-
@ Martin Enlund
2025-03-09 15:22:43
Last fall, Italian economist Mario Draghi, former head of the European Central Bank (ECB), published his 400-page report on Europe's (actually the EU's) competitiveness. Draghi's verdict was harsh: Europe is facing an "existential challenge." It's hard to disagree. While the EU is launching new regulations on plastic corks and [hiding text messages from the public](https://en.wikipedia.org/wiki/Pfizergate), Elon Musk is changing the world with groundbreaking innovations in the automotive, robotics, and space industries.
**At the same time that the EU is not only preventing people from trying new things but also preventing them from even thinking about trying, Musk's space company SpaceX is capturing massive star rockets with "chopstick grips".** While the EU is stuck in an ocean of meaningless bureaucratic details, Musk is engaged in a process of constant testing and improvement, reminiscent of the natural course of decentralized systems.
The EU's meager economic growth can be compared to a ticking time bomb that threatens to explode in all of our faces. Disposable incomes have increased nearly twice as much in the US compared to the EU since 2000, and this is a difference that is noticeable not only in our standard of living but also in our opportunities for leisure time. As the late economist Robert Lucas said, "Once you start thinking about growth, it's hard to think about anything else." **Perhaps the best thing that can be said about the report is that its abundance of words, numbers, and images underscores how bad things are.** And perhaps it has therefore become impossible for the EU's leaders to continue ignoring the union's problems.
#### Like giving a shark responsibility for beach safety
However, asking a former EU president to investigate and propose changes is like giving a shark responsibility for beach safety. Among other things, he proposes larger allocations for research and development, even though the EU already spends more than the US as a percentage of GDP - it's thus impossible for this to be the problem. **It comes as no surprise that the proposals are about more centralization, harmonization, and streamlining - i.e., continuing in the same old tracks**. While Musk seems to have an intuitive understanding of how knowledge arises through [real-world experiments](https://www.affarsvarlden.se/kronika/enlund-globalismen-ar-den-riktiga-pandemin-ge-oss-mer-av-naringslivets-superkraft) , what is proposed here is more of the administrative bureaucracy's preconceived five-year plans. The bureaucracy is to be given free rein, and the nations are to be pushed back - a repeat of a theme we know all too well. **Centralization undermines real knowledge growth, which may explain why the EU is falling behind.**
#### A venomous snake that is ignored
**Rent-seeking is like a venomous snake that slithers through the EU's corridors, but the concept is conspicuous by its absence in Draghi's report**. It is a well-known phenomenon where companies spend resources on influencing decision-makers to gain advantages instead of creating value. The EU bureaucracy has produced a total of 13,000 legislative acts since 2019 - more than four times as many as the US. How many of these have received an invisible stamp of approval from lobbyists? Economist Jeffrey Sachs has [warned](https://www.youtube.com/watch?v=Ls1j16bN8S0) that American lobbying in Brussels is so dominant that it affects all decision-making in the digital economy, which may be one of the EU's biggest problems. GDPR regulations, for example, are estimated to have reduced small tech companies' profits by [15%](https://x.com/sytaylor/status/1833460011491537138) (!).
#### Size is not everything
**Small businesses are the invisible heroes that contribute most to productivity and employment growth. These are being suffocated by the ECB's actions** and the constantly increasing and inefficient [regulatory mess](https://www.affarsvarlden.se/kronika/martin-enlund-regel-cirkusen-kostar-mycket-mer-an-den-smakar). The ECB's war on small banks hampers growth for small businesses because large banks prioritize large transactions. Big computers' algorithms cannot replace small banks' local knowledge. Harmful regulations and grandiose dreams lead to a loss of both knowledge and growth.
#### What should the end goal be?
Sweden's daily Dagens Industri's editorial page recently wrote that "Defeat is not an option" on the theme of green transition. It asked whether "free democracies or a Chinese dictatorship should lead the way." Large-scale industrial projects and plans can undoubtedly provide benefits. **But it's worth questioning whether Europe should really have the same end goal as China.**
During both the Renaissance and the Industrial Revolution, decentralized power structures played a crucial role. During the Renaissance, states and cities were relatively independent. Power was decentralized to princes, nobles, and merchants. The Church had an important role, but it was not as centralized as it would become. Florence, Venice, and Amsterdam could develop different scientific and artistic traditions. **When one region encountered problems, other regions could continue to develop and grow, and so on.** At that time - even if the concept did not exist - it seemed to be understood that the economy is a complex system of the second order. Or a computationally irreducible one, as Stephen Wolfram would have expressed it.
In the book "The Art of War," Chinese General Sun Tzu wrote that "He who chooses the battlefield first will win. He who lets his opponent choose the battlefield will lose." Instead of striving to play on China's (alleged) centralized battlefield, perhaps we Europeans should consider returning to our roots. Do away with the bureaucracy's heavy foot and give power back to the individual! Scrap the monster banks and create conditions for small local banks instead. Stop subsidizing American IT giants' data centers and give every European an AI in their own hand. **Forget the five-year plans and invest in decentralized economic experiments instead.** Does that sound radical?
The word "radical" comes from the Latin word for root, *radix* . The word used to have a positive connotation because it implied a willingness to go to the root of the problem or to return to one's roots.
More of us should dare to question the modern structures that brought us to today's sad situation. Roots are a plant's strength - without them, it cannot grow and flourish. So it is with Europe. **Our continent, which was once a thriving garden where ideas and innovations bloomed, needs to return to its roots to regain its former strength.** This may be exactly what is required.
Put simply: a more radical Europe.