Stardate 20021201.1323

(On Screen via long range sensors): Glenn Reynolds has located another interesting article about the growing divide between the US and Europe, by Karl Zinsmeister. In some ways it covers a lot of the same ground as the article by Kagan. However, it's much less sympathetic to the European point of view and far more negative about European prospects than Kagan. So though I've seen many comments to the effect that Kagan's article has been widely read in Europe, Zinsmeister's article is unlikely to get anything like as much exposure there.

Which is a shame, because he also looks at the issues more frankly, with far more attention to economics than Kagan, who concentrates far more heavily on politics. And Zinsmeister makes the point that to a great extent the reason the Europeans hate us is the same as one of the big reasons the Arabs hate us: we're showing them up. We're doing everything ideologically wrong; and yet we seem to keep on winning. But this has taken an ugly turn in the last year, and it's probably going to get worse. He describes the experience of being the only American on a panel discussion in Europe last April about the divide:

To my knowledge I was the only American participating. This was an occasion for Europeans--Germans especially--to talk frankly to other Europeans. The panel on which I spoke was chaired by Reiner Pommerin, a professor at the University of Dresden, colonel in the German air force reserves, and advisor to the German Ministry of Defense. My fellow speakers included Germany's former ambassador to the U.K., the current German ambassador to Poland, a DaimlerChrysler managing director, and a professor from Britain. We were to focus on transatlantic relations.

Throughout the two days, Pommerin set the tone with an aggressively antagonistic attitude toward all things American. "Thank God we had the 11th of September," he declared--for this showed the U.S. how it feels to be humbled. Herr professor-colonel went on to suggest that Americans often feel nostalgic for the "good old days of slavery in the nineteenth century." He told ludicrous stories about seeing empty bottles and litter piled "one meter deep" along roadsides in America, illustrating our environmental slovenliness. He insisted the seemingly mighty U.S. military was now a hollow force, all flash and no substance.

Picking up on this, another panelist stated with authority that most Microsoft products, and indeed most American technologies generally, are junk, and have come to dominate world commerce solely through manipulative trade and advertising. These McProducts will be dashed, he suggested, once Europe gets its high-tech sector (which was sound asleep last I checked) in gear with superior European engineering.

Zinsmeister writes his article with an American audience in mind, which is probably just as well because his first paragraph is, shall we say, less than kind towards Europe. I'm not sure it's fair to judge Europe's cities on the basis of what he saw in Warsaw, for example, and his description of the audience approaches bigotry. Any European reading his article will decide he's an asshole in the first thirty seconds.

But they need to try, because he makes a lot of important points. In particular, he points out that one of the reasons for the widening division between Europe and the US politically is because of a widening economic gap. The per-capita GDP of the US is 60% higher than in even the most prosperous European nations, and the trend is for that to grow in the future. Part of the reason why is American government policy; part of it is cultural. But a lot of it is just that Americans work harder. We work more hours per year; there are more of us working; and on average we produce a third more per hour worked than Europeans do. That is not a gap easily bridged, and right now Europe's policy makers are trying to institute rules which will increase that gap. Zinsmeister says:

We have conventionally thought of Europe as having about the same standard of living as Americans. This is less and less true. For the European Union as a whole, GDP per capita is presently less than two thirds of U.S. levels. America's poorest sub-groups, like African Americans, now have higher average income levels than the typical European.

What's behind this? For one thing, Americans work harder: 72 percent of the U.S. population is at work, compared to only 58 percent in the E.U. American workers also put in more hours. And U.S. workers are more productive--an E.U. worker currently produces 73 cents worth of output in the same period of time a U.S. worker creates a dollar's worth.

Over the long haul, these sorts of disparities add up to crunching economic divergences. Since 1970, America has produced 57 million new jobs. The E.U. nations, with an even bigger population, have produced 5 million (most of them with the government). A startling 40 percent of the unemployed in Europe have been out of work for more than a year, compared to only 6 percent in the U.S.

He continues:

Another telling indicator of economic stagnation in Europe is the fact that many or most immigrants to that continent end up on welfare. In the U.S., almost all immigrants grab entry-level jobs, frequently more than one, and work their way up the economic ladder. The easy availability of work--indeed, our economy's insatiable hunger for additional laborers--is the main force that attracts immigrants to the U.S. in the first place.

That's certainly true about the majority of immigrants to this country, but not about one particular group. It was his comment about Europe's high-tech sector, and his comment about the Nobel prizes, got me to thinking. About those, he says that three quarters of all Nobel laureates in science, medicine, and economics have lived and worked in the U.S. in recent decades. That's an interesting way to state it, because he's dancing around a critical point: a lot of those were immigrants, and most of the immigrants were from Europe.

If you work in high tech in the US, you soon become very good at understanding English spoken with a wide variety of accents. The number of immigrants with technical degrees is staggering, and they're not being hired because they can be paid coolie wages (despite what some might have you believe) or because they can be abused. American companies are hiring them because they're starved for good people to fill positions. That part is pretty straight forward. But it's the other side of the coin which is more interesting here.

