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Is Europe Slipping Behind?


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January 24, 2006

Is Europe Slipping Behind?

Michael Mandel

Carl Bildt, the former prime minister of Sweden, has his own blog at http://bildt.blogspot.com/. He writes on European technological progress:

Although rarely reflected in the main media, there is a new debate across Europe on the necessity of doing more in the fields of research, development and higher education.

The brutal fact is that we are slipping behind in particular the United States.

It's not that our brains are inferior. That's unlikely - particular in view of the fact that some of the most stellar scientific advances in America have been done by men and women coming from Europe.

In the past they were fleeing from war and persecution in Europe. Hopefully those days are gone.

Now they are fleeing to the better resources and rewards in the United States. Before it was an issue of survival - now it's often a question of money.

02:03 PM

Growth

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Europe is certainly slipping behind. In fact, it is surprising that it held out this long.

1) Not only has America attracted many bright Europeans who were fleeing persecution and are now pursuing money, but the socialist system in Europe greatly hampers meritocracy. There are a lot more British and French in Silicon Valley than Americans going to Europe to start new companies.

2) The US also attracts most of the brightest Indians and Chinese. The debate in India and China among new graduates is whether to stay home or go to the US, but rarely, if ever, to go to Europe.

The only immigrants that Europe attracts large numbers of, are Arabs, which, unfortunately, do not contribute as positively to the knowledge-based economy.

Posted by: Kartik at January 24, 2006 05:11 PM

As I see it, over the next twenty years Europe and America are not going to be the centers of cutting edge development in tech. It will come from Asia, with Korea and Japan leading the rest of Asian tech development.

Most of Asia can not now, hold these very tech advancements at that cutting edge, but we, Europe and America can. And it will be sometime if they ever do, for the Asian nations infrastructure and consumers to gain the footing to use that edge.

I say don't waist our effort in a head to head r&d development race. We need to see "using" world wide innovation efforts that are in the market, for our economic development. Don't be the next car company, going head to head with the world of r&d development.

It is flat world, remember to use every advantage in cost. So we, Europe and America, need to take the ride on that cutting edge work they do, and find the social and economic advantages that come from that tech development.

That sounds new age but it is a economic fact, and I think is now being missed by many. Working with that fact, we may remove many extra efforts and costs that are not needed in our own economic and social development.

Posted by: Mike Reardon at January 24, 2006 05:24 PM

"Large scale strategic actions are called for in key sectors to provide an environment in which supply-side measures for research investment can be combined with the process of creating a demand and a market"...this is just more top-down thinking. As long as European leadership continues to think this way, the problem will persist.

Posted by: David Foster at January 24, 2006 06:23 PM

The prior and superior question is "how long will the necessary capital remain in the United States?" ... or, at least, how long will it remain at the discretion of firms regarded as American firms? As was correctly pointed out above, the World's best and brightest continue to stream to the United States ... but not because we're swell and everyone else stinks. They come because the perception (and historical reality) is that capital is 'here'. As capital accrues in Asia (or with Asian based firms), is it not foreseeable that they'll emerge as the new Daddy Warbucks? Given that we don't make much anymore, our input can increasingly be reduced to mere monetary input. Under those circumstances, I think the best and brightest will find new dates.

Posted by: larry b in op at January 25, 2006 02:06 AM

Rich and mature economies inevitably have a growth problem--how do you create enough space for change and innovation, in a society where the existing entrenched players have a incentive to block or slowdown progress? To date, the U.S. is the only country which has solved this problem.

The issue for China, India, Korea, and the other major Asian powers is not whether they are or will get rich enough to do cutting edge research--that's a given. The real issue is whether they develop the same sort of institutions which enable the U.S. to keep innovating, even in the face of entrenched opposition from the status quo.

Posted by: Mike Mandel at January 25, 2006 03:56 PM

"develop the same sort of institutions which enable the U.S. to keep innovating, even in the face of entrenched opposition from the status quo"..exactly.

For example, there was recently a story here about a 21-year-old woman who stared a biotech firm, complete with a venture capital investment.

What are the chances that something like that would be supported under the process envisaged by Carl Bildt & his associates?

(startup story summarized here)

http://photoncourier.blogspot.com/2005_12_01_photoncourier_archive.html#113587746701370033

Posted by: David Foster at January 25, 2006 05:12 PM

I see Europe and America and Japan being only the consumers centric leader nations of the direction of cutting edge tech, that is created in Asia.

The Japanese when they were the masters of the World in the 80's, moved many manufacturing processes into the rest of Asia, and then went and invested in local asset and equity bubbles, and so missed the opportunity domestically to invest in social quality of life issues that would gain higher value added returns. Broader advanced education, and advanced medical programs, and fuller social programs where left behind.

Now we have a demographic hole that is in front of all advanced nations, and it (Medicare and Pension funding), will for the next 25 years or so be filled by deficit finance. Labors wage increases, and equity advances, are not going to find the returns to fill this.

Politically something will be made to fill that hole. It is the European and American economies, not missing the correct economic and social direction in our society, that will fill that demographic hole. We need boader advanced education, and advanced medical programs, and fuller social programs with higher return being supported by the governments of advanced nations during these times. The cutting edge tech only give more economic return to the services offered in this social investment.

If you find this too new age, you can pass on posting this.

Posted by: Mike Reardon at January 26, 2006 09:50 PM

Hm... Swedish engineers working in the United States with Indian engineers on products to be manufactured in China. Sounds like real globalism to me. What are the American workers doing? I guess someone has to be the janitor at the US office building. Europe certainly has it's problems; there is no doubt about that. But they are graduating over twice as many math and science majors as the United States. Nonetheless... The opportunity for Americans and Europeans alike is in creating small businesses to source from the top engineering talent and most cost-effective manufacturing in the world.

If "free market" capitalism truly lifts all boats, then we have to let the ocean of globalism rise and accept the results. No matter how poor regular Americans become, even socitety's losers aren't living in shantys and rancid filth. They can afford to eat *something*, have a roof over their head, and maybe even afford a few outfits of clothing, which is more than many in this world have. Those that create businesses that take advantage of global resources are more intelligent, educated and motivated and deserve to be hundreds of times more wealthy.

Posted by: Brandon at January 27, 2006 08:54 AM

I disagree with most of these comments and the story line by Carl Bildt. A reread on trade theory would clear up much of this confusion and hyped commentary. Beyond that, these straight-line projections of trends assume that public policy will be locked in with a punitive social contract in old Europe and gridlock political division in the U.S. I find it fascinating to watch U.S. liberals explain away the Irish economic miracle with a collection of education-related factors while blissfully ignoring the corporate tax rate incentives and use of tax shelters to attract investment in this gateway to the EU market. I can only count on rational policy adjustment to alter the trend lines over time before rigid policy structure take down national wealth and opportunity. This hope for the future is just as important in old Europe as it is for the U.S. and Japan.

Posted by: John at January 31, 2006 12:38 PM


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