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BRUSSELS ― The United States and the European Union have faced similar challenges over the past couple of decades, with the financial crash and the Covid pandemic wreaking economic havoc, taking years to recover from.
But of the two, it’s America that has found a way to surge ahead. When it comes to things that create wealth — science, innovation, even a higher birthrate — the U.S. is ahead by most metrics.
The EU is trying to change that. It hired the former European Central Bank chief Mario Draghi to deliver a report into all that was wrong and everything that needs to be done about it. A year and 400 pages later, the verdict was clear: The gap between the EU and U.S. is only growing. Drastic measures are called for.
We didn’t need him to tell us that. The numbers speak for themselves. Sure, Europe’s cities are unmatched, its architecture gorgeous, food and wine delicious ― and who doesn’t like taking all of August off the way many Europeans do? To say nothing of universal health care. But the economics don’t look good. POLITICO took a closer look at the numbers.
1. Americans are richer
Setting clichés about money and happiness aside, Americans are, on average, richer than Europeans. That’s been true for a long time, but the worrying thing for the EU is that the gap is getting wider. In 1990, U.S. gross domestic product (GDP) per capita was 16 percent higher than the eurozone’s. By 2023, the difference had doubled, to more than 30 percent.
2. Americans are wiser
More money means, all things being equal, more spending in science and research. But all things aren’t equal. In fact, the government and the private sector in the U.S. spend more proportionally of their already-larger GDP on them than Europe does. Figuring out how to mobilize more private money to accelerate European research and development is one of the big points of the Draghi report. As it is, “many European entrepreneurs prefer to seek financing from U.S. venture capitalists and scale up in the U.S. market,” it warned.
3. Americans are more creative
Measuring the pace of technological development isn’t easy. But looking at a few proxies, it does seem like the U.S. is ahead. Let’s be clear: Europeans are no slouches. But when it comes to the share of science and technology articles published in the top scientific journals, the U.S. comes out well ahead. Look out though, as China is on the rise — and now the EU is behind it too.
4. Americans have more energy
Sometimes you just get lucky. America’s luck has a name: the Permian basin. Millions of years ago, this chunk of territory stretching from Texas into New Mexico was under water and teeming with plant life. Now, all that accumulated organic matter has transformed into good ol’ Texas crude. It’s made the U.S. the world’s top producer of oil and natural gas. As a result, American industry benefits from power prices that are a third of those in Europe, giving a jolt to manufacturing.
5. Americans are more productive
Time is money. American workers consistently produce more per hour worked than Europeans do. For a while that gap was closing — but it’s widened once more. U.S. productivity can, in part, be explained by its fast adoption and development of digital technology, an area where Europe has lagged behind.
6. Americans have the biggest companies
Last year, California microchip designer Nvidia became the eighth American company worth more than $1 trillion. Contrast that with Europe, where in the past 50 years there hasn’t been one business that hit the €100 billion mark. It’s not a surprise that seven of those U.S. companies are in the tech sector (the one exception being Warren Buffett’s Berkshire Hathaway). Even zooming out a bit, the U.S. continues to dominate, with American firms taking 73 percent of the top 30 companies, and more than half of the top 500.
7. Americans have more kids
Historically, Europe’s growing labor force has boosted GDP growth — so the bloc’s falling population spells massive trouble. Europeans have few children, per mother, than Americans. That means less taxable revenue in the future, and a smaller working-age population relative to pensioners, who require social spending and health care. Even in the U.S., falling birth rates are causing alarm. But while Europe’s population is expected to peak at 453 million people in 2026, the U.S. population is only expected to peak sometime in the second half of the century, with its population also bolstered by migration flows.
