Esko Aho, former prime minister of Finland, in a new report prepared for the European Commission states:
Europe’s most successful companies are turning their backs on EU markets because of red tape, a high-level report said yesterday.
The companies that Europe needed to survive were instead investing more money than ever in the United States and Asia, concluded the report, presented to the European Commission in Brussels.
The findings made unsettling reading for the EU leaders, ripping into their pledges to build a “knowledge-based Europe” that would overtake America in 10 years. The reality was the opposite. Not only were US, Chinese and Japanese firms outspending Europe on research and development, the gap with Europe was growing.
Perhaps most damagingly, Europe’s most important countries were pouring more and more of their technology investment overseas, as they despaired of the European Union becoming “innovation friendly”.
Unless EU governments took bold action to increase spending on research, freed labour markets so skilled workers could move more easily, and stopped pouring taxpayers’ money into dying industries, Europe’s post-war way of life was doomed.
The report said: “Europe must break out of structures and expectations established in the post-Second World War era that leave it today living a moderately comfortable life on slowly declining capital. This society, averse to risk and reluctant to change, is in itself alarming but it is also unsustainable in the face of rising competition from other parts of the world.”
“This society, averse to risk and reluctant to change, is in itself alarming but it is also unsustainable in the face of rising competition from other parts of the world. For many citizens without work, or in less-favoured regions, even the claim to comfort is untrue.”
Mr Aho refused to follow the lead of French or German politicians, who have attacked major corporations for investing overseas and called for more “economic patriotism”.
He said: “We cannot blame them. They are trying to take care of global competitiveness. Unfortunately, these companies can survive without Europe, but Europe cannot survive without these companies. That is why Europe has to act before it’s too late.”
I love European models.
LOL @ Oso’s comment!
LOL.
Do to the mobile nature of modern capital; state attempts to tame its instability will cause it to flow toward less restrictive places.
At present, the U.S. is an attractive place for capital since it offers a well educated public, a good infrastructure, a weak labor movement, and state/capital institutions and such as The Federal Reserve, the Commerce Dept. and legal structures such as copyright laws which tend to serve the interests of capital.
The difficulty for U.S. capital interests will be to continue to convince a public that these state/capital institutions and laws are a benefit to all and not a few.
If the future seeks liberty and less restrictive structures, look to sharp parings if not eliminations of needless state institutions such as the Commerce Dept, Dept. of Education, etc….
It would be a mistake for EU nations to take Esko Aho’s advice and “increase spending on research” since that is better left to individuals. What the state can do is slough off its institutions and open it borders.