The land that ambition forgot (Europe)

[ergophobe]

At the start of the 21st century 41 of the world's 100 most valuable companies were based in Europe (including Britain and Switzerland but excluding Russia and Turkey). Today only 15 are (see chart 1).

https://www.economist.com/briefing/2021/06/05/once-a-corporate-heavyweight-europe-is-now-an-also-ran-can-it-recover-its-footing

But is that a metric worthy of attention?

[Brad]

I couldn't read the whole article - paywall, but my opinion is that the EU is terribly flawed.

1. the EU can't respond quickly to any kind of huge emergency, they are mired in bureaucracy which is accountable to nobody;
2. the purposeful erosion of national sovereignty of the member states is not going down well, especially in the old Warsaw Pact states that were occupied by the USSR for decades and are really touchy about being dictated to by foreigners once again.  The lurch to the nationalist right is being fed by reaction to the EU.
3. Even non-EU states like Switzerland are having a hard time being closely associated by treaties with the EU because the EU keeps pushing to erode Swiss sovereignty and the Swiss don't like that at all.
4. The EU is arrogant, but I've seen very little ability or talent to back that up.
5. The EU has no military power. As one EU member put it, the EU has the military backbone of a worm. The UK was their military power and spine and they are gone except for NATO.
6. The EU was so slow to act on covid vaccines, and then all they did was whine and try to blame the UK.
7. Any likely new members will simply drain EU coffers further as they will be too small and weak to be self sustaining.

I'll be surprised if the EU is still around in 10 years.

[ergophobe]

>>I'll be surprised if the EU is still around in 10 years.

I found an essay I wrote in 2005 on the occasion of the No vote on the EU constitution in France. I predicted the demise of the European Union. To be fair, I did not pick a date and was thinking of something on the order to 20-30 years. But I also made this stellar prediction:

It is no surprise that China, one of the least self-organizing economies, fears chaos above all else. But as the Chinese economy becomes more self-organizing, the "chaos question" will become irrelevant and only the power and privilege question will remain, at which point the Communist Party will be driven from power.

At last check, I'm quite wrong on both counts. That last prediction seems particularly naive at this point with support for democracy in retreat in nations all over the globe.

All that to say that I'm less convinced today than I was then that the EU is doomed to dissolve soon (or course it is doomed to dissolve, just like the US and country, federation and union in the world if you're patient enough). I don't think the EU will simply be gone in 10 years. I think it will just have less and less relevance. I think it will still exist in 50 years, but it's possible that everyone who lives outside of Brussels will have to be reminded what is they do in that building.

[BoL]

Anecdotally my boss has said how investing mentality is different in the UK, or Europe vs the USA particularly in tech.

Certainly plenty valuable tech companies in the US.

Maybe Neeva for instance, a Bing meta - $40 million, still not a search engine.

[ergophobe]

>> investing mentality

A Swiss friend who has been involved in startups in biotech in the US, Denmark and France at one point told me he lived in the US despite all its problems because the default investor bias in the US is "yes, let's try" and the default bias in Europe is, "no, it won't work."

Eventually, though, he decided that was not enough to counter the negatives of living in the US and moved back to CH.

And that's what I meant when I asked about using the right metric. In other words, if you could have 60 of the 100 biggest companies in the world, but you also have some of the highest levels of inequality in the OECD, parents constantly worried about school shootings (perhaps out of proportion to actual frequency, but how can you not think about it?) and an ex-president trying to subvert your democracy, is that a good tradeoff?

The European Union is one thing and Europe is another. The EU bureaucracy is no doubt part of the explanation, but so are European attitudes in general. But looking at it wholistically, I think that one metric of nubmer of the top-100 companies by market cap is a foolish measure of a society.

[Brad]

> 50 years

Heh.  Yeah it might linger like the Holy Roman Empire (neither Holy, Roman or an Empire).  Well said, look how long itg took Sears to finally die.  However, I'll stick within 10 years for other chunks to leave or Germany and France to quit talking to each other in a huff or something.

And yes, the EU is not the same as Europe, but it is all the parts of Europe that matter and that means you come under regulation from Brussels if you want to become a huge corporation.

I do think a lot is attitude.  The European mindset seems to be about making things - safe.  But wealth is in part a return on risk. If everybody plays it safe you are probably going to get, at best, just average middle of the road results.

[BoL]

https://berthub.eu/articles/posts/europes-software-problem/

[ergophobe]

>>berthub.eu

In earlier times, software (and communications) were far more interoperable than today.

This is huge - the internet has moved from open standards that allow interoperability to proprietary standards that create walled gardens that survive by rent-seeking and surveillance, and EU laws block companies from profiting that way. But it's also bad for the US. We end up with a greater share of those large cap companies, but they got that way by holding us and our data hostage.

[Brad]

Twitter meme: European vs American out of office

https://twitter.com/likaluca/status/1405616218661339146/photo/1