Some literature on ancient Rome tells an anecdote of a slave who was walking behind Julius Caesar in a parade. As Caesar received the accolades from the crowd, the slave whispered in his ear: “Memento te esse mortalem”—remember that you are a mortal.
Historic records would dispute the accuracy of this story, but that doesn’t really matter. It is a good story, especially for its moral message: political leaders who think they can ignore reality should expect at some point to be served a reality check.
It is a sign of strength in political leadership when those who exercise it are willing to hear scathing criticism of their own work. Likewise, it is a sign of weakness when they turn a deaf ear to anyone who brings them information that is not to their liking. In the latter case, the messenger is often blamed for the problems that he or she points to.
Prime Minister Viktor Orbán will probably not be blamed for Europe’s chronic economic weakness; if there is one politician in Europe who has successfully brought growth and prosperity to his country, it is Orbán. This gives him the credentials to talk about how to make a country thrive.
It also gives the prime minister standing to criticize those who, in his view, fail to respond to economic malaise. When Orbán recently spoke at Ludovika University in Budapest, he used that standing to go where no head of an EU member-state government has gone before. Without using language quite as blunt, he de facto warned the European Union that it is becoming a second-tier economy.
To the best of my recollection, no other prominent European politician has spoken so pointedly about Europe’s economic realities. Yet Orbán’s willingness to point out how Europe is falling behind internationally is one more example of how he prioritizes political leadership over ideological dogma.
As support for his claim that Europe is falling behind, Prime Minister Orbán cited the recent report from former European Central Bank president Mario Draghi which “found that the economic growth of the EU bloc has been ‘constantly lower’ than that of the United States in the past two decades”.
This is a damning but well-deserved critique; since I have myself repeatedly pointed to this problem, I am also very familiar with the wall of silence that meets the messenger. However, willful ignorance among the political leadership in the EU is no excuse for not trying to solve a problem.
And a problem it is. Figure 1 reports the average real GDP growth rates for the U.S. economy and for the current 27 EU member states from 1996 through 2023. For more clarity, the data is divided into four-year periods, with the numbers representing average, inflation-adjusted GDP growth:
Figure 1
Another way to illustrate this difference is to think of the annual GDP growth rates as interest on money in a savings account. Suppose you deposited $100 into two different accounts back in 1995; one account would pay you an interest rate equal to the annual real GDP growth rate of the United States; the other account would base its interest rate on the same number from the EU (again configured according to today’s membership).
Figure 2 reports the results, and they are a thundering back-up of Prime Minister Orbán’s point. While the EU account grows the $100 initial deposit to $156.52, the U.S. account practically doubles the money, ending with a balance of $199 in 2023:
Figure 2
The numbers in Figure 2 are not just for show—they convey a real, tangible economic difference between the American and the European economies. A higher real economic growth rate comes with higher growth rates in personal income, which in turn means that compared to the low-growth economy, consumers in high-growth America generally have more money and grow their purchasing power faster.
As a result, businesses that sell to the general public can make more money in America than they can in a similarly sized market in Europe.
Higher growth rates also come with more spending on research, innovation, and product development. It is an old point by now, but still valid: while America has its own Silicon Valleys (with Texas now rivaling California in that regard) and is home to multiple high-tech corporations, Europe is nearly void of cutting-edge technological evolution.
When Viktor Orbán points to Asia as a center of economic strength, he broadens the conversation in a direction that makes the European Union look even more like a second-tier economy. Again, the prime minister’s point is valid, especially with reference to China, India, Japan, and the resilient economies in Southeast Asia.
It is important to remember that while we often get impressive GDP growth numbers out of China, we need to take those numbers with a grain of salt. The Chinese government has been criticized—on good grounds—for its creative attitude toward the accuracy of national accounts data. With that in mind, though, there is no doubt that the combined GDP and population of China, India, Japan, South Korea, and the rest of Southeast Asia, are big enough to permanently shift the epicenter of the global economy away from the Atlantic region.
Add the remarkable resilience of the Russian economy, as well as the pulsating global interest in BRICS, and the economic bell is already tolling for Europe. While these countries have not yet toppled Europe and America as the world’s economic engine, they might do so sooner than most people think.
If Europe refuses to heed Prime Minister Orbán’s warning and instead continues to ignore its own economic quagmire, there is only one end station for Europe: a continent that has turned itself into an economic museum.
