Six-Chart Sunday (#59) – While Europe Slept

6 Infographics + 1 Video (Palantir CEO Alex Karp's "Fight for the West")

When history “ended” with the close of the Cold War, Europe went to sleep. Over the next several decades the EU outsourced its energy production to Russia, its defense to the U.S. and its innovation to regulators in Brussels. Their economy increasingly depends on Chinese manufacturers and American consumers, and today they find themselves unready for the harsh new realities of the 21^st century. Are they doomed, or is a Great EUwakening possible? Has it started?

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1. Anemic Defense Spending. EU defense spending dropped below 2% of GDP in 1994 & never returned (though it probably will in 2025).

2. Comparatively Weak Market Returns. EU stock markets are up 124% this century vs 454% for U.S. markets.

3. Under-Innovating in AI. The EU & UK have only earned 2% of global AI patents, badly trailing China & the U.S.

4. Trade Imbalanced. EU trade is overly-dependent on U.S. consumers and Chinese producers.

5. Energy Dependent. While the EU has long had a trade deficit in energy, its reliance on Russia grew rapidly for decades prior to the invasion of Ukraine, especially as EU nations decommissioned their nuclear power plants.

6. Shrinking Populations. Smaller working-age populations produce less (absent accelerating productivity) and growing “dependency ratios” increase the cost of social safety nets.

CODA: Can Europe get its groove back? There are early signs of a potential Great EUwakening… Germany is investing a lot more on defense & infrastructure; France is urging more innovation and less regulation of emerging technologies; EU stock markets are out-performing this year; and EU policymakers are moving to develop new infrastructure for nuclear power. Is it enough? Is it too late? We’ll see.

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UPCOMING LIVE EVENT: 3/13 at 2pm ET… register here

VIDEO

I am currently reading Palantir CEO Alex Karp’s new book, “The Technological Republic.” It’s a really interesting and thoughtful perspective on how Silicon Valley lost its way and how the future of America hinges on its finding its way back, fast. Here’s the 2 minute book promo: