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Donald Trump's national security strategy presents a misguided view of Europe. It claims that open-border policies and what it terms "progressive" agendas represent an grave risk to European civilization. However, this argument is based on a fundamental misreading of the situation. The true danger confronting Europe is not societal but economic and technological backwardness.

A Glaring Growth Gap Between the US and Europe

Statistics reveal a sobering picture. Between 2008 and 2023, US GDP grew by 87%, while a paltry thirteen and a half percent growth for the EU. During this time, EU GDP per capita fell from over three-quarters to just 50% of the US level. Remarkably, even Mississippi now boasts a higher per capita income than several leading European economies like France and Italy.

Currently, about 50% of the global top fifty technology firms are American, while only four are from Europe.

The Technological Deficit: The Core Question

The growing disparity is driven by stronger productivity growth in the United States, largely due to technological innovation and better use of resources. The landscape of global tech dominance is overwhelmingly US-centric. In the last five decades, 241 US firms have grown into enterprises valued at over ten billion dollars, versus just 14 in Europe.

This disparity prompts a pressing question: In the race for future industries like semiconductors, AI, and fusion energy, where does Europe stand? Experts widely agree it is largely a contest between two involving the United States and China, with Europe entering at a significant handicap.

Root Causes of Europe's Technological Lag

A number of key factors explain this technological divide.

• Financing Ecosystem: The US boasts a much more robust and agile system for financing new ventures. Europe has yet to establish a genuine unified investment market, which caps the growth potential of new firms.
• Regulatory Fragmentation: Excessive and fragmented regulation hamper Europe. A US startup can introduce a product under a single regulatory framework to access a consumer base of over 330 million. The EU, despite a larger population size, is split among 27 separate systems, creating huge market obstacles.
• Mindset Differences: Attitudes toward risk-taking differ sharply. In parts of Europe, business failure was historically viewed with stigma, whereas in the US, it is often considered a badge of experience.
• Defense Spending: The US benefits from a deeply integrated innovation pipeline linking defense and academia. The continent's chronic underinvestment in military capabilities has eroded its ability in breakthrough innovation.

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 begun to propose serious reform. Notable reports on European competitiveness and the internal market point to the necessity of major changes.

With the right incentives and rule changes, these assets could support far greater degrees of commercial innovation.

The continent retains significant advantages: high-quality human capital, top-tier schools and universities, and premier labs. Alongside a vast domestic consumer base and substantial household savings, these elements have the potential to unleash a surge of investment and entrepreneurship.

Crucially, even if Europe does not take the lead in creating cutting-edge technologies, it can still dramatically increase productivity by adopting and adapting innovations from other regions.

A Critical Juncture

The European Union now stands at a critical moment. To paraphrase a famous line, economic erosion often happens "gradually and then suddenly". So far, Europe's technological decline has been gradual. However, without bold steps to address its deep-seated problems, today's gradual weakening could turn into a sudden and irreversible decline in world influence.