America's stock-market dominance is an emergency for Europe
wsj.com
wsj.com
Well, I think we solved the riddle …
I can make a forecast - anyone outside the US who lets their policy positions be swayed by the US press is heading for a disaster. Even if the Americans turn out to be accurate in their opinions. Countries need to maintain their own internal dialogue.
It'd be more interesting to be looking at what the British, or even the Germans and French think about the situation. They're the ones with the levers.
I feel that our priorities have been on social/climate issues. For a very long time the feeling was that we had enough prosperity and that more was nice but that it was not as important.
There was some serious talk about "de-growth" and the trend (for some groups) was mostly towards working less but maintaining the same standard. Among left political circles it seemed that the focus was on doing the most good, for the most people and this focus often lay outside of Europe. To put this in a historical context, many Europeans (especially Germans) feel that we have historical sins to atone for.
We trusted the US and were happy to see them succeed. To a lesser degree we trusted China and Russia and we figured that they would make (economical) rational choices to codependency was seen as a strength and not a weakness.
It's very clear that we were in some degrees naïve and lazy and wasted opportunities and choices. Europe occasionally needs a good crisis to get going again, I'm glad we're finally getting one.
We Americans love our economic growth, for better and worse.
I used to manage software teams in Europe, Russia, North America and China/Taiwan. Quality of life seemed best in Europe, Asia seemed best for the young, and the US was the most business aggressive. I liked the Canadians. California climate (and innovation) can't be beat.
In my next life, I will figure out what's best...
I think outside perspective is actually useful, because internal dialogue often goes rounds like should do something -> can't do anything -> football -> should do something
In the Netherlands we try to compete globally but as long as we’re rich enough people focus more on free time.
As our income grew the past decades the Dutch have cut back on working hours in stead of just hoarding more money.
The average Dutch person now works 400 hours per year less than the average American.
More than 50% of us now work a 4 day workweek and this will probably be made official before 2035 if I had to guess.
People just dont care enough to become even richer.
And though I am considered a workaholic by family and friends I too enjoy my 16 weeks paid time off this year with my newborn. :)
Bankruptcy clemency is one of those key advantages the US has to really enable entrepreneurship. Another one in California is no non-competes.
As an American I want to see the EU be economically vibrant!
without their moral posturing - dubai wouldn't exist.in 3rd world countries a while back in the 90s companies would dual-list on their home exchange and the LSE. win-win. back then visas were not difficult to get etc or you could travel visa free if part of commonwealth.
now the shaddy business dealers would rather prefer dubai were they're not lectured about the moral failures of their business practices or who they associate with.
trump for all his failures was able to recognize this - hence one of his first trips was to the GCC.
Well, ok.
So the plan is to save their way to growth. For example: less students, less research, less teaching (including at lower levels), less ...
https://universitytimes.ie/2025/05/french-students-protest-b...
https://www.uni-mannheim.de/en/news/higher-education-budget-...
https://www.timeshighereducation.com/news/layoffs-begin-dutc...
It gets a lot more vindictive than this. For example, one of the few things that is getting increased funding is debt collection. Also, the laws are getting "strengthened" (e.g. pensions are no longer untouchable for debt collectors in France). There's a saying "you can't whip blood out of a stone", by which they mean that you can't get money from the poorest of the poor. Clearly, the plan is to lash the poor until blood comes out.
It's not like the economic theory these governments claim, in their high school economy courses, clearly states that governments should save when things go well, like the last 15 years, and then seriously increase expenses in times like these ... Otherwise, given that they saved less than nothing, those courses amount to lying to essentially every student in the EU. Hell, given that it's lying about the money of these students, you could argue it's fraud ...
Oh wait ... that's exactly what they teach.
A lot of European countries have a much more paternal approach. Citizens can't be trusted to make good decisions, so they only receive part of their salary, and the rest is being managed "for them" - and that's non-negotiable (but there are some exceptions). A lot more stable, but a lot less free because you have a guardian making those decisions for you.
This system has its problems, mostly demographics with fewer young people entering the workforce and an unwillingness to fill the gap with immigration, but it has nothing to do with not trusting people to make their own decisions. It’s simply a historically grown approach which actually has worked quite well (and better than in the US for a greater share of society) for over a century.
