We are immersed in a gigantic wave of creative destruction. The world we knew, in which we were born and grew up, is being deconstructed to give way to a new unknown reality, in the midst of very profound technological, climatic, demographic and geopolitical transformations that are going to have an undoubted impact on our lives. How can it be? that the Western system, based on scientific rationality, technological innovation, economic freedom and political democracy (surely the best possible) is failing miserably? Why does that model built on Enlightenment principles generate so much inequality, conflict and frustration, instead of widespread productivity and prosperity? We must urgently review our value creation and distribution systems. Today, everything is in question.
A few days ago, The Economist asked in the article Universities are failing to boost economic growth why, at a time when scientific research and higher education are booming, the productivity of the economy is so weak. Have we made a mistake in an implicit division of labor, according to which universities must investigate, and companies then exploit – if they can and know how – that research? Large economies are changing their model, focusing their financial muscle on strengthening corporate R&D laboratories, shifting the center of gravity of research towards the economic structure. According to the World Bank, the world already allocates 2.7% of its GDP to investment in R&D, an indicator that has skyrocketed almost exponentially in recent years. The world is definitely not flat, as Thomas Friedman imagined in the triumphant era of globalization, but rather stretches like chewing gum between a few large economies that are increasingly R&D intensive and generate a substantial part of the world’s GDP (with the US). USA and China in the lead) and the rest, who are falling behind. Rich countries that generate technology, and poor consumer countries, dependent on the former.
Europe awakens from its limbo, with a growing sense of urgency. Enrico Letta, former Italian Prime Minister, advocates in a recent report the need to integrate capital markets to prevent European savings from escaping en masse and going to finance the attractive American industry. Mario Draghi, at a high-level meeting of the European Pillar for Social Rights on April 16 in Brussels, gave a conference with the suggestive title: Radical change is what we need. Draghi, also former Prime Minister of Italy and former President of the European Central Bank, already had a decisive intervention in recent European history during the 2008 financial crisis, when, in an unprecedented display of leadership, he stated that he would do “whatever was necessary.” ” to save the euro. With this he injected decisive confidence into the markets at a critical moment in continental finance. We need figures and reference messages.
Now, Draghi warns us of the essential radical change in our economic policy if we want to maintain Europe as the space of democracy, peace and freedom that it has been for the last 70 years. For Draghi, the European competitive strategy is outdated, and leads to the destruction of our social model. “We have looked inward, seeing each other as competitors even in sectors such as defense or energy, where we share interests.” According to him, the world is no longer a level playing field where everyone plays by the same rules. On the contrary, some regions are carrying out aggressive policies to attract investments and, in the worst case, “to make us permanently dependent on them.” Draghi explains how China intends, unambiguously, to control all strategic supply chains, ensuring its access to critical resources; and how the US applies large-scale industrial policy to reindustrialize the country, breaking its old complicities with Europe and challenging the rules of international trade. In other areas of the world, the industry not only faces lower energy costs, but also suffers from a more lax regulatory environment than in Europe, and receives massive aid.
We’re alone. We compete with our hands tied behind our backs, and our naivety keeps them tied. Draghi adds that three threats endanger the continuity of the European project: the lack of scale due to fragmentation and internal lack of coordination, the weakness in the creation of common public goods (energy infrastructure, security, or scientific networks), and access limited to critical resources (such as minerals or raw materials). He laments the lack of a forceful, consistent and cohesive strategy to address these challenges. European leadership styles and decision-making processes are “designed for the world of yesterday, pre-Covid, pre-Ukraine and pre-conflict in the Middle East.” Europe needs a radical transformation, Draghi concludes, a “new partnership or redefinition of the Union no less ambitious than what the founding fathers did 70 years ago with the creation of the Coal and Steel Community.” A challenge as complex and urgent as it is motivating.
All of this means changing the age-old mentality of austerity and prudence, and developing a new expansive and self-conscious leadership aimed at reinforcing our own R&D and consolidating industries and strategic investments as a guarantee of our prosperity. Perhaps we need a European supra-state, a large entrepreneurial state that allows the old continent to compete on the same scale as the US or China, generates a large competitive platform with integrated and homogeneous markets and provides Europeans with the necessary public goods. (from scientific networks to digital, physical and energy infrastructures) that ensure the continuity of the great European project and the well-being of its citizens. Europe is waking up. But you have to run.
