At 1:30 pm on Tuesday 17 September, Mario Draghi will present to MEPs the fruit of his work, a 400-page report made public a week ago. This report, dedicated to the future of European competitiveness, is an act of the Old Continent’s disengagement. But for Philippe Silberzahn, professor of strategy at EM Lyon, it misses the opportunity to make the right diagnosis and draw conclusions.
“God laughs at men who complain about the effects whose causes they cherish. Here it is the opposite: the EU wants effects (growth, productivity, competitiveness) whose causes it rejects (free market, innovation, deregulation). This is magical thinking,” he sighs in a ticket without concessions published on his blog on Monday. In an interview with L’Express, Philippe Silberzahn calls on the European Union to reconnect with a vision focused on the search for growth, under penalty of jeopardizing its social model.
L’Express: Loss of competitiveness, decline in innovation… These issues are not new in Europe. What are the main points you take away from this report?
Philippe Silberzahn : Beyond being a cry of alarm about a reality of which not everyone is aware, the report makes the link between what may seem technical – productivity, competitiveness – and the consequences of a decline in this competitiveness on the lives of European citizens. It is not simply a question of loss of profits: it is the very survival of our social model that is at stake. If we do not stop this decline, we will no longer be able to maintain it.
The report is very clear on the symptoms – a drop in productivity and the absence of Europe in strategic sectors – but does not dwell on the causes of this situation. It is annoying not to make a diagnosis if we want to provide solutions. A striking example is over-regulation, which is certainly mentioned, but never explained in depth.
Is over-regulation Europe’s real evil?
We cannot complain about a lack of innovation and continue to impose excessive regulations in almost all sectors. These rules are well-intentioned but have harmful effects. On artificial intelligence, for example, Europe regulates on the basis of fear rather than trying to enable its development. Result: a company, to follow all these standards, must have a dedicated team. All this is expensive and penalizes small companies.
Were you expecting more introspection on Europe’s mistakes?
Europe does not have the entrepreneurial ecosystem that America has, and that is the key to the problem. It is thanks to their entrepreneurial ecosystem and their dynamism that the United States – our competitor in this race – generates new companies in all the new sectors. And the report does not talk about it at all. So the diagnosis is wrong.
Europe’s real problem is its “mental models”: a set of beliefs relatively hostile to growth that have been developing for about twenty years. And we are paying the price today.
How can we change this European moral stance, which is not as favourable to growth as in the United States?
This is a question that Mario Draghi does not ask, but it is the real question. Europe had a philosophy of growth in its early years, after the Second World War. Today, civil society must re-appropriate the idea that growth is not just an economic phenomenon disconnected from reality. It allows citizens to have a pension, social services, hospitals that work. Because all of this consumes money and this money must be created by growth. We must want growth, it is not a new plan that will change that.
Today, the European Union encourages innovation, in particular by selecting projects and granting subsidies. Should we stop doing this?
The fact that there is European funding is a good thing. There are fundamental projects that are very expensive, particularly in research, and that require this funding. The problem is that the Draghi report would like us to have the same entrepreneurial dynamism as in the United States, and in the next paragraph, he says that the solution is to have a “coherent European policy”.
“The GDPR starts from a real question of privacy protection but adds a colossal cost for companies”
In other words, he would like the results of American capitalism… but not American capitalism. Having a European industrial policy consisting of selecting the companies that we promote does not work. We must ask ourselves how to free up these energies rather than choosing to finance this or that company.
If it is businesses that are contributing to growth, what should be the role of Brussels?
The report suggests that the role of politicians is to drive Europe’s industrial policy. I think that is a mistake. But there are alternatives, where the role of politicians would be to ensure that companies can grow and develop internationally. The role of politicians is not a leadership role. They must keep in mind the need for growth, while ensuring a balance with regulation. This is the first part that has been forgotten in recent years.
What were Europe’s failures?
There are two, in the same sector by the way: the GDPR and the regulation of artificial intelligence. The GDPR starts from a real question of privacy protection but adds a colossal cost for companies, and always penalizes the small ones more than the big ones.
Regarding the recent regulation on AI, once again, fear prevails. We prefer to restrict innovation because there might be a risk. This is where we lose opportunities. The almost caricatured example is the new iPhone that comes out with many artificial intelligence functions, and which will not be able to be marketed in France because of restrictive regulations. This regulation deprives us of progress.
The report repeatedly mentions the capital markets union, an initiative requested in particular by banks. Would it be a factor of competitiveness?
That there is a need to unify markets is obvious. In fact, Europe started out like this, an economic union first, before becoming political. But there needs to be tension between unified aspects – regulations, markets – and on the other side a certain diversity, because what works in Florence does not necessarily work in Berlin.
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