It is a big Ponzi scheme, and now that fewer people are joining the workforce, governments borrow money to pay pensions. And a duscretiinary power to decide how much a retired worker gets. Nothing scremas solidarity more than a bureaucrat deciding that from next month your grandma is only entitled to this much pension because there’s less money for it.
The American way is actually the mote fairer system. Could be even more fair if you did mot have to pay tax on your pension gains from stocks inventments and whatnot.
It would have sucked, but they wouldn’t have been a burden on the current generation back then who did not start the war or went through the great depression.
The classical "Old World" social system is based around solidarity. Solidarity of the young with the old, of the healthy with the sick, of the fortunate with the unlucky. It has produced much better results for a far greater share of society and with much less inherent risk than the "everyone for their own" system of ultimate individual responsibility that the US has largely favored. Where it has failed it was largely due to the "neoliberal turn" of the 1990s and 2000s.
It's clearly due for an overhaul, but there are good options to do so. Europe's societies are waelthier, both in absolute term, as well as on average per capital, than they've ever been. What's missing is largely the political will to commit to the principle of solidarity over the resistance of monied interests that would benefit from a stronger turn to individualism. And I challenge you to look at the results of the mostly private health and pensions systems in the US on a factual and comparative basis and claim that they produce inherently better results.
"Nothing scremas solidarity more than a bureaucrat deciding that from next month your grandma is only entitled to this much pension because there’s less money for it."
Again, this is not how it works. I.e. in Germany there are actual laws governing the setting of pensions. And while these laws can be changed by parliament (though not by "bureaucrats"), they are rooted in constitutional principles that set guardrails for any reform.
You'll see echoes of the same ideas in other parts, be it recreational drug use, gun-ownership, what you're allowed to name your kids, building codes & zoning laws, school laws etc etc.
You can absolutely argue the merit of limiting people's choices, but I don't think you can deny that we do.
I'm personally in the very lucky position of being born to reasonably rich parents. Having benefited from that wealth (and good quality public education and infrastructure), I earn more than the average person. I pay a lot of taxes and public insurance, much more than I probably would in the US. I have very little say in how that money is used and it probably benefits other people much more than it benefits me personally.
Your perspective probably is that my government limits my liberty to handle my money as I see fit. Some people would even go as far as call this system theft.
My perspective is different. There is not only my personal liberty, my freedom to choose at stake. If I don't pay taxes, some kid from a poor family won't benefit from the public education that allowed my parents and myself to become wealthy.
Same with gun-ownership. It has been well established that the US system increases the liberty of owning guns, but at the cost of decreasing the liberty of gun victims to stay alive. Zoning? It might inconvenience my personal liberty to not be allowed to build where I want, but it sure increases the liberty of everyone else to benefit from reduced urban sprawl.
I'm not saying that we can't argue over where the lines should be drawn. But all that discussion of "freedom", "liberty" and "choice" always only focusses on the choice of the person talking and rarely on the choices available to everyone else as a result of individual behavior.
As for drugs, I think it's hard to argue that US drug laws are more liberal than those in many EU countries. If I recall correctly, an immense share of the US prison population is related to drug charges, often for relatively "soft" drugs like Marihuana, that are legal in many instances in the EU.
I think that's perfectly fine and primarily a cultural choice. There's no need to make it a moral question and declare this or that the "right" way.
Europeans tend to mistrust the individual to make good decisions without laws removing choice, I think you've demonstrated that part very clearly. And, that's all I was saying, that is a primary driver for mandatory pension systems that removes people's ability to make their own investment decisions. Again, you'll say that's good and necessary - but it's happening.
It's about your individual liberties limiting someone else's personal liberties. Nothing collective about it. But in public discourse, it is always the liberties that powerful people benefit from disproportionately that are framed as "good". I.e. when there was a concerted push by black liberationists in the US to form armed militias, gun laws were tightened. Now that gun ownership is interpreted mostly as a right valued by disgruntled white people, it is expanded.
Same with equating of control over money and liberty. We live in an age of almost unparalleled wealth accumulation in the hands of the few. I'm sitting on my local council and I can tell you that if we have to increase the fees for school lunches due to low tax revenues, there is nothing "collective" about the ramifications. It will directly and forcefully impact a relatively small number of individual children, whose parents will have significantly (for them) less disposable income as a result, severely limiting their liberty to afford their children a decent start to life.
