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Allan's avatar

I think the fact that the EU has very aggressive antitrust and pro-privacy regulations and the fact that basically the only innovation to come from the EU's tech sector in recent years is making us click "Accept Cookies" are not unrelated.

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Geoffrey G's avatar

Writing as an American from Sweden, this essay strikes me as superficial, unsubstantiated, and just incorrect on its own terms.

Firstly, it misinterprets the reasons why the United States is uniquely successful in certain key areas (IT, domestic energy) as policy choices rather than just "not screwing up a lucky break." And it points the finger at European for dropping the ball when a lot of what they "did wrong" was just an issue of structural constraints and no-win dilemmas. And granting "the win" to Obama and Biden is granting them too much agency in this process. If anything, the policy choices that had more bearing on those successes in both Silicon Valley and Houston go back WAY further, to the first half of the 20th Century. And that subject deserves a closer examination from you here because Americans tend to think that tech, especially, is some new thing dreamt up by Steve Jobs and Bill Gates, instead of an industry that saw its inception prior to WWII (and scaled out largely because of the war).

But, whatever the origin story, the salient factor for American Big Tech's dominance today has less to do with entrepreneurial genius, government policy, or anything purposeful like that. It's just a matter of size: the United States has Silicon Valley because it, alone, is the world's only rich, single market of sufficient size for an industry that rewards network effects and clustering. Europe (or the EU/EEA) is a single market on paper, but it has structural barriers that create friction for developing scale in financing, talent pipelines, and go-to-market. I can tell you all sorts of anecdotal stories about this as a founder and employee for both American and European tech companies of every size, but just imagine what it's like for a London tech office (still the dominant European tech city even after Brexit) to recruit tech workers from even neighboring France (impossible to get working visas, language barriers, Brexit-driven administrative nightmares, etc.) and compare that to the pool of 330 million Americans that any US tech employer can draw to Silicon Valley or elsewhere without any of that. Germany managed to make a tech giant in SAP right around the time that Microsoft was incubating, but SAP is never going to be able to draw upon a huge, captive domestic market like its tech peers Microsoft, Oracle, or Google. Since IT hardware is simpler to export, you have a different story for Europe there: chipmaker ASML is certainly doing quite well for itself coming out of tiny Netherlands.

China and India are the only two other continent-sized countries with huge population that could scale like this, but both of them are still poor on a per-capita basis, retain significant internal barriers for business even within their own countries, and are extremely difficult to recruit foreign talent into. China has its Alibaba and India its Infosys, but they're likely never going to surpass their American competitors as long as the United States is still the only really big, really rich country.

Energy is an even more obvious area where the United States is just plain lucky. The oil boom started in Pennsylvania and America was the world's largest exporter until the 1970s and now again today. Europe (ex. Russia) basically doesn't have fossil fuels. Norway's production is enough to make Norwegians rich, but nowhere near enough to even feed Scandinavian energy demand, much less the entire EU's. Yes, some European countries could have joined the fracking boom (and you neglected to mention how some like Poland, Romania, and Denmark actually did), but that wouldn't have moved the needle significantly. Europe just doesn't have this option on the table, whatever their qualms. Again, structural factors matter: Sweden transitioned away from oil in the 1970s not for environmental reasons, but purely for pragmatic ones after the various oil crises of the decade threatened to derail their heavily industrialized economy that lacked domestic fossil fuel access. The Swedes quickly built out hydropower and nuclear power at a fast clip because that's what Sweden could do. For France, lacking hydropower, their answer was the world's biggest concentration of nuclear power plants. Germany could have chosen to take after France, but they instead fell back on that Ol' Ruhr Valley Reliable: coal. A fateful decision that continues to haunt them. The UK and Denmark have now been opting for wind because that's what they have a lot of, just like Spain and Italy are going big on solar, and Norway and Sweden continue to enjoy their geographic gift of abundant hydropower. Iceland, famously, leverages its geothermal resources to not only be largely energy-independent, but also to dominate the aluminum smelting market with some of the cheapest electricity and industrial heat in the world.

Aside from Germany and their peculiar and paradoxical anti-nuke Green politics and soft-on-Russia Ostpolitik, I don't see a lot of evidence of Europeans lacking pragmatism or making stupid decisions on energy. Yes, I absolutely would have loved to see the EU and ECB itself take a bigger role in facilitating the green transition and maybe even resolving some of the cost and scaling issues of nuclear power with some subsidies, but that's the weakness of a contested federal system, isn't it? We have had the same issue in the US for decades until "Bidenomics" (which, as you have written about, isn't an unmitigated success yet). Mostly I just see Europeans making pretty good choices within some major structural constraints.

But that's not a story that Americans like to hear. Europe is a dark mirror for Americans, either a Utopia or a Dystopia! A shining exemplar or a miserable failure! Maybe both...? But couldn't it be true that Europe isn't perfect but is just... doing fine? And that it's not just a "good place to vacation," but also a great place to live?

And that Europe is arguably even better for the median European than the United States is for the median American, by most objective standards? (Glove thrown!)

You mention (and wave off) the embarrassing issues of the Great American Life Expectancy Deficit, where Europe is clearly wiping the floor with the United States. But you could have mentioned all sorts of other quality-of-life factors, too, even the ones that Americans pride themselves on. We all know that Europeans have it made when it comes to vacation time, paternity leave, healthcare access, public transit, unionization and working conditions, walkable cities, delicious food, non-toxic environment, and joie de vivre-type stuff like that. But what about all the materialist pleasures that Americans ostensibly value? The country where you can get hella rich, even if it kills you, bro! Though Americans do make higher salaries and pay lower taxes, they actually have a much lower household savings rate than Europeans. Which is pretty obvious when you account for all the things that those (slightly) higher salaries are supposed to pay for on the (crazy inflated) private market: a (big, expensive) car for every adult, five-figures in daycare for every child under age 5, thousands out-of-pocket for healthcare (with "good" insurance!), ruinous costs for eldercare for all those Boomers, etc. Stuff that is covered in the (slightly higher) taxes for most Europeans. Also, we tend to assume that workaholic Americans are always working, but it turns out that they're not: the US also has much a lower labor participation rate than "lazy" Europe. A shocking and under-discussed issue that is related to the sorry state of our safety net and healthcare "system." Americans also don't own their homes at the same rate as Europeans, and their experience as renters is far worse than their European peers. They have higher poverty, too, both in relative and absolute terms. So, it turns out that we Americans are not actually so rich, in practice, but we will certainly die tryin!

That type of stuff might not register to well-compensated Substack columnists who experience Europe as tourists, but it is exactly the kind of stuff you should be interrogating when making statements about how the US "beat Europe." This isn't to say that the US is a dystopia or miserable failure, either. Both places house among the luckiest humans alive or dead, living a lifestyle unimaginably abundant for most people who have ever lived. But, in terms of making that abundant life abundant for a wider swath of the population than only the top 20%, Europe still has a lot to teach Americans.

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