Transatlantic Divergence: Why Europe Can't Catch Up with America

At the beginning of the millennium, the USA had no plan to economically surpass Europe. While the EU committed to creating the "most dynamic knowledge-based economy in the world" with the Lisbon Agenda 2000, the USA did not pursue a similar strategy. Nonetheless, the transatlantic difference in material outcomes has been evident for two decades. Europe's starting position was already worse. Only recently, through Joe Biden's protectionism, has Washington developed something akin to an economic vision. Draghi is partly criticized for wanting to adopt this. However, even a more candid approach following the American model would be difficult to implement. Cultural differences make it doubtful whether Europe's handicap can be overcome. The continent remains, after all, a different world. If Europe's problem is the inability to mimic Biden’s economic policies, this problem will persist. Sixty-seven years after the Treaty of Rome, the EU budget amounts to just 1 percent of the Union's total output. A substantial increase seems unlikely, as anti-European parties are gaining strength in many places. Neither national veto restrictions, as demanded by Draghi, nor similarities in decision-making with the USA or China are foreseeable. This is by no means a leadership failure; Europe is simply not a nation-state. If Europe's problem is burdensome administration, there are few technocratic solutions. Europeans have higher expectations of the welfare state than Americans. This cultural peculiarity—whether it originated from Catholic social teaching, feudal times, or decadence—is deeply ingrained. Leaders who oppose this risk civil unrest (e.g., Thatcher, Macron) or election defeats (e.g., Schröder). Brexit proponents who believe Britain is "Anglo-Saxon" in these matters should propose US levels of statutory leave and await the reaction. Another reason for Europe's relative lethargy is the incomplete internal market. There is a need for action and potential here. Draghi demonstrates strength in the integration of capital markets. Nonetheless, the challenge remains that America speaks a single language, which is not the case in Europe with its 27 member states. The cultural barriers to scaling a business are significantly greater than in the USA, which has been united longer than Germany or Italy, let alone the EU. In addition to these timeless differences, there are also new ones. In the 1990s, the average age in the USA was not much lower than in Europe. Since then, the gap has widened. The USA is also the largest producer of oil and natural gas worldwide, a luxury Europe has not enjoyed to the same extent, even before the shale gas boom in the USA. Considering all these advantages—mineral, demographic, linguistic—it is surprising that the USA's economic lead isn't even greater. This includes entrepreneurial enthusiasm, which appears to be far more pronounced in the USA. An American investor in Britain was surprised that announcing plans to start a company garners little esteem in graduation speeches. How technically solvable is this cultural problem? Perhaps it isn’t Europe's performance since the turn of the millennium that is the exception, but rather the decades before. What Draghi refers to as Europe’s "social model" was then shielded from more intense competition. China was only beginning to integrate into the world economy, and India liberalized in 1991. The American model, harder to undercut, might be better suited for the 21st century than for the 20th. This consideration is not resigned. Europe remains livable. It is telling that American elites frequently visit the continent, which is less often the case vice versa. European refusal to reform is inseparable from the quality of life here. Yet, it stands that Draghi's report was likely not the last. Such reports will continue to be praised, but their implementation prospects doubted. This polite skepticism reflects: A politically and culturally improbable plan is not a good plan.