It is beside the point if I think that someone can or can't make good decisions about the use of their own money. Even if I assume that they'd make much more profit if they invest it on their own, I'd still argue that a healthy society should be based around the principle of solidarity and a wholistic view of individual freedoms, and not just advance the advantage of a select few that have the means to push for their favorite liberties to be prioritized over everyone else's.
Yes, I understand the point. There are others who feel threatened and affected by people of different sexual orientations, even if those people never interact with them different than everyone else. You'll protest, no doubt, their feelings aren't legitimate - those are phobias while yours are rational feelings!
In pretty much every EU member state, you'll have to assume that random people on the street carry guns. Not everyone, not most, but some, none visibly. Would it make you more or less comfortable if the same number of people openly carried the same guns?
"Wholistic view of individual freedoms" sounds to me like a quote from the movie Thank You For Smoking. My memory is terrible, but it goes something like this (context, old movies are being edited to remove cigarettes in order to not promote smoking): "Aren't you altering history" - "No, we are improving history".
I find it much better to just flat out say "the collective over the individual", and not dance around it with fancy terms. Redefining liberties as privileges instead of rights isn't the way to go. Arguing for the merit of something is much better than trying to sneak it in by bending language and concepts.
"In pretty much every EU member state, you'll have to assume that random people on the street carry guns. Not everyone, not most, but some, none visibly. Would it make you more or less comfortable if the same number of people openly carried the same guns?"
You could search 10,000 random people going about their daily business in a major German city and with the exception of members of police and security services, you won't find a firearm. While a private gun ownership permit is reasonably simple to obtain, public open/concealed carry permits are not. And while criminal use of guns certainly exists, actual gun violence is so rare outside interactions between criminals that for any interaction with other members of society in public, the risk of a gun coming into it in any way is so small that in practice it can be ignored.
I've also travelled extensively in the EU and lived in several countries and I haven't seen a single firearm in public with the exception of members of police and security services (though I admit that armed private security services are not uncommon in some countries). Even if concealed carry were the main practice for private gun owners, I doubt that I wouldn't have spotted a gun at some point if it were at all common in a country (I've been in countries outside the EU where gun ownership is much more widespread and where I did see both open and concealed carry).
Yet you included privileges (like getting tax-funded things) in those liberties that would be affected. That's muddying the waters. I'm sure you're well aware of the escalating utilitarian thought experiments that use the same type of argument ("but many people would benefit from doing X to Y").
On guns: You're moving the goal post from guns being carried to guns being used. Statistically, you don't need to worry about guns being drawn in normal interactions in the USA - it happens, it happens a lot more often than in Europe, but it's not like there's a daily shoot-out at the grocery store unless you live in some areas with a lot of gang activity.
But risk-perception is subjective. Where I spend a month in the US doing average things and expect to not see a single gun being raised, you might expect to see them on two occasions. Is expectation of risk a liberty that's infringed? I don't think so.
There's plenty of good arguments for strong firearm regulation, but it's not a freedom vs freedom thing. There's a right not to be harmed, but it doesn't extend to potential abstract harm.
Differentiating between abstract liberties and the economic means to actually make use of them makes no sense to me. If a government guarantees the liberty to choose your profession freely, but the overwhelming majority of the population does not have the economic means to access the education required to become i.e. a doctor, does that liberty have any practical impact whatsoever?
In that sense, a free public education (including university), public health care, public pensions and even social security are not "privileges". They are fundamental rights that form the basis for the expression of liberty. And this is exactly how i.e. the German constitution frames these things. Social security payments explicitly are not a "privilege", they are a right and no government can cut social security payments below a certain threshold (though that threshold will make for a very uncomfortable living).
"I'm sure you're well aware of the escalating utilitarian thought experiments that use the same type of argument ("but many people would benefit from doing X to Y")."
Which is why it is important to build in protections. Modern/progressive democracy is not a "dictatorship of the majority", it is a rights-based system in which certain lines can not be crossed, no matter how benefitial it would be in a utilitarian sense.
"There's a right not to be harmed, but it doesn't extend to potential abstract harm."
It totally does. Again an example from Germany: We have a general prohibition on the surveillance of public spaces by public or private actors. Governmental authorities can supersede this in certain cases, but for private actors, you can't even point a fake camera at a public space, except when everyone using that space explicitly to that (which is impossible i.e. on public roads and already very hard in the common areas of apartment buildings).
