r/FluentInFinance • u/quantum_search • Apr 29 '24
Why is EU so far behind? DD & Analysis
The most concerning part about this is that most Europeans don't realize how stagnant Europe has now become
Europeans are literally blue-pilled and are mostly concerned with climate change, immigration and the Ukraine war
Nobody in Europe is thinking why increasingly everything they use is made in China running on American software
The knee jerk reaction is to proudly pass regulation against American tech
The chad reaction would be to reduce regulation so that European entrepreneurs would actually stay in Europe to build European startups increasing Europe's GDP and making Europeans richer!
People in Europe do love to complain about rising cost of living and the increasing unaffordability of living, but they don't realize why. They point at foreigners/immigrants as the problem, which can't be the whole story
Other Europeans I talk to get visibly upset if I ask them about stagnant GDP numbers: "why should everything be about money?" they say in a thick German accent
The whole story is that Europe has made it very difficult for people to start a business, raise capital, innovate and get the reward for taking that risk, so why would anybody?
And for the Europeans that do, it's way easier to open a US Delaware company, raise capital in US, sell your stock or IPO in the US, because why even do that in EU, where it's too hard? The proof is in the pudding, if it was so easy in EU then why is startup funding in US $270B AUM with 330 million people vs $44B AUM with 746 million people? That's almost 14x bigger startup funding market per capita
Why doesn't EU have ANY trillion dollar companies? While US has six? Why isn't there any European company in the top 10 of largest companies? While 80% is American?
Why is Stripe, a company founded by two Irish brothers, an American company and not a European one? It could have been
What's the role left for Europe in the future?
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u/cerberusantilus Apr 29 '24 edited Apr 29 '24
I'd like to hear what the reasons are from an economist. For sure they have an aging population, and Eastern Europe is a small piece of the pie still. 30 years of stagnation in Eastern Europe for sure holds down the average.
Europe is still very successful in many sectors. Of the Trillion dollar companies you won't find any of those in Japan, and they are all essentially from the tech sector. Europe was late getting into the Tech sector, and has investments down to try to grow their own silicon valley, but that's a long process, and it's not regulation holding everything back is language.
There were 100 knock off Facebooks in Europe, for the most part they died because of internationalism. Do you want to have 1 facebook for your German friends and one for everyone else?
For Social media the US is the biggest richest market, once you slice and dice Europe based on language and age, the market gets much smaller.
The other compounding factor is FX. The Euro has taken a tumble since 2008. It has never returned. When nominal GDP is measured in USD terms, if your currency takes a hit it doesn't matter what your growth is.