Thoughts on Trump's double threat to Europe, how Sell America became the new Trump trade, Europe's missing law enforcement, and why Romania's new president may be liberalism's last hope
Very nice piece. Your section 3 makes a clear case that Europe is its own worst enemy. The current consensus in Europe seems to be that the US is as bad as China, or worse. It would then seem rational to stop complaining about the US, and start fixing Europe's many problems, along the lines you suggest. The world would benefit. Failure to do so, conversely, is the best way to vindicate Trump's venomous jabs.
I think the secret to the Trump/Putin relationship is that Putin commiserates with Trump regularly about the “Russian hoax.” Remember Trump saying, “WE went through so much together.”
In Helsinki, Putin told him there was no Russian hoax. Ever since, Putin has been reiterating that there was no Russian hoax. They "went through so much together!" No one can commiserate with Trump the way Putin commiserates with him.
By reassuring Trump about the Russian hoax for the last nine years, Putin has built up enormous
relationship capital that little spats about Ukraine cannot obliterate. What do you think they talked about for TWO hours? Actually, part of those two hours were Putin throwing sand in Trump's eyes about an incredible economic relationship in the future.
This was a very insightful read Simon. It shows how Europe is a little confused and misdirected right now, and is really not in a great position given what is happening with US policy. Maybe they need to be more proactive economically.
Why is reexamining value added tax and digital services tax a non-starter? If we are not willing to challenge the assumptions underpinning the build up of political compromises in Europe, we are done by our own hand not by Trump or anyone else's.
"European businesses spend 40% of their IT budgets on complying with regulations, according to a recent survey by Amazon. Two-thirds of European businesses don’t understand their obligations under the EU’s AI Act, which came into force last summer, the survey found.
"Meta delayed the launch of its latest AI model in Europe by nearly a year because of EU regulations. It began rolling out a limited version in March that doesn’t include features like image generation or editing. Apple also postponed its new AI features for iPhones in Europe until recent weeks."
Which, if I may suggest, leads to the wrong diagnosis.
Firstly, it is surely more important that large US tech companies are unable to gain 'early mover' advantage in EUrope because they don't really understand (or build according to) the rules. This surely creates openings for EU tech companies who grow up in a more regulated environment?
Secondly, that 40% of European IT budgets is spent on compliance isn't necessarily a bad thing. This budget effectively creates a 'moat' which investors tell us justifies the elevated value of US tech companies - and equally, I would suspect, the '40%' problem is largely because European business isn't spending enough on IT / Tech. Hence, rather than tackle the compliance issues, Draghi's proposal for a EU Capital and Savings Union would bring must larger allocation of capital to European tech and therefore the compliance % would drop sharply.
I know it is standard Economist theory that compliance rules are bad, but, I'll never forget listening to an entrepreneur tell me he liked the complicated rules because he had built a first class legal team that knew how to navigate them.
Lastly, I just want to add that the much hated GDPR rules give EUrope a huge tech advantage. The simple rule that does not allow data generated in the EU to be stored outside the EU means US tech companies have to build data centres in EUrope with all the economic benefits coming to EUrope - and especially natural clean energy countries like Spain and now increasingly Italy and southern France. I know this rule has nuance, but, the thrust of the rule (and the threat of the rule hardening in the future) also means that for 20 to 30 year investments in data centres infrastructure, EUrope must be a key player.
And, once the data and infrastructure is in EUrope, the connecting pipes and connecting energy grids will (its fair to assume) have to follow and from this base, EUrope has the potential to rebuild its own tech industry.
So yes, some EUropean entrepreneurs did rushed off to the US to get more money than their competitors - but with a EU Single Capital and Savings market - and perhaps the Euro becoming more or less equal to the US$ - that is unlikely to continue and in fact, may easily reverse.
Very nice piece. Your section 3 makes a clear case that Europe is its own worst enemy. The current consensus in Europe seems to be that the US is as bad as China, or worse. It would then seem rational to stop complaining about the US, and start fixing Europe's many problems, along the lines you suggest. The world would benefit. Failure to do so, conversely, is the best way to vindicate Trump's venomous jabs.
Remind me again; what did Churchill say about democracy?
Also about the Americans!
Indeed! From 2018: https://www.smithsonianmag.com/history/when-churchill-dissed-america-180970541/
I think the secret to the Trump/Putin relationship is that Putin commiserates with Trump regularly about the “Russian hoax.” Remember Trump saying, “WE went through so much together.”
In Helsinki, Putin told him there was no Russian hoax. Ever since, Putin has been reiterating that there was no Russian hoax. They "went through so much together!" No one can commiserate with Trump the way Putin commiserates with him.
By reassuring Trump about the Russian hoax for the last nine years, Putin has built up enormous
relationship capital that little spats about Ukraine cannot obliterate. What do you think they talked about for TWO hours? Actually, part of those two hours were Putin throwing sand in Trump's eyes about an incredible economic relationship in the future.
Sorry to say that my respect for you is substantially diminished.
This was a very insightful read Simon. It shows how Europe is a little confused and misdirected right now, and is really not in a great position given what is happening with US policy. Maybe they need to be more proactive economically.
Why is reexamining value added tax and digital services tax a non-starter? If we are not willing to challenge the assumptions underpinning the build up of political compromises in Europe, we are done by our own hand not by Trump or anyone else's.
This is a really interesting quote:
"European businesses spend 40% of their IT budgets on complying with regulations, according to a recent survey by Amazon. Two-thirds of European businesses don’t understand their obligations under the EU’s AI Act, which came into force last summer, the survey found.
"Meta delayed the launch of its latest AI model in Europe by nearly a year because of EU regulations. It began rolling out a limited version in March that doesn’t include features like image generation or editing. Apple also postponed its new AI features for iPhones in Europe until recent weeks."
Which, if I may suggest, leads to the wrong diagnosis.
Firstly, it is surely more important that large US tech companies are unable to gain 'early mover' advantage in EUrope because they don't really understand (or build according to) the rules. This surely creates openings for EU tech companies who grow up in a more regulated environment?
Secondly, that 40% of European IT budgets is spent on compliance isn't necessarily a bad thing. This budget effectively creates a 'moat' which investors tell us justifies the elevated value of US tech companies - and equally, I would suspect, the '40%' problem is largely because European business isn't spending enough on IT / Tech. Hence, rather than tackle the compliance issues, Draghi's proposal for a EU Capital and Savings Union would bring must larger allocation of capital to European tech and therefore the compliance % would drop sharply.
I know it is standard Economist theory that compliance rules are bad, but, I'll never forget listening to an entrepreneur tell me he liked the complicated rules because he had built a first class legal team that knew how to navigate them.
Lastly, I just want to add that the much hated GDPR rules give EUrope a huge tech advantage. The simple rule that does not allow data generated in the EU to be stored outside the EU means US tech companies have to build data centres in EUrope with all the economic benefits coming to EUrope - and especially natural clean energy countries like Spain and now increasingly Italy and southern France. I know this rule has nuance, but, the thrust of the rule (and the threat of the rule hardening in the future) also means that for 20 to 30 year investments in data centres infrastructure, EUrope must be a key player.
And, once the data and infrastructure is in EUrope, the connecting pipes and connecting energy grids will (its fair to assume) have to follow and from this base, EUrope has the potential to rebuild its own tech industry.
So yes, some EUropean entrepreneurs did rushed off to the US to get more money than their competitors - but with a EU Single Capital and Savings market - and perhaps the Euro becoming more or less equal to the US$ - that is unlikely to continue and in fact, may easily reverse.