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Bizarre to me that "not having tech giants" is seen as a weakness, where I would think that "allowing giant (tech) monopolies" is the bad thing.
I feel like this will be an enternal debate on HN. I also think there’s no need to come up with a definitive answer. The EU and US have fundamentally different perspectives on a bunch of things that results in a very similar but mildly different society. Trying out different ideas is good. Variation is good.
> "not having tech giants" is seen as a weakness
It’s a second order weakness. The first order weakness is the relative lack of capital availability vs the United States which made it less likely to spawn EU native tech giants. The lack of tech giants means that there is a brain drain effect to the US or US tech giants functioning in Europe.
From an ethical perspective, tech monopolies aren't a very good idea. However, from a purely economics standpoint, tech giants make up a not insignificant part of the US's GDP.
Much of Europe sees businesses only as employment programs. They see the economy as managed or run by the state - it's the state that (believes it) drives the economy through employment law, tax rates, subsidies, "development programs", etc. Businesses are not there for serving the public, or making money, or advancing technology, or as free enterprise - but convenient as docile employment programs.
And for that purpose it makes sense to prefer giant corporations. It's easier to steer them, talk to them, model them, regulate them (you can talk bureaucrat to bureaucrat), twist their arm, occasionally get services or equipment from them.
And from that point of view, it's useless to try and favor startups: it will be years before just a tiny fraction of these are relevant in number of salaried people.
Even putting monopolies aside: tech isn’t a great industry to have in your community. Our former au pair went back to Germany and now has a great office job in logistics at a Dannon factory that makes baby formula. She lives in a small German town and there’s no highly paid engineers driving up the cost of everything. She never went to university but lots of career paths are open to her. At a tech company, you’d be a second class citizen without a degree (unless you were a genius programmer).
Apple was nowhere near a tech giant when the iPhone was introduced. Facebook was a student's project. Consumer tech innovation just doesn't happen in Europe, I think that's the real issue Europe should be tackling, given how influential consumer tech is.
The problem is that we are at the whim of tech giants anyway, they're just not ours. I.e. not having an European Google doesn't mean my phone is running an OS from some European non-giant, it's running Android. How is this not a weakness with respect to at least having a local alternative?
There are often complaints here that American programmers earn more than their counterparts in Europe and other continents. American tech giants pay well in the U.S.
Lacking some domestic equivalent, "not having tech giants" means that hundreds of billions of euros annually are flowing out of the region to benefit someone else instead of the citizens of that region. Forever.
Add to that the political and cultural soft power accrued and also brain drain that both come with that and, yeah, that does seem to be a pretty big weakness.
Some tech giants of the US are legitimate technology giants, others are just land grabbers that do something simple at scale(i.e. sharing status updates with peers).
EU lacks on the second one, also its the one that has all the controversy.
Yet, I wouldn't downplay the USA's hard tech capabilities and talent pool. IMHO the US is special, as it doesn't have the baggage from the history that spans thousands of years on the record.
EU is the old neighbourhood that once had all the cool new stuff but now is focused on preserving what they accumulated, life is good there but not much is happening. The USA is the newly built neighbourhood that got hip and trendy and has all the new cool stuff. China is this neighbourhood that once was great, lost its lure but lately it is up and coming with some of the coolest new stuff being there.
If Europe had 50 small companies doing what big tech does I don't think there would be a problem, but the problem is that Europe doesn't. So it gets a smaller slice of the economy and has to "import" social media, operating systems, mobile phones, etc.
It depends on whether you want to have a part in writing the rules, because guess what: The rules are always written by those in power, which in this case are mostly American tech megacorps.
If exerting tech leadership is among your goals, not having your own tech megacorps is a weakness.
I think "no tech giants" is really a shorthand for "all the tech we use is non-European".
All the websites, operating systems, devices, device components etc.
Another effect of this is that the workforce doesn't grow to gain (the tech) skills to build such products.
Tech giants, while getting worse in terms of lobbying etc. are still much more benign than the old-school industry giants we have in europe. The European Roundtable for Industry [1] is particularly disgusting. The bigcorp lawyers are essentially writing EU law…
[1] https://en.wikipedia.org/wiki/European_Round_Table_for_Indus...
That is well said, but there is a difference between good regulation on monopolies preventing tech giants versus structural problems preventing competitive high-scale companies from emerging.
The USA is going to have to deal with its monopoly problem, but the EU has to deal with the problems making them uncompetitive in the tech scene.
Your perspective makes sense to me if you live in Sweden's capital.
