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Blue Model Brussels
EU Corporatism Stifles Digital Age Promise

“Why is there no European Google?” It’s a question we’ve been asking—and exploring the answers to—for a while now. A piece today in Politico Europe indicates that some people on the other side of the pond might be starting to catch on to the key issues here, too. John Springford, a fellow at the Centre for European Reform, argues that:

Brussels mandarins bemoan the lack of a “European Google,” and think they can help create one. Fearing that it is engaged in a race to create online giants — and losing it — the EU is resting on an outdated economic idea: the “national champion,” elevated to the European level.

The European Commission’s strategy for the digital single market contains some good ideas: harmonizing online consumer protection rules, curbing “geo-blocking,” which is used to charge different prices in different countries, and reducing VAT compliance costs, to name a few.

But the EU wants to liberalize while giving European companies a helping hand.

By a helping hand, of course, leaders in Brussels mean cracking down on the American competition, particularly Google. It’s corporate welfare by way of regulation. Not surprisingly, it winds up in practice being the opponent of liberalization, protecting large corporations on the old European model from their modern competitors. The results are not good:

Manufacturing productivity on both continents grew at 3 percent a year between 1995 and 2007; but services productivity grew at 3 percent a year in the U.S., and just 1.3 percent in the EU. The difference was mostly due to a surge of American information technology investment.

And as we’ve pointed out before, there’s a significant gap between the U.S. and EU when it comes to the emergence of “unicorns”—start-ups that reach a valuation of $1B.The “third industrial revolution” of the digital age is creating a lag in Europe, where the legal and cultural climate is not conducive to the kind of creative destruction from which successful tech companies emerge.

It’s good to see these issues get a bit of organic attention in Europe, and even more heartening to see some of the correct diagnoses being made as to why there’s no “European Google.” But nobody should underestimate the scale of the shift that would be required on “the Continent” to adjust for the 21st century a corporatist model that dates back to before Bismark and Colbert.

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  • FriendlyGoat

    It’s hard to understand why we need another Google. I presume what is meant here is a desire for one or more companies doing something ELSE as unique and world-wide as Google——but hatched in Europe and based in Europe.

    The third paragraph above has suggestions for harmonizing some structural parts of doing business which might only be helpful. The more that continent is and acts like the “United States of Europe”, the better for them and everyone.

    • rheddles

      It’s hard to understand why we need another Google.

      That says it all. You just don’t understand the value of competition, creative destruction, or that absolute power corrupts absolutely.

      • FriendlyGoat

        Hey, we had Yahoo, AltaVista, Lycos, Ask.com and several other search facilities of the past. Google simply did all that better, and it’s hard to imagine how or why Europe might eclipse what Google is doing. I’m not knocking progress, including any in the future. I just think “Why is there no European Google” is an imprecise question.

        • Boritz

          The question about Google could be interpreted as why in the U.S. and not in the EU. What factors could
          have produced a world where we asked instead why the United States has nothing like Google and the EU does? The article touches on some of the factors of freedom and it’s lack that produce results that grow only in the enchanted soil of a freer market.

          • FriendlyGoat

            That’s why I originally commented above that I believe Europe only benefits from harmonizing laws and the business environment between countries.

      • f1b0nacc1

        You haven’t read many of his postings, have you (grin)….
        Sadly, his ignorance is hardly unique….consider that the same ‘logic’ was used by Bernie Saunders not too long ago…

        • FriendlyGoat

          The reason you and I have often dis-enjoyed our discussions is this kind of backbiting. Middle school stuff, f1b.

  • Jacksonian_Libertarian

    All human organization can be placed on a line between Monopoly and Free Market. Starting at the extreme left you have Communist Totalitarian Government Monopoly which owns everything, and going to the extreme right you have a Laissez Faire Anarchy, neither is a successful model. The Ideal Model is the one that encourages the greatest growth, which compounds over time. This is because “Compounding Growth” is the greatest force in the Universe according to Einstein, or so the urban legend says. So a Government Monopoly that limits and confines itself to only those tasks that only a central Government Monopoly can perform (Defense, Foreign Relations, Justice) and leaves everything else to the free market. Only the free market has the “Feedback of Competition” that provides both the information and motivation which forces continuous improvements in Quality, Service, and Price. According to the Rahn Curve the burden of the Government Monopoly should not exceed 15% of GDP, or it begins to sap growth from the economy. I also think the “Feedback of Competition” needs to be injected into the Government Monopoly where ever possible. Democracy which has Politicians competing is alright, term limits would improve it, but even better would be a heavy turnover of Government Bureaucrats, who work for the government for a few years and then must return to the private sector and re-exposure to the “Feedback of Competition”.

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