Is Europe going extinct or for sale?
In the past few weeks many people have posted and published comments on the Draghi report on Europe’s competitiveness (lack thereof).
I merely navigate the global economic waters for my own purposes (as an entrepreneur and business advisor). I like to believe I have my finger on the pulse in what happens in Europe with an American business mindset and perspective.
Finally, someone in the European establishment calls out reality and dares to use the word “extinction”, albeit with an Italian sense for drama… I believe it. I experience it every day.
I believe that success for a person, business, yes even country and union depends on 3 pillars… the Trilogy for Success.
Mindset…
Europe derives its wealth from colonialism, and it has instilled a mindset and culture of entitlement. America was a colony.
It is a generalization, but people do not want to work in Europe. They are bickering about retirement age, benefits, free this and free that.
Europeans like comfort, joie de vivre… enjoying life.
Europeans are rich thanks to inherited savings, but very little value is created.
Europeans like to go to Silicon Valley as if it is a tourist attraction, yet this small area south of San Francisco creates more value in a few months than major European countries in a decade.
The European social security system (albeit handled individually by the member states) is a time bomb: too many people benefiting, not enough people contributing. And when people can contribute, they often go to the US to benefit themselves. Why doesn’t Europe apply global taxation to its citizens like the US? European taxation doesn’t even exist, it is left to the member states.
People need to work more, longer and harder.
Finance
Draghi advocates public investments to lead by example and spearhead private investments.
Public investments will of course fuel GDP growth, but not sustainably nor structurally.
I am not a neo-liberalist; I do believe in government intervention. Every orchestra needs a director, even the free market economy, but when the director becomes bigger than the orchestra you have a problem.
If Europe wants / needs to grow, it needs to attract investors. Here in LA or New York European foreign investment agencies are fighting for dollars to come to their respective member state, but… and I have experienced this now several times myself… when you actually want to make an investment in Europe with an American investor, small or large, you are immediately confronted with skepticism and all the McDonalds stereotypes are thrown at you. At the the head Europe is welcoming foreign investors, but not on the field. Local mayors or other dignitaries look at you wearily as if you are there only to take, because that is exactly what they would do or have done…
Not to mention taxation, social laws, compliance, … try to open a European bank account as a US entity or person. Europe is a rabbit hole for investors.
Creative direction
Creative direction is not how you see yourself or how you want to be seen… it is managing how you are seen and experienced.
Ask 100 people throughout Europe what Europe does for them. Perhaps two economists will respond: a monetary union, or freedom of movement… but for most people it is about theater, rules and regulations.
In America Europe is considered a great place to spend your money. Enjoy and relax a bit. Everything is cheap. You get more value for your buck.
But I have rarely heard a US company say that they want to be in Paris or Amsterdam because of the skilled workforce or efficient capital markets. If they see something or someone, they will just buy them.
Europe is not going extinct; it is for sale. Draghi knows this. Most prime ministers and senior dignitaries know this, but local mayors, governors and bureaucrats sit on their small throne in total ignorance. They are the grassroots of Europe’s revival, but they are afraid of change!