> where I would think that "allowing giant (tech) monopolies" is the bad thing
For what? Certainly not GDP.
"weaker university rankings", lol. The ETH Zurich is 7th in the ranking, and does that with tuition fees that are 1/10 of MIT...
Or do we want to talk about the > 1trillion student debt bubble that keeps US universities afloat?
I had to look this up. I'm doing my master's in computer science at ETH Zurich, where it is ranked #5 globally according to THE [1], and I pay 804 CHF (874 USD) per semester, i.e. 1608 CHF (1,748 USD) per year. I just had to check MIT's tuition.
> The median annual price paid by an undergraduate who received an MIT Scholarship was $12,715 in the 2022–2023 academic year. [2]
You're basically right, MIT (ranked #3) is almost eight times more expensive than ETH (ranked #5). To be clear though, ETH Zurich is in Switzerland, which is not in the EU.
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[1] https://www.timeshighereducation.com/world-university-rankin...
[2] https://mitadmissions.org/afford/cost-aid-basics/access-affo...
I’m sceptical about the claims here - seems like all of the growth is coming from Eastern Europe catching up.
True exponential growth requires that everyone get richer over time, all the time, even the rich.
It would be wonderful for the world if Europe could grow as rich as the States, so I hope the article is right.
The US's formula for growth is incredibly politically unstable though.
The rich getting richer (aka trickle down economics) is all fun and games until you have blood on the streets which is already happening in the US.
The EU formula (have the rich make their money where it's cheaper but still within the union) seems to be better on the long run but it won't be without significant pain either.
European's weakness in my opinion is the size of the state. The state can only grow with private sector growth, but when 50% of all spending in your economy is done by the government and most people are employed either directly or indirectly via the government organic growth (without debt) becomes challenging.
Additionally for government to be as large as it is Europe implements significantly higher tax rates than most of the world which results in consumers having less disposable income to spend on products that drive innovation like tech and private companies have less money to invest in new opportunities.
Further, Europe is probably the single most unattractive place to start a business from a regulatory perspective in addition to being very unattractive from a tax perspective. Unlike in the US or Dubai where entrepreneurs will travel to start businesses, in the UK you would typically look to do the opposite if possible and start your company somewhere else.
Nothing Im saying here is particularly controversial from an economics perspective, yet politically what I'm saying is highly controversial if you like in Western Europe. I find people here tend to view it as the government's job to fix economic issues through investment, interest rate manipulation and debt rather than allowing room for private sector to innovate and grow.
At this point the evidence of Europe's failed economics policy is clear, and given this you would think politicians would be looking to try something different. But we're not. The answer if anything is that the government just isn't big enough, there just isn't enough regulation, there just isn't enough debt and investment, there are too many damn companies making profit while we grow poorer!
My guess is that Europe's underperformance will continue for a while yet.
> Additionally for government to be as large as it is Europe implements significantly higher tax rates than most of the world
Significantly higher INCOME taxes.
Europe is quite friendly to capital with lower property taxes and capital gains taxes (~18.6% average).
> Unlike in the US or Dubai where entrepreneurs will travel to start businesses, in the UK you would typically look to do the opposite
What? The UK has a massive amount of immigration, and loads of startups and tech companies were started by Europeans moving to the UK TO START A BUISNESS. Like, you probably picked the worst country to make this claim about.
The math adds up when you notice a couple of things:
1. The EU added Bulgaria, Romania and other new member states in 2007 that expand the population and thus markets to 440 million in the EU vs 300-something in the US.
2. Government makes money from every transaction by its residents (and companies, but for per capita metrics, we look at residents)- income, employment, purchases, etc. The US grows by immigration - but fresh immigrants usually jump into employment in lower skilled / paid jobs. However the EU with its social policies enables more women to be in the workforce due to better childcare availability and hours and allows individuals to carry less savings because of low cost healthcare and other available safety nets. Poorer people with income buy a lot more staples, food and spend a lot more of their income, boosting the local economy. Wealthier middle class is more likely to save or spend money on bigger things- from real estate to investments to education, but that doesn’t trickle into the GDP as much (education is often non-profit and real estate has capital gains rates). When more people are employed in a country - you see a bigger rise to middle class and more spending per capita and income per capita.
To raise GDP per capita, just enable more childcare and support for employment of women. However, since the US government uses unemployment of only people who became recently unemployed and are still looking for jobs instead of all unemployed, to measure all unemployment they would irreversibly damage their performance in their favorite self-improving metric, and would have to do more for their citizens.
