Technological Lag

Several major reasons account for this innovation chasm.

• Financing Ecosystem: The US boasts a far deeper and agile network for financing new ventures. The EU still lacks a true unified investment market, a factor that caps the growth potential of new firms.
• Regulatory Fragmentation: Excessive and fragmented rules hamper Europe. A US startup can introduce a product under a single set of laws to access a market of over 330 million. The European Union, despite a larger population size, is split among 27 separate regimes, creating huge internal barriers.
• Mindset Differences: Attitudes toward entrepreneurial failure vary greatly. In some EU nations, business failure was once met with stigma, whereas in the US, it is often considered a badge of experience.
• Military Investment: The US benefits from a deeply integrated academic-military-industrial complex. The continent's chronic underinvestment in military capabilities has eroded its capacity for pioneering research.

The Road Ahead: Grounds for Cautious Optimism

In spite of these challenges, there are reasons for hope. Policymakers are increasingly aware of the existential challenge and have begun to advance serious reform. Key reports on EU competitiveness and the single market point to the need for major reforms.

With the right incentives and rule changes, these assets could support much higher levels of commercial innovation.

Europe still possesses considerable strengths: high-quality workforce, excellent schools and universities, and world-class labs. Coupled with a large internal market and high savings rates, these elements have the potential to trigger a surge of investment and entrepreneurship.

Crucially, even if the EU does not become the leader in developing next-generation technologies, it can still dramatically boost economic output by implementing and tailoring innovations from elsewhere.

An Inflection Point

Europe now stands at a decisive moment. To paraphrase a famous line, economic erosion often happens "slowly, then all at once". So far, Europe's technological decline has been gradual. However, if it fails to take decisive action to tackle its deep-seated problems, today's gradual weakening could give way to a rapid and permanent decline in world influence.