History has repeatedly shown that sustained economic development is only possible through strong and intense commitment, which does not tolerate distractions. Just like poorer countries, wealthy Europe does not grow because it is busy doing other things.
On February 12, European leaders met at an informal summit to address issues of competitiveness. The debate did not arise unexpectedly; it follows the Letta and Draghi Reports of 2024, two lucid and detailed studies on the Single Market and the future of European competitiveness.
There is no doubt that it is good to see leadership focused on such matters. But it is impossible to ignore the peculiarity of a summit of foxes encouraging the efficiency of the henhouse. One understands why the vixens are interested in the success of the poultry yard, but it is undeniable that they are the main obstacle to that competitiveness. If it were not for the gigantic mountain of demands, rules, regulations, institutions, impositions, fines, and taxes placed on companies, far beyond those of all competitors around the world, Europe would be much more competitive.
Competitiveness is a vast, complex, and profound subject. Even so, in most societies the diagnosis of these problems is easy to make: citizens are busy with other matters. In poorer countries, the concerns that overshadow progress are usually wars, corruption, isolation, adverse natural conditions, and obstacles in communication, education, and basic infrastructure. Under such conditions it is not difficult to explain underdevelopment. In richer regions, such as Europe, the priority issues may be more favorable, but they likewise sap economic creativity and efficiency.
One only needs to listen to our political debates to understand the reason for productive apathy within a prosperous and sophisticated system. What truly occupies Europeans is not initiative and competition, creativity and innovation. It is rights, guarantees, security, and benefits.
These are excellent aspirations; they simply do not generate, and may even hinder, economic dynamism.
A few examples make this clear. One of the major technological developments of the early decades of this century was social media. Europe did not produce any of these platforms, which are essentially American and Chinese, but it did produce the GDPR, the world’s most advanced data protection regulation. Now we are in the frantic race of artificial intelligence. Once again, the creative process is led by the two superpowers, while the old continent published the AI Act almost two years ago, carefully regulating something that no one yet truly knows what it will become.
At the February 12 summit, there was once again discussion of the proposal to create the “28th regime,” a legal status that, in several fields, would go beyond the rules of the 27 member states, creating “EU Inc.” companies operating under European rules. But this proposal adds, without eliminating, the thicket of diverse provisions that these supranational entities must still comply with in order to operate in specific countries.
The pattern repeats itself in areas as different as workers’ rights, environmental protection, consumer safety, pension benefits, and many other issues. No one could ever say that these concerns of the Union are spurious, exaggerated, or vicious, as happens in many cases with African, Asian, and American priorities; they simply have little or nothing to do with technological innovation, business competitiveness, and economic dynamism. On the contrary, they impose multiple, varied, and subtle barriers to those productive goals. History has repeatedly shown that sustained economic development is only possible through strong and intense commitment, which does not tolerate distractions. Just like poorer countries, wealthy Europe does not grow because it is busy doing other things.
In fact, the only reason European leaders are now so concerned with competitiveness has little to do with foresight or any recent devotion to dynamism. The issue is that they need funds to address their real priorities, from rearmament to regulation, from aging to the climate and digital transitions, and the only way to avoid explosive debt is to have fatter hens and better layers so they can carve them up and plunder them.
It may be said that, thanks to these concerns in other areas, the Union has achieved important gains in justice, the environment, and quality of life. After all, growth is merely a means, not an end. That may be entirely fair, but in that case we cannot be surprised by weak competitiveness. Europe is a much more pleasant place to live than the United States or China, something few would dispute. But despite all the reports and summits, it will be in those places, not here, that progress will be determined.
There is no doubt that European foxes are far more refined, well intentioned, and respectful than those of other regions. Moreover, living in a democratic henhouse, they claim to be merely following the wishes of the perches. But their carnivorous instincts are the main reason why the aviary cannot be competitive.
João César das Neves, Professor at CATÓLICA-LISBON