Comment by lossolo
10 days ago
It's largely a political issue. At this stage you can't create alternatives to Google and other U.S. tech giants without removing them from the market (so essentially the Chinese approach, which has allowed them to build their own massive tech giants). But that path is nearly impossible for the EU due to the risk of U.S. retaliation. The EU can't even implement a digital tax.
You also can't just say, "Here's a few hundred billion in public support to create alternatives to U.S. tech giants", because the U.S. would argue that it's unfair state aid and retaliate.
There isn't enough private capital in the EU with the risk tolerance required to take on such a challenge independently.
We also lack a reserve currency like the USD, so we can't print $2 trillion a year, much of which ultimately flows into the U.S. stock market and further boosts U.S. tech companies, making competition even harder.
EU markets are already fully penetrated by U.S. behemoths that can either withstand or acquire any privately funded competitor, thanks to their massive cash flows and valuations.
For all these reasons, the outlook isn't very promising.
>>There isn't enough private capital in the EU with the risk tolerance required to take on such a challenge independently.
That can be improved by making traditional investments (real estate, land) less attractive while making investments into businesses more attractive. You just need to change tax incentives by removing capital gain tax and introducing real estate/land value tax (or raising it). Removing red tape would help as well and then making the common market really common.
As it is there is very little incentive to invest in companies here.
> That can be improved by making traditional investments (real estate, land) less attractive while making investments into businesses more attractive. You just need to change tax incentives by removing capital gain tax and introducing real estate/land value tax (or raising it). Removing red tape would help as well and then making the common market really common.
That's unrealistic. Majority of people in the EU own property and/or land, and no one wants to pay even more taxes on it. In my EU country, the majority of politicians own more than two apartments. I don't see them working against their own interests.
Yes, it's unrealistic because the plan is for people who already own property or land to extract rent from productive class, especially young people.
That's why nothing every changes. Ever increasing taxes on productivity to benefit the real estate/land owners is how EU operates. No wonder we have fewer and fewer children and there isn't many people willing to found new businesses.
It's a death spiral which will end with the youth rebelling or going extinct. The latter being more probable looking at current fertility rates.
Russia can do it. Thinking EU can’t shows only how low the self esteem is. And it’s a very sad story. EU needs to wake up sooner rather than later.
I'd argue Europe is further in to their economic decline that the US, but both are in a downward trajectory
> And it’s a very sad story. EU needs to wake up sooner rather than later.
Indeed, it's a very sad story. I'm afraid the EU is in a coma, so waking up is not a given.
Russia can do it because they are a dictatorship. If they were a free-market democracy, I very much it would happen.
I think there are two aspects of it, one political - we didn't have democracies with strong leaders for quite some time, but I don't believe it's inherent to it.
Another is economical - with tech (absolute) free-market would for sure benefit the biggest player. I don't believe in absolute free-market economy anyway (and we don't have it), and I think EU (and other countries) should protect their (tech) businesses. For example EU can start with above mentioned service tax, Trump started with tariffs anyway.
Side note - Russia had very strong domestic tech for a long time, and one of the reasons I believe was the fact it's a big market mixed with different language. I don't think dictatorship played as big of a role.
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What outlook? What planet are we on? Why are we debating who makes better handcuffs? Do E.U citizens prefer their handcuffs be made in Europe? I'm so confused.