Saturday, March 11, 2006

Europe Behind in Technology as the Rich Grow Richer

An article by Theresa Küchler in the EUobserver.com points to the newly published Forbes list of billionaires and a very important comparison of billionaires in the USA and Europe, pointing out that the billionaires in the USA represent the technology sector (Microsoft, Dell, Oracle, Google, eBay) whereas the billionaires in Europe represent the retail sector and the luxury sector. The top billionaires in the retail business are retail discount furniture (IKEA) and retail discount food (ALDI), whereas the luxury sector is represented by Bernard Arnault of LVMH, Moet Hennessy, Louis Vuitton and Hennes & Mauritz chairman Stefan Persson.

These billionaire statistics point to two substantial economic problems in Europe. The first is found in Küchler's article, the second is our observation:

1) Europe has fallen behind the USA in technology development, which points to a weak structural foundation for Europe's economy, and

2) Europe is falling into two classes - the rich, who can afford luxury goods, and the poor, who increasingly have no choice but to resort to discount shopping. This is the result of faulty politics and faulty economics in many European countries, which pander to the wealthy and which have proven incapable of developing a solid economic policy benefitting all sectors of society. Exemplary for this development are European Union agricultural subsidies, which go primarily into the pockets of rich landholders, although the money comes out of the taxes paid by everyone.

The notion that Europe suffers from being a "welfare state" is totally erroneous. Europe suffers from too many rich people and companies using Europe as a seemingly never-ending pot of gold which they tap as their source of wealth, with the money to be invested elsewhere after it is made. An example: shoes made in the Far East at low Far East wage prices are sold in Europe at high prices reflecting European wages, thus ultimately destroying European labor, as more and more factories are exported to low-wage countries. How long can this killing of the golden goose in Europe go on? Not long.

The rich get rich and the poor get poorer. This is a problem which Europe will have to solve to keep peace in Europe in future years. If poverty and unemployment continue to increase in Europe as they have in the last decade, then there will be social unrest and upheaval everywhere in Europe down the road.

Europe will also have to figure out a way to promote technology within Europe, rather than merely to see Europe as a market for technological goods, made elsewhere. That strategy has no long-term future.

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