Why Europe's Economy Could Catch Up With America

The EU has long been known for its worse economy, at least when compared to the US. In this video, we're taking a look at how the EU could catch up to the US, and how Mario Draghi's recent suggestions could be implemented EU-wide.

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00:00 - Introduction
01:20 - Productivity
04:52 - Industrial Policy
06:13 - Big Companies
07:55 - Sponsored Content

[krombopulos_michael]

The EU doesn't need to nurture big companies, it needs to create an environment where small companies are easier to set up and grow. Europe has lots of big companies, but they're all dinosaurs who are generally protected by subsidies and regulation because they're seen as so important to domestic economies.

[heinkle]

Won’t be the UK catching up - we still haven’t caught up with ourselves from 2008

[SilvesterMiles-yj]

Okay, so I’ve been sitting on a $56k emergency fund for what feels like an eternity. No idea where to start with investing. But hey, maybe Europe’s economy catching up with America is a good sign, right? Hoping to finally put my money to work, just need a good headstart. Any tips?

[uku]

Title: "Why Europe's Economy Could Catch Up With America"
Content: Why America is doing so much better than Europe

[BirdEgg]

3:57 What a terrible point. Every single example does not convey anything useful.

The productivity of Norway is tightly linked with oil. In 2014 we see the dip, and as such in 2022 they had incredible growth. Actual productivity excluding oil is similar to that of Sweden.

According to that graph, Finland hasn't reached 2005-levels of productivity. Hardly something you can call growth.

Germany is one example where there is mild productivity growth, but nothing you'd call extraordinary, knowing Germany's notorious bureaucracy.

[CedricJustice]

As an American in Europe, I'm sceptical. Sure, the numbers say X and Y: that productivity isn't as good, yadda yadda. But, my sceptical commentary has to do with the "so what" of economies.
Europe is much better at balancing work/life balance, ecology, and, as you mention, worker ownership.
Perhaps these things "drag" the numbers and metrics, but having better numbers at the expense of people's safety, health, and economic well being seems to be a reasonable trade off, to me.
Having paternity and maternity leave that is paid, public transit, etc etc etc just seems better.
I chose Europe for this reason.

[iamlaurenmoe]

The situation is worse in the United States, where our economy is struggling to survive like a flailing fish. The U.S. economy is truly in a very poor situation right now. As a result, it experiences convulsive spasms and desperately tries to develop in whatever manner it can. Tricks, gimmicks, and rule changes are all attempts to boost the economy and keep it from collapsing, but they only provide short-term respite to people because inflation causes us to decline.

[logan-vy]

Europe has large companies, we dont need more of them. We need small businesses an innovation. Here in norway it's a nightmare to run and start a company, it's like the government wants you to only work for the established large companies they are ok with. It's a suffocation of innovation and competition, not a lack of major companies.

[TempusWasTaken]

A very effective long term solution to the EU's problems would be copying Estonia's digitalisation programs with respect to businesses and more importantly, bureaucracy. Might be costly in the short term but in the long term, it very quickly pays itself back even without investment because of the sheer cost of paper-based bureaucracy. There's a reason Estonia is currently the most business friendly country in the world and has equivalent public services and institutions to the rest of Europe whilst having a flat tax rate which is lower than even the US (and of course, low taxes wouldn't need to be pursued, the current tax bands could be maintained whilst digitalising, leading to major budgetary surplus which could then be used for historic state investment or to start properly getting rid of a country's national debt rather than merely maintaining it).

[antoinebaldur]

The tariffs that Brussels wants to introduce cannot be called “protectionism”, because even the chairman of the WTO agrees with these measures. It is legal to impose customs duties on a company that benefits from illegal subsidies.

[HessionDrasha]

Austerity really screwed Europe over, after 2008.

[DelrioCobaj]

$450k Returns the Lord is my saviour in times of my need!!!

[FredSveru.]

It is impossible because The EU already regulates new technologies like AI and electric cars from other countries without having created or manufactured any company of those in the continent.

[jontalbot]

The problem with this is it misunderstands the fundamental nature of the EU. It’s essentially a trading bloc so that the prescriptions here are really matters for national governments

[Ornitholestes]

Why should we? We already have higher life expectancy, lower infant mortality, better access to education and healthcare, lower crime rates, better social safety nets, better working and living conditions, more workers' rights, better public infrastructure, and all that despite lower economic "productivity". Clearly GDP is not that relevant to, and at some point even detrimental to, indices that actually measure people's quality of life.

[mjr_schneider]

It's hilarious how Americans are convinced their economy is doing badly when the entire rest of the world wishes their economies were doing half as well.

[shintsu]

Yep i worked at multiple companies in my career, and scaling outside the country is hard
Infrastructure is different for example the way phone numbers postal codes and such are working is different each country souds trivial. but if you need to implement a different way to validate communicate and check for all these differences takes time and effort you want to rather spend in improving the product instead.
Culture is different in each country so sales and marketing that works in country A will not work in country B or event the culture in general results that the prodcut is maybe to modern/not relevant for that country making it less worthwhile to scale.
Rules and regulations is also a pain, since its hard enough to be complient and keep your product up to date on the rules of your own country. then handling the exeptions for the other countries and understanding them. Only bigger companies has the resources to hire profesional people that can handle these compliancy issues.
Change of rules and regulations is also a pain i have seen and still see a lot of time and effort is spend in updating/changing the product due to regulations changing every time. While good for consumers some new regulations require 40%+ of development capacity to update the system to comply to the new rules what is basicly a big deal holding growth and spending it in just avoiding not following the rules. There are more problems but these are some examples where small and mid sized companies deal with resulting in them not able to grow into larger companies since the investment and effort is to big to overcome.

[ricequackers]

I watched a video by a Finnish tech startup founder very recently, explaining why tech salaries are so much higher in the US than Europe. As he succinctly put it, "the US innovates in technology, Europe innovates in tax and regulation". European industrial policy also favours large established corporations instead of new startups. The exception to this norm is Switzerland, and the results in economic metrics are plain to see.

Deregulate, cut taxes and make it worthwhile for entrepreneurs to set up shop in a European country and they'll do so.

[ericpoeperic]

Europe can't maintain that level of investment

[jcliu]

I think the problem is that there’s no “European economy” as such. Companies trade goods across national borders, but not services and certainly not innovative talent. You can see this even in the identity of CEOs. Germans would riot if VW hired a French CEO (what do they know about engineering?), and the French would laugh you out of the room if you proposed a German CEO of LVMH. Europeans say they want tech champions capable of competing with US, but are they really prepared to see the commanding heights of their economies controlled by executives born in Taiwan (Nvidia), India (Microsoft, Google), South Africa (Tesla, SpaceX)? European companies are less effectively (i.e. ruthlessly) managed b/c the pull of national identities in what’s supposed to be a single market is the world’s most wasteful DEI program.

The disparity is even greater when you consider the equivalent of Germany, France, Denmark, etc isn’t America as a whole, but US states. Does anyone think Silicon Valley would’ve conquered the world if the unspoken assumption is only native-born Californians should be in charge?

Of course, some small countries can do just fine in the modern global economy while insuring control and capital remains in local hands. See Taiwan, Israel, South Korea. The problem for Europe is it has the worst of both worlds: Whereas TSMC and Samsung are practically intertwined with government as an arm of state policy, members of the EU gave up control of their own trade, currency, and regulatory powers with none of the benefits of scale. (West Virginia is surely a loser in the 21c American economy, but that’s cushioned by all the automatic fiscal transfers its residents receive from the tax dollars of Californians, New Yorkers, and Texans.)