Europe can again become the place the world talks about when it talks about the economic frontier. Europeans have nothing to lose but their August of leisure.
T he Paris AI summit showed us the 21st-century Europe we know so well: talking a good game on innovation, having some decent wins, but then tying its own hands in the name of European Values™.
And the greatest of all European values — at least the value where there’s the biggest difference between the U.S. and Western Europe — is leisure. The average adult in Germany or France works about 300 to 400 hours less per year than the average American. That’s partly because they’re less likely to work at all — whether through unemployment or earlier retirement — and partly because they take more vacation time. That gap in hours worked is easily the biggest reason Western Europeans are poorer than Americans.
Economists have known this for a long time: Western Europeans produce about as much as Americans for every hour worked; they just work a lot fewer hours. And the best evidence is that Western Europeans work less not because they individually love leisure so much; instead, it’s mostly because some mix of high taxes, big payments for staying unemployed, rules that make it harder to fire bad workers, and mandatory vacations lead to higher unemployment rates and fewer hours per worker.
Western Europeans may vote for all of these anti-work rules, and they poll well, but if the rules weren’t there, they’d probably be out there putting in as many hours as the average American, maybe even more. Western Europeans have voted for a truce in the rat race, a truce that effectively mandates leisure for all.
That truce imposes a cost, a tax, on the entire world. That truce means Europeans contribute a lot less to the world’s stock of ideas, of inventions, of practical solutions to the world’s problems. That means Europeans are doing a lot less than they could to reduce poverty and misery around the world. Europeans are here again talking a good game on innovation, but when it comes to results, they’re unwilling to sacrifice their sacred vacation time for the goal of uplifting humanity.
You might say it’s none of my business how Europeans (or my fellow Americans) spend their time — it’s a personal choice, and perhaps nobody has a concrete duty to reduce the world’s misery. But the “eradication of poverty” truly is a stated European value — it’s right there on the EU’s web page! — and in my view, and I hope yours as well, it’s a good value to have. Personally, I wish more Americans had that value.
If Europe would deregulate its labor markets, stop mandating long vacations, stop giving out a year or two of unemployment benefits that are nearly full-income-replacement severance packages, Europe would probably end up working about 20 percent more and probably innovate much more than 20 percent more, sacrificing summertime aperol spritzes for the benefit of humanity.
Why can I be so sure of this? Because each link in the chain is well-made:
Research is a luxury good, and when one compares rich countries against poor, one of the big differences is research intensity. Obviously, the great influential research universities are nearly all in the rich countries, but the same pattern holds in the private sector too: Where do innovations in computer chips and batteries and biomedical research happen? You don’t need me to tell you, but I’ll belabor the point anyway.
Regardless of how you measure it, most of the world’s valuable tech innovation happens in just seven countries, what I call the I-7:
China makes the list only on scale: Per person, its rate of innovation isn’t close to the top, but China makes it up on persons. It’s a reminder that population size matters for overall innovation, since the world doesn’t care about innovations per person; it cares about innovations per planet. And human-inhabited planets are still holding at one. (On the honorable mention list, let’s include India and Switzerland: India, like China, making it up on scale, and Switzerland making it up on being Swiss.)
The I-7 are a list of rich countries plus a country with the same income per person as Mexico but ten times the population. Richer countries innovate more: They have more researchers per person, they invest a higher percentage of income in research and development, and we all know they’re where the next big cool tech innovation is going to come from. Poor countries rely on the innovations made in the rich countries — they just have to wait a while until the patents expire or for follow-on innovations to cut the cost before they get frontier tech at an affordable price.
And inventions really do partly trickle down from rich nations to poor — the cutting-edge drugs of yesteryear, available only to elites, end up as nearly free generics that can be given away in clinics worldwide. And better, cheaper medicine, more abundant food, and more reliable electronics all help in their way to reduce poverty.
The trickle-down shows up in different ways at different times: Smartphones with fewer bells and whistles exist the world over, and used Toyota Corollas end up being shipped from rich countries to lower-income countries, driving hundreds of thousands of miles. Technological innovation diffuses, with long and variable lags — which means that Europe’s innovations today improve the lives of the poor in the future.
Yes, Europe can help save the world. But the best path, the wisest path, isn’t the path of being a mere role model — modeling a civilization where leisure and live-lightly environmentalism are supreme values. Instead, Europe should return to its glory days of innovation, when scientists, engineers, and working people across the continent shared their practical wonders with the world. Rudolf Diesel and Karl Benz in Germany, the Curies and Louis Pasteur in France: Europe should be, as it was in the 19th century, ahead of the U.S. in grand discoveries rather than far behind.
Europe can again become the place the world talks about when it talks about the economic frontier. Europeans have nothing to lose — but their August of leisure.