The European Union's Infinite Debt to American Capitalism

By Tom Rogan

Thursday, October 22, 2015

At more than $18.2 trillion, the European Union has the largest annual GDP on Earth — greater than America’s GDP of $17.4 trillion, and more than China’s GDP of nearly $10.4 trillion, if the CIA “World Factbook” is anything to go by. Europe’s leaders are very proud of these statistics; as they see it, the EU’s collective economic power is an endorsement of the EU model of co-dependent big government and economic growth. As Americans who have visited Europe will attest, the continent’s citizens enjoy claiming that their model is superior to U.S. capitalism.

It’s time to correct this error. Europeans are enjoying better lives precisely because of American capitalism, not in spite of it.

Consider major American technology companies like Apple, Facebook, Google and Microsoft, all of which were established by risk-taking U.S. entrepreneurs and investors, and all of which have transformed how we live our lives. By shattering traditional physical and psychological barriers between information sharing and networking, these technologies empower individuals and businesses alike. Indeed, today it would be tough to find a young or middle-aged European who doesn’t rely upon at least one of these companies.

But none of this came — or comes — easy. Contemplate the complaints of the late Steve Jobs about President Obama concerning U.S. regulatory and union obstructions to economic growth. “The president is very smart. But he kept explaining to us reasons why things can’t get done,” Jobs told biographer Walter Isaacson. “It infuriates me.” But while Jobs was absolutely right to be angry, the sort of obstacles he grumbled about are far greater and more intransigent in the E.U. than in the United States. Yet most E.U. citizens may easily ignore those obstructions. Why? Because it is American entrepreneurs who invest time and money to develop these new goods. Europeans simply collect the end product: the latest smart phone or tablet or what have you. Then, without a hint of irony, Europeans use their iPhones and iPads to expound upon the evils of American capitalism.

Well, as it turns out, Europeans benefit from evil American capitalism in all manner of other ways. Consider the pharmaceuticals industry. It’s a simple fact that drug prices are far lower in the E.U. than in the United States. That’s because E.U. health care agencies are run entirely by governments. They can negotiate with U.S. drugs firms for low price. If the drug firms don’t budge, these agencies refuse to buy. But here’s the catch: lower drug prices in Europe are subsidized by Americans. Contrary to the false narratives of a socialist utopia, new life-improving and –extending drugs require massive input costs for research and development. With EU governments refusing to share these costs, Americans must do so alone. Remember this, next time a European lectures you about their health care system!

Even then, we must also remember that the European Union’s generous (albeit fundamentally flawed and somewhat selfish) welfare system would be impossible without America — specifically U.S security guarantees, paid for by American taxpayers and enforced by U.S. Armed Services personnel. Without the American defense umbrella, Europe would have to spend far more on defense against Putin and Co. than it does currently. Incidentally, this absurdity is why we should move U.S. forces out of Western Europe into Eastern Europe.

In the end, the great flowing benefits of American capitalism are undeniable. Truth is, American capitalism has done far more for humanity — the poorest especially — than any other political or economic system in history. Unfortunately, in the E.U., the moral and economic beneficence of American capitalism is ignored. Obsessing about the immediate gains that an entrepreneur makes from his or her risk, European critics portray capitalism as a dominating kleptocracy. In reality, true kleptocracy is socialism. Still, when one tries to consider all that American capitalism means for the European Union, the task is impossible. Because that task ultimately requires our knowledge of those as yet undiscovered goods and technologies and medical discoveries that capitalism will one day discover.