Europe is in the streets. From Paris to Brussels, Milan to Lisbon, hundreds of thousands of citizens are protesting rising living costs, stagnant wages, unaffordable housing and deteriorating public services. In France, demonstrations have descended into burning barricades, looted businesses, and attacks on public buildings. Elsewhere, students, workers and frustrated families are demanding that their governments deliver the prosperity and security they have long promised. Most protesters are peaceful, but the unrest reflects a growing anxiety that Europe’s economic and social model is no longer delivering.
The immediate grievances vary, but the underlying problem is more profound: too many European economies have become better at protecting yesterday’s arrangements than creating tomorrow’s opportunities. Excessive regulation, rigid labor structures, fragmented capital markets, and slow decision-making constrain the growth necessary to sustain Europe’s generous social promises. Europe has not run out of talent. It has made it unnecessarily difficult for talent to flourish.
Having served as the U.S. ambassador to the EU, I have heard this firsthand from executives running the American operations of major European companies, particularly in Silicon Valley. Their message is remarkably consistent: they simply cannot innovate in Europe the way they can in the United States. These are Europeans describing the limitations of their own economic environment. They come to America because our ecosystem allows them to move faster, attract capital, take risks, recruit talent, and turn promising ideas into commercially successful businesses.
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Think about the implications. Europe has extraordinary universities, brilliant engineers, world-class scientists, and sophisticated corporations. Yet many of those same corporations look to America when they want to push the boundaries of innovation. The problem is not imagination. It is an economic and regulatory structure that too often suffocates imagination before it can become commercial reality.
There is another uncomfortable dimension to Europe’s predicament. For decades, the United States provided the military security umbrella under which European governments could devote comparatively modest resources to their own defense. While American taxpayers financed enormous military capabilities, many European countries concentrated more of their resources on generous pensions, health care, social benefits, and other domestic priorities.
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Imagine if European governments had been required to spend 4% or 5% of GDP on defense throughout the past three decades. Would their social safety nets look anything like they do today? Perhaps Europeans would still have chosen extensive benefits, shorter workweeks and lengthy vacations. But those arrangements would have required far more difficult fiscal choices involving taxes, borrowing, spending and economic growth.
American military power did not create Europe’s welfare state, but it helped make that welfare state easier to afford.
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The American security guarantee may also have distorted European perceptions of the threats themselves. When someone else bears much of the cost of protecting you, it becomes easier to discount the danger. Why acknowledge the full threat posed by Russia if doing so means telling voters they must sacrifice cherished benefits to purchase tanks, aircraft and missiles? Far easier for Europeans to conclude that Washington is exaggerating the danger, let America spend the money, and enjoy another three-hour lunch.
Poland and the Baltic states have generally viewed Russia differently. But across much of Western Europe, American protection made strategic complacency easier to sustain.
Now the defense bill is coming due. President Trump has pressed NATO allies to assume greater responsibility for their own security, and European governments have committed to substantially higher defense spending. Those commitments arrive just as their economies struggle to generate the growth necessary to finance them.
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Europe needs an immediate regulatory reset, more integrated capital markets, flexible labor arrangements, faster permitting, affordable energy and an environment in which entrepreneurs can build global companies without crossing the Atlantic. Estonia’s digital government, Denmark’s labor flexibility, Ireland’s technology investment and Poland’s industrial development offer useful examples. What Europe lacks is not another commission or another report. It needs political leaders willing to confront the bureaucracies, vested interests and institutional inertia that prevent meaningful reform.
Which brings us to America.
We have our own protests, riots, economic inequalities, political dysfunction, and government bureaucracy. We are far from perfect, and we should never pretend otherwise. Millions of Americans struggle with housing costs, health care, education, and the fear that their children may not enjoy the opportunities they once expected. We have communities that feel abandoned, institutions that have lost public trust and political divisions that sometimes seem impossible to bridge.
But America’s greatest strength has never been perfection. It is our extraordinary capacity for reinvention.
Our system is built around the possibility of constant change. We experiment, fail, learn, improve and try again. Yesterday’s conventional wisdom becomes tomorrow’s obsolete business model. New companies challenge established giants. New technologies disrupt entire industries. Every generation has the opportunity to create something that did not exist before.
That process can be messy, disruptive, and sometimes deeply unfair. But it creates something indispensable to a successful society: the belief that tomorrow can be better than today, and that individuals have the power to help make it so.
This is the essential difference between American economic dynamism and the more rigid structures that constrain much of Europe. Our system does not guarantee success. It preserves the possibility of extraordinary success, and it gives people repeated opportunities to pursue it.
Critics of American wealth inequality frequently point to our growing number of billionaires, and perhaps someday a trillionaire, as evidence of a system gone wrong. But the mere existence of extraordinary fortunes misses a fundamental point. The question is not simply how much wealth the richest American has accumulated. It is whether the next American, starting with little more than an idea, talent and determination, has a genuine opportunity to build something extraordinary.
I want to wake up every morning believing the sky is the limit. I want every American to have that same opportunity. Not a government-imposed ceiling on ambition, not a predetermined limit on success, and not a tax system designed to punish exceptional achievement simply because it is exceptional.
Why take the risk, invest the capital, work the extra hours or pursue the seemingly impossible if government has already decided how much success is enough?
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None of this means ignoring inequality. An economy in which wealth and power become permanently concentrated, established businesses suppress competition and children born into poverty have little realistic prospect of advancement would betray the very principles that make American capitalism work. Government has an essential role in enforcing the rule of law, protecting competition, providing education, maintaining a functioning safety net and ensuring that opportunity is not reserved for those who already possess wealth or influence.
But there is an enormous difference between government creating the conditions for opportunity and government attempting to dictate economic outcomes.
America should respond to Europe’s difficulties with neither arrogance nor indifference. A prosperous, innovative and militarily capable Europe is essential to our own security and economic interests. We should encourage European reform, welcome European investment and insist that our allies assume a greater share of their defense responsibilities.
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At home, however, we must be careful not to import the very economic rigidities Europe is struggling to escape. We should resist the temptation to address every imperfection with another layer of regulation, another barrier to investment or another policy that makes entrepreneurship less rewarding.
We should instead ask a simpler question of every major economic policy: Does this make it easier or harder for Americans to work, invest, innovate, start businesses, change careers and recover from failure?
And we must make sure that the promise of advancement remains credible. That means better schools, affordable housing, competitive markets, access to capital, effective public institutions and opportunities extending far beyond a handful of prosperous technology centers.
America’s protests remind us that economic growth alone cannot sustain public confidence if too many citizens believe the system is closed to them. Peaceful dissent must be protected, violence must be rejected and legitimate grievances must be addressed. A dynamic economy cannot remain politically stable if large portions of its population lose faith in their ability to participate in its success.
The answer to inequality is not to suppress exceptional outcomes. It is to prevent inequality from becoming permanent exclusion.
The American dream was never a guarantee that everyone would become wealthy. It was the conviction that nobody’s future had to be dictated by the circumstances of their birth.
The measure of a successful society is not how effectively it limits the fortunes of those at the top, but how convincingly it keeps the door open for those who aspire to join them.
Europe’s unrest should serve as a warning about what happens when expectations grow faster than the economy’s capacity to fulfill them, and when political institutions become better at protecting yesterday’s arrangements than creating tomorrow’s opportunities.
America’s greatest asset is not the wealth it has already accumulated. It is the wealth, discoveries, industries and opportunities that have yet to be created.
Europe needs to rediscover economic possibility. America needs to protect it.