Yeah, this is entirely down to the explosive growth of low-GDP mostly-eastern-Europe[1] nations as they approach parity with the rest of the EU. The countries that made up the "EU" of 2000 have generally done poorer than the USA[2] in GDP per capita growth.
Great data here if you want to explore: https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location...
[1] And also Ireland, who have really done well the past two decades.
[2] The UK in particular really fell off its mark.
Is it possible that the relative strength of the EU per hour worked results from the fact that the low end jobs were made non-existent by regulation and people who work them in the US live off government handouts in the EU?
Low-end jobs aren’t non-existent. The EU still has people working at fast food joints. But the EU mandates paying those people a reasonable amount of money. The US is much more guilty of forcing people in low-end jobs to require government handouts despite being employed.
Anyone working in a full time job of any sort should be able to live without government assistance. The EU’s labour laws come much closer to that than American laws do.
It definitely affects these figures, because they are filtered out of the income statistics. Just one of the many ways figures are skewed.
Another is the low-paid jobs done without proper employee registration by immigrants.
Low end jobs definitely exist in EU, low end jobs are the stuff that run the society and were considered essential and were not allowed to stay at home during the pandemic.
Also, the jobs not captured by the "essential workers" also still exist in EU as the wealth scale of EU is very wide, with the lower end being significantly lower than the US lower end in terms of pay.
The big problem with this is that the EU has a lot of very different economies, at different levels of development, significant variations in policies at the national level. If you look at the breakdown in figure two west and north EU economies have been stagnant, the south has declined hugely, while the east has performed really well.
The entire article can basically summarized in one sentence
"Using PPP instead of USD to measure GDP, significantly shrinks the gap between the EU and the US"
Now, using USD has its problems, but PPP's primary purpose is living standard comparisons, and doesn't work as a national strength comparator.
When in a war, you are buying ammunition and weaponry with USD, not PPP. When there's a energy shock, you are importing oil and gas with USD, not PPP. When you are in a AI race, you are buying GPUs with USD, not PPP.
There'll be some people who argue that 'only living standards' matter. If the two simultaneous hot modern wars in Ukraine, Gaza, and soon Taiwan can't convince that hard power matters, then don't complain when the draft officer knocks on your door.
> The right metric for international comparisons is purchasing power parity (PPP)-adjusted output
MER is the right metric for most uses. But for comparing growth no currency conversion is needed, obviously.
In every period to 2023 from 1995 (1995-2023, 1996-2023, 1997-2023 etc) US GDP growth has exceeded EU GDP growth.
US output is 59% higher than in the year 2000. EU output is 36% higher. (Constant local currency data from the respective governments.)
'in terms of output per hour worked, some EU countries are as productive as the US'
A weakness of this metric is that you can raise it by having a high minimum wage and other policies that discourage the employment of less skilled workers, while reducing total income by shutting some people out of the labor market.
>weaker university rankings
Really? As far as I know, the most authoritative ranking in academia is the Shanghai ranking[0], where, apart from outliners in the US with gigabudgets, most of the top are made up of European universities. The top looks rather like that, except for a “bunch” of mega popular US universities, the rest are quite mediocre.
GDP per capita per hours worked is an interesting metric, and highlights a significant cultural difference between the US and the EU.
But for me it's a little disingenuous to start taking cherry picked slices of the EU and comparing them against the whole US. If you ignore Mississippi, Alabama, Louisiana, etc, or just focus on the Northeast corridor or West Coast...no region in the EU comes close in GDP terms.
>Because of the large role of foreign multinationals in Irish GDP, we do not include Ireland in intra-EU groups on panel B.
Same should be applied for Netherlands and Luxembourg.
> The EU has outperformed the US on per-capita output growth
Too bad we're demographically dying here in Europe, as in the population has stopped growing.
We're slowly becoming the 18th century Venice of the global world, i.e. pretty wealthy by the standards from back then but just waiting for a Napoleon to put it out of its geo-strategic irrelevance.
I would imagine that Europe's biggest problem is that most of its smartest people tend to work in the US or for US companies or universities.
why are all these discussion threads filled with whataboutism, I would wonder that having equal opportunities across the pond, in either direct, as a positive.
... and other stories we tell ourselves to sleep better
With of course Germany being dead last
What does the EU even do these days? Can't launch things to space, and gets salty that SpaceX is launching Sats for them, can't make shells for a war that literally at their doorstep and relies on countries literally half a world away to do basically everything for them (US and SK), barely has a navy that can patrol waters literally next to them and has to rely on the US for boats. Has fewer Carriers than single nations and the ones that the UK has are Diesel because they couldn't afford nuclear power.
What does the EU even do?