The reasoning behind this is that no one should be exposed to even the abstract feeling of being surveilled in public, as this would alter their freedom to express themselves and limit control over their private information. Even employers need to limit incidental surveillance of their employees wherever possible.
"Is expectation of risk a liberty that's infringed? I don't think so."
I completely disagree. Again, it's a matter of degrees and your rights need to be weighed against mine. Often, your concrete expression of your liberties will outweigh the abstract infringement of mine. But sometimes they won't.
I want to add one more aspect to this.
If I gamble my pension away, I have detrimental effect on my neighbours and the rest of society. Sure I could work for a little longer, but not for too long.
One non-exhaustive example: If I don’t die right after my last contract ends, it means I’m consuming food and have some kind of shelter, which is payed by somebody.
I'd compare it to investing in the stock market (volatility & good yield) vs investing in government bonds (more secure, you know what you'll get back after they mature, lower yield).
The US has far more protectionism and other barriers to entry than it did when it seized the means of production from England, through the Boston tea party and the revolution that followed, but it still has enough freedom of business that it easily beats the European Union in pretty much every developing field.
Where the American Revolution differes from communist reviolutions is that, after seizing the means of production from a repressive government, the revolutionaries' new government did not hold onto the means of production through a planned economy, but instead held effectively zero economic oversight, leaving production open to a free market and anyone who wished to participate in it.
Do they own it, though?
Or is the US public relegated to a position of financing investment corporations without any ownership or control in exchange for a fraction of the profits and the bulk of the losses?
If anything, the US public seems to be used as a strategy to lower investment risks of investment firms.
> (...) whereas this article points out European pensions are state-based or through bond investments.
The "state-based" aspect which you are casually glancing over refers to full blown income redistribution schemes, where everyone's paycheck, being rich or poor, is proportionally deducted to finance retirement pensions, unemployment benefits, parental leaves, and even medical leaves.
Do you think that paying a corporation to invest in the stock market is more socialist than this?
Yes.
Do they control it? If you really get right down to it, technically also yes. If the public banded together to get things done, it would get done. But as with anything shared by millions people in the real world there becomes a disconnect between the people and in the chaos of lack of communication and no shared will to get things done a few actors end up usurping control. So in practice, no. But, I mean, that has always been the criticism of socialism — that a few actors end up taking control — so no surprises there.
One of the core tenants of the Communist Party, who believe (on paper, at least) that socialism is the path to enabling post-scarcity.
Communism is an imagined sci-fi world where we've already achieved post-scarcity; Star Trek is a more modern adaptation of the same idea. If it has anything resembling "core tenants", there being no ownership is one of them. It is imagined that in a post-scarcity world, ownership doesn't mean anything.
At some point it’s going to be absolute carnage. Private investment companies have already seen the end game and from direct observation have been pushing the hype to drive volume so they can shift their holdings on to the bagholders.
Good luck. It’s not a stable market. It’s fucked.
But when companies do this while their stock is overpriced, they’re wasting shareholder money on expensive shares. Executives pad their own pockets while shareholders get screwed.
I’d rather see companies pay better dividends or keep the cash. At least then shareholders actually benefit instead of just watching executives get richer.
I once asked what could be the alternative they literally couldn't answer me. Virtually every EU citizen with a bit of money has part of their savings invested in the same 5 US big tech companies. And I am sure it is the same in many parts of the world.
We are very very far from initial role of a bank and you might wonder why Europe has its own banking system in the end. It also explains why the price of those stocks are so high.
I made more out of the tech market in the last 5 years than I would have in it by having sensible advice and a half decent financial model.
Gen X here btw. Some of my age-peers have low financial sense so that figures.
It has already started. I am sure most gen Z who inherited something from their grand parents who passed away in the last 5 years, invested some in crypto (after putting a roof over their head hopefully). It is visceral for that generation, for better or worst they do not understand or trust our current financial system.
So now it is just a race between the boomers dying out and the collapse.
Consolidation of power means that’s just what happens when you chuck money into an index fund, even a global one.
Because most of them will absolutely try to fleece their older customer demographic by trying to make them invest in high expense funds that perform terribly. For them to advice you to put them into a decent index tracking fund is already a good sign.
Tech sector dominance/hype is a nice perk.