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Donald Trump's national security strategy presents a misguided view of Europe. The document asserts that open-border policies and what it terms "woke" policies pose an grave threat to the continent's identity. Yet, this perspective rests on a fundamental misreading of the reality. The true challenge confronting the EU is not cultural but economic and technological backwardness.

A Glaring Growth Gap Separating the US and Europe

The data reveal a sobering picture. From 2008 and 2023, American economic output surged by 87%, while a mere 13.5% growth for the EU. During this time, European income per person dropped from 76.5% to just 50% of the US level. Remarkably, even Mississippi now has a greater average income than major European economies like France and Italy.

Currently, roughly half of the world’s 50 largest tech companies are American, while a mere four are European.

The Technological Deficit: A Critical Question

This widening disparity stems from stronger efficiency gains in the United States, fueled by technological innovation and higher total factor productivity. The landscape of world technology dominance is overwhelmingly American. Over the past five decades, 241 US firms have scaled into enterprises valued at more than ten billion dollars, versus just 14 in Europe.

This disparity prompts a vital question: As the competition for tomorrow's sectors like semiconductors, AI, and quantum computing, what is Europe positioned? Most analysts concede it is essentially a contest between two between the United States and China, with European nations entering at a clear handicap.

Root Causes of the Continent's Technological Lag

A number of key reasons account for this technological divide.

• Venture Capital: The United States has a far deeper and agile system for funding startups. The EU has yet to establish a genuine capital markets union, which limits the growth potential of emerging companies.
• Regulatory Fragmentation: Excessive and fragmented rules hinder Europe. A US startup can launch a service under a single regulatory framework to access a market of over 330 million. The European Union, despite a larger population, is split among twenty-seven different national regimes, creating significant internal barriers.
• Cultural Attitudes: Attitudes toward entrepreneurial failure vary greatly. In some EU nations, business failure was historically met with stigma, whereas in the US, it is often considered a valuable lesson.
• Military Investment: The United States enjoys a deeply integrated innovation pipeline linking defense and academia. Europe's long-term lack of spending in military capabilities has weakened its ability in pioneering research.

A Path Forward: Grounds for Cautious Optimism

In spite of these hurdles, one can find causes for optimism. Policymakers are growing more conscious of the severe threat and have started to advance substantial change. Notable analyses on European competitiveness and the single market point to the need for major changes.

Given appropriate incentives and rule changes, these assets might enable much higher degrees of commercial innovation.

The continent retains significant strengths: high-quality workforce, excellent schools and universities, and premier labs. Alongside a large internal market and substantial household savings, these elements could unleash a surge of venture creation.

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

An Inflection Point

Europe now faces a critical moment. To paraphrase a famous line, decline often happens "gradually and then suddenly". So far, Europe's slide in innovation has been gradual. But, without decisive action to tackle its deep-seated problems, today's gradual weakening could give way to a sudden and irreversible loss of world influence.