It's just as easy to understand why people from India might want to come here to work, or from Korea, or Taiwan, or mainland China. (With regard to India, I've long had a suspicion that a disproportionate number of them might be from lower castes, who want to live here in part because we are far more egalitarian. But I've never asked any of the many Indians I've worked with about that, so I don't really know.)

But why are so many of Europe's best and brightest emigrating? When you look at that list of Nobel laureates, you find again and again "Born in Germany, residing in the US", "Born in France, residing in the US".

I can't say whether it's primarily money, since I don't know how European companies pay their engineers and scientists. I suspect some of it is that this is where the action is; we're the ones who are creating the cool stuff; Europe is mostly just following along. To some extent that's self-reinforcing.

Europe is a high-tech disaster area. It's a desert pock-marked with occasional oases. For an area with the kind of overall education level Europe has, and the kind of industrialization Europe has, and the overall average wealth that Europe has, and the transportation and communication infrastructure that Europe has, the amount of ground-breaking work in science and technology happening on the continent is embarrassingly small.

It's not that they cannot do it. There are significant examples which demonstrate otherwise. The Ariane program has been a substantial technical success. Airbus is the only company in the world which is even challenging Boeing in the passenger jet business (though Airbus only was able to get going through substantial subsidies by the French and British governments). Philips has been creating cutting edge technology for years. At least three major pharmaceutical companies are headquartered in Switzerland. CERN is doing good work, and has one of the world's best particle accelerators. And I have only the highest regard for the engineering which is being done by the European Southern Observatory for its sites in Paranal and La Silla, (not to mention their full intention of creating a telescope with a one hundred meter main mirror).

But what these few successes show is that the potential is there and that it is not being realized very broadly. The Europeans can do this stuff, but it seems as if they mostly don't bother. You have a small number of companies which are competitive in production of high technology, but most of Europe's companies seem to produce rather prosaic me-toos, using fundamental technology developed elsewhere (usually the US).

If you ask someone with any kind of technical background to list high-tech Japanese companies, they'll have no trouble at all reeling off several names immediately (often brandnames chosen for the American market, like Pioneer), and several more after a few seconds of thought: Sony, Toshiba, Matsushita; the only reason there aren't more names on the list is because of the Japanese zaibatsu system. Ask pretty much anyone to list American high tech companies and they may come up with 50 names before they have to slow down.

But ask people to list high-tech companies from continental Europe, and I think most people would have to think hard to list even one. I, myself, having been in the industry for 25 years can only list a few: Nokia, Ericsson, Siemens, Alcatel, Philips and then I run out, and honestly can't think of any more right now. And among them, Philips as the only one actually doing cutting-edge research. (They developed the laserdisc, which led to the CD and DVD, among other interesting things.)

What the Europeans seem to spend most of their time doing is to refine or develop or apply basic technology coming from other places. Americans created the transistor, the laser, the MOSFET, the integrated circuit, the LED, the first computer built out of transistors, the first microprocessor, the hard disk, television, wide area networks, cell phones. Europe uses computers, but the only major contribution from Europe in my field is the development of the first block-structured programming language, ALGOL, which influence later languages like C but which itself was too bloated to really be very useful. And in general, I'm really pretty hard pressed to think of anything (except the laserdisc) which has come from the continent which ranks the same as that long list of American innovations, which is far from complete.

Where is Europe's Intel? Where is Europe's Microsoft? Where is their IBM? Their Dell? Their Applied Material?

I managed to post an incomplete version of this article by accident, and it was up for a few hours before I noticed and took it down, and in response an engineer in Europe (who requested anonymity) wrote the following:

About the supposed difference in high-tech, it's about size. Engineering in Europe is as good as in America. Our problem is marketing: Europe is not a single market, and therefore it's hard for European companies to grow by selling many millions of tech products before venturing abroad (there is no European Dell or Microsoft). European tech leaders usually opt to sell far less numbers of quite expensive items (Arianespace, Airbus, F-1 racing cars, etc.), to diversify (Siemens, etc.) or to take advantage of the few homogeneous markets in Europe (Nokia, etc.) The relative size of the various markets also influences research budgets, the demand of researchers, the availability of venture capital, and a lot more.

Unfortunately that explanation doesn't wash. Why is it that Japan and Taiwan and South Korea seem able to do these things when Europe cannot? Taiwan Semiconductor Manufacturing Corporation has a state-of-the-art 130 nm semiconductor fab; and as far as I know the only fabs in Europe which are equally good belong to American companies (such as the AMD fab in Dresden). TSMC is a foundry; they don't do any design. But they produce a lot of good chips; for one thing, nVidia uses them.

Taiwan has a population of 22 million, one third that of Italy. Where is Italy's TSMC? (Where's Italy's nVidia?)

