Eurostat's latest growth data put "economic resilience" in the headlines: eurozone GDP grew 0.4 percent, beating expectations. Pull the number apart, however, and the picture changes — Germany, France, and Italy, the three largest eurozone economies, were nearly stagnant. The verdict of this National Review long-read is that what looks like resilience is, in fact, "institutional rigidity masquerading as stability."
1. Two Sets of Numbers — From 76.5% to 50%, From 7th Place to 51st
In 2008, EU per-capita GDP stood at 76.5 percent of the US level; by 2023 that figure had fallen to 50 percent. France's per-capita GDP in 2000 was on a par with the 36th-richest US state; today it has slipped below Arkansas. The British cognitive bias is even more striking: when asked where UK per-capita income ranks among US states, respondents guessed 7th — the reality is 51st, below Arkansas and Mississippi. More than a quarter of those surveyed said they were "shocked."
Counter-intuitively, the gap is not about hours worked. Employment rates among working-age adults are nearly identical on both sides of the Atlantic (EU 76% vs US 75%), and European workers actually log more hours per week (36 hours vs 34 hours). The divergence comes from what each hour of labor produces: between 1995 and 2025, US labor productivity grew 88 percent, while the eurozone grew only 30 percent; from the end of 2019 to the start of 2024, labor productivity in US market services rose 12.4 percent, against just 3.8 percent in the eurozone.
| Indicator | US | Europe |
|---|---|---|
| Working-age employment rate | 75% | 76% |
| Average weekly hours | 34 hours | 36 hours |
| Labor productivity growth (1995–2025) | +88% | +30% |
| Market-services productivity growth (end-2019 → early 2024) | +12.4% | +3.8% |
2. The Cost of Failed Freedom and of Protection
The Dow Jones Industrial Average fifty years ago contained General Motors, IBM, Kodak, Sears, and AT&T — most of them have since been replaced. Over the same half-century, the largest European companies have rarely turned over. This is the visible face of "creative destruction" — the US has preserved "the freedom to fail": roughly one in five American firms is less than five years old, against only one in eight in Germany. When companies collapse, workers find new jobs and capital flows to more productive uses.
Europe's largest economies chose a different path: employment law makes firing costly, and works councils give labor substantive influence over corporate decisions. When demand falls, firms prefer to retain surplus labor — the "insiders" (those holding stable, formal jobs) benefit, while "outsiders," younger workers, and anyone trying to enter a protected market pay the price.
Europe has also adopted a precautionary approach to technology regulation: regulating before an industry scales up. The compliance burden suppresses the growth of startups while entrenching the position of incumbent platforms. The 2024 Draghi competitiveness report states the problem plainly — too little innovation, too little dynamism — yet the political obstacles he identifies remain in place: free-market reform imposes concentrated, immediate losses on protected groups, while the gains are dispersed and only materialize over years. Those who bear the immediate costs hold the power to block change.
🔑 Core Judgment
The real root of the widening US–EU per-capita-GDP gap is not hours worked but productivity; and the productivity gap in turn comes from attitudes toward "creative destruction" — the US allows failure and lets capital flow toward higher-output uses; Europe trades dynamism for stability through employment protection and technology regulation, with the result that "outsiders" are shut out and the next generation of industry is shut out at the border.
3. The Threshold of Strategic Dependence
The gap is amplified into a strategic problem in the next generation of growth industries. In 2025, private-sector AI investment in the US ran at roughly US$286 billion; in Europe, not a single country reached even US$6 billion. In industries that will decide the next wave of growth, Europe is becoming increasingly dependent on foreign technology, manufacturing, and capital — the result is not just a loss of market share, but strategic dependence.
In 2025, US private-sector AI investment was roughly US$286 billion; in Europe, not a single country reached US$6 billion in AI investment — a gap of nearly fifty times. When AI investment differs by an order of magnitude, the divergence is shifting from an economic gap to a strategic one.
4. Cold Water for America
But the essay also pours cold water on the United States: its labor market remains relatively flexible, yet the political landscape is shifting. Worker representation on boards, restrictions on corporate restructuring, industry-wide collective bargaining on wages — once fringe ideas — are now entering mainstream policy debate. ESG imposes a corporate-statist structure on American business, and restrictions on foreign investment in data centers and infrastructure, the essay notes, "reflect the same instinct" — government decides, by political criteria rather than return on investment, who deserves capital. This is how European market sclerosis began.
America's challenge is how to distribute the fruits of growth; Europe's challenge is how to generate growth in the first place. Europe's lesson: protection bought with stability ultimately shuts the next generation of industry out at the border; and if the United States, under political pressure, walks the same road — allocating capital by political criteria rather than return — then today's European sclerosis becomes tomorrow's American mirror.
This page is a translation of a long-form essay in National Review, relayed by the Weibo account "Consular Small Talk" (领事闲谈, 2026-08-16). Related Wiki page: The US–Europe Productivity Great Divergence — A Fifty-Year Comparison of Creative Destruction and Protectionism; related pages: The Ghost of Greater Europe, The Bankruptcy of New Europe, Why First Movers Urge You to Tear Down Walls — all currently Chinese-only.