Don't Let the United States Become Like Europe

America must not fall for the idea that free markets are optional, or that we can preserve our economic hegemony while embracing autarky, protectionism, redistribution, and government dependency. We cannot allow ourselves to be convinced that prosperity is a permanent inheritance that requires little more than a fairer distribution to maintain or that we can dismantle the foundations of American strength and somehow still keep the strength itself.

Europe’s economic stagnation continues to show up across the data, from its share of global technology research and development to its sluggish GDP growth.

According to data analyzed by Michael A. Arouet, Europe’s share of global technology research and development has plummeted from 23 percent in 2005 to just eight percent, while the U.S. share has climbed from roughly 35-40 percent to 62 percent. China, meanwhile, has risen from virtually zero to 15 percent. 

This is eye-opening. Europe’s share of global tech R&D has collapsed from 23% in 2005 to just 8% today, while the US has climbed to 62% and China has risen from near zero to 15%. South Korea now outspends Germany, France, the UK, and Italy combined in tech R&D. Yep, you read that right. This is the predictable result of policy choices that systematically favor control and redistribution over growth. Layered regulation, data rules, AI restrictions, labor rigidities, and precautionary frameworks, raises the cost and slows the pace of turning ideas into products, forcing companies to spend scarce resources on compliance rather than experimentation. High taxation and expansive redistributive systems extract capital that would otherwise fund private R&D and risk-taking, while shrinking the after-tax reward for building something new and scaling it. The broader left-leaning mindset that prioritizes equality of outcome over dynamism treats entrepreneurial success as something to be managed, taxed, or shared rather than unleashed and rewarded. Places that protect the returns to innovation and keep barriers low continue to pull ahead, attracting talent and capital that Europe increasingly loses. Europe’s relative decline is the cumulative outcome of treating dynamism as a problem to be regulated rather than the engine of prosperity. Without a shift toward lighter rules, lower burdens on enterprise, and greater tolerance for unequal outcomes from unequal effort, the gap will keep widening, and Europe will become an open-air museum for wealthy Americans and Asians.

— Michael A. Arouet (@MichaelAArouet) October 28, 2026

That severe economic failure is further reflected in Europe’s technology sector, where one of its largest tech companies is Spotify, a music-streaming platform, rather than a company leading in medicine, defense, or computing. In artificial intelligence, Europe has been largely absent from the race to develop the technology, yet eager to assert itself in the debate over how to regulate it. Having failed to lead in innovation, it is offering the world its supposed expertise in restriction.

The same pattern appears in GDP per capita and economic output per hour worked, both of which have stagnated in countries once regarded as economic powerhouses, including the United Kingdom, Germany, France, and Italy.

One of the strangest and under-discussed phenomena in macro is how different GDP per capita and GDP per hour worked have evolved since 1990 in the US and Europe. https://t.co/puTFsFKkR9

— Benjamin Wolf 🇺🇦 (@benbawan) October 25, 2026

But Europe did not simply lose its economic strength. It willingly traded it away for the promise of government dependency.

The United States is one step away. Sure, we have not crushed our tech sector, and our redistribution and government programs are not as extensive. But all it takes is one ambitious administration to change that. Several analysts have argued that if California’s “one-time” billionaire wealth tax succeeds, we should expect some version on the Democrats'’ 2028 platform. Socialists within the Democrat Party are already pushing similarly crushing policies. 

But Republicans are not immune either. Many seem more concerned with who receives government benefits, immigrants or Americans, than with why we have those programs in the first place. The Trump administration itself has entertained government stakes in private companies, a step toward the state ownership and control of production associated with socialism. It has also pursued prescription-drug price controls and accused businesses, from oil and gas producers to Wall Street investment firms, of ripping off Americans or driving up housing costs. 

The United States cannot let economic grievance define its politics unless we are willing to end up like Europe. Yet we are well on our way in that direction, with argument after argument for socialism on one side of the political aisle and little willingness to champion free enterprise on the other.

The point of no return by Richard von Mises is worth reading: "A state becomes almost unreformable when the majority of the population is financially or structurally dependent on the state (state employees, civil servants, recipients of subsidies, grants, or transfer payments, etc.). As soon as those who net benefit from or are supported by the state outnumber those who do not, the system blocks reforms, since the majority votes out of self-interest for the preservation or expansion of state services." Does this sound familiar? Some European countries, France, Belgium, Finland are already way beyond that point, closely followed by Germany, Spain, Austria and Italy. It works for a while, as long as markets buy more sovereign debt at reasonable interest rates. The party ends when they stop though. For France, they stopped this month, Belgium will be next. The longer the socialist illusion persists, the more painful the inevitable cuts and adjustments will be. It’s pure arithmetic. Good luck Europe, good luck Euro. Buckle up, it won’t be pretty.

— Michael A. Arouet (@MichaelAArouet) October 25, 2026