Sony has been turning out cutting-edge products for a hell of a long time, some of which (like the VCR) have been revolutionary. Japan has been competing against the US in supercomputers for 20 years. The Japanese and Koreans developed both the technology and manufacturing capability to produce large flat-panel color LCD displays and they are the main source for the world. Where is Europe's equivalent of Japan's LCD industry? Is there any equivalent product which you go to Europe to buy because no one else makes them? I can't think of even one.

Part of the answer is Europe's labor laws and other business regulations tend to strangle that kind of entrepreneurial spirit. But another reason is that for a long time now a substantial percentage of Europe's best and brightest have been coming here to work instead of staying in Europe. And though the numbers have been small, the impact has been great. That happens with engineers in all industries and also in science, and that's why when you run down the list of Nobel laureates who work in the US, you see so many of them were born elsewhere. For instance in Physics:

2002: Raymond Davis, Jr. (American), Masatoshi Koshiba (Japanese), Riccardo Giacconi (born in Italy, living in the US)
2001: Eric A. Cornell (American), Wolfgang Ketterle (born in Germany, living in the US), Carl E. Wieman (American)
2000: Zhores I. Alferov (Russian), Herbert Kroemer (born in Germany, living in the US), Jack S. Kilby (American)

and on and on... Taking 40 years (1963-2002) we find 6 Germans, 4 French, 3 Dutch, 5 Brits, 3 Swiss and 56 Americans of which 13 were born in Europe. (There's also 4 Russians, 1 Pakistani, 3 Japanese, 2 Swedes and 2 Danes.)

(For Chemistry: 10 Brits, 4 Germans, 1 Norwegian, 3 Swiss, 1 Belgian, 1 French, 1 Dutch, 1 Dane, 1 Argentine, 3 Canadians, 4 Japanese and 37 Americans.)

Everywhere you look in high tech you see the same thing: the Europeans show occasional flashes of extreme brilliance which stand out from a sea of mediocrity, and meanwhile you find a lot of good work being done in the US by people from Europe, along with a lot more being done by people born here.

This pattern has been consistent since the 1950's and there's no reason to believe it will end any time soon.

Given how Europe is fractured, I don't really expect it to be able to compete directly with the US on a per-capita basis (though it really should have made a better showing than it has). But it hasn't even been as good at cutting edge technology as Japan. Japan has a population of 127 million, compared to 83 million for Germany, 60 million for France and 60 million for the UK, but it's doing a lot more and better work than the numbers would suggest. I think a lot of the reason for the poor European showing is because they're losing so much of their talent to us. (Japan retains far more of its own best talent.) The numbers overall are relatively small (a few tens of thousands per year) but the impact is disproportionately large; these people are the yeast which makes an economy bubble, and Europe isn't keeping enough of them.

This brain drain doesn't tend to get discussed much, and I think part of the reason why is that if it were then the people in Europe who claim they're creating a better, more comfortable, more civilized place than America would have to explain why so many of their best people would rather live here. It's easier to just ignore it.

But this, to me, shows that the intellectual fire of Europe has gone out. There doesn't seem to be much drive left; they're coasting.

Now that may well be a deliberate choice. I wouldn't know about that. The same anonymous European engineer also wrote this:

It's hard to compare standards of living because there isn't a suitable unit of measure. Money alone isn't a very good choice, because most Europeans define well-being in non-monetary terms. Several examples I've run into are: access to favorite food and drinks, leisurely pace (two and a half hours to have lunch, for example), lots of vacations, living and working near the extended family, etc. Seen through European eyes, less work hours is usually good, even if that means less earnings. Where taxes are so high, why work?

I guess that's an alternative to American workaholicism. Fair enough. But what this won't do is to give Europe any chance of actually catching up to the US either economically or technologically. Zinsmeister's quote of someone on that panel that the Europeans were going to surpass the US technologically Real Soon Now is completely unrealistic. If Europe wants to do that, it's going to have to get a work ethic, and part of that is for the governments there to stop punishing hard work through high taxes. As he says, when taxes are high, and when you don't get to keep most of what you make, why bother straining?

Why, indeed? Because if you don't, you're going to fall behind, and Europe already has done so. Nothing shows that more clearly than the rather odd demands made by some in Europe that the US teach the Europeans how to make high-tech weapons. The European forces have fallen behind the US so badly in terms of technology that they can't even really fight on the same battlefield beside us any longer (making a practical mockery of the NATO alliance even if it were not a mockery for other reasons), and Chris Patten actually called on us to help them get their act together so that they could act as a counterweight to us internationally. (Uh, yeah; whatever you say.)

If Europe wants to sink into comfortable decadence, that's its choice to make. But let's not pretend that people who work 46 leisurely 35-hour weeks per year (or nations where 25% of the workforce are government employees) are actually going to be able to compete with America even on a per-capita basis, let alone in absolute terms.

Zinsmeister's article points out several other reasons why Europe's future is looking really grim. I think his article is very important, and I've added it to my Essential Library page. And though Europeans will decide he's supercilious, and clearly an American partisan, I think it's important that Europeans read his article. The points he's making about Europe's fundamental problems are serious and correct and they can't be solved if they're ignored.