Edward Conard

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  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
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  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
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  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
Upside of Inequality Oxford Unintended Consequences

AI Summary. Listed American firms are on average larger and more profitable than European ones, and Europe's productivity lags America's while lacking world-beating corporate giants. The gap is most striking in technology, where American firms are twice as profitable and more than 10x the size.

Economist Staff The Economist
Date Posted:

Compared to EU public companies, US public firms are larger and more profitable. “The difference is particularly striking among tech firms, which are twice as profitable and more than ten times the size in America.”

Are European firms smaller and less profitable than American ones?

Core argument: American tech firms are twice as profitable and more than ten times the size of their European counterparts, the widest gap in a broader pattern among listed companies.

Europe's productivity lags behind America’s, and it lacks world-beating corporate giants. Rising geopolitical tensions have made this problem more acute for European policymakers. They are right to worry. Listed American firms are, on average, bigger and more profitable than European ones. The difference is particularly striking among tech firms, which are twice as profitable and more than ten times the size in America.

Takeaways by Macro Roundup® AI

  1. American tech firms are twice as profitable and more than ten times the size of their European counterparts, the widest gap in a broader pattern among listed companies.
  2. Europe's productivity lags behind America's, and Europe lacks world-beating corporate giants, a shortfall that rising geopolitical tensions have made more acute for European policymakers.
  3. Listed American firms are, on average, bigger and more profitable than European ones, giving European policymakers grounds for concern.

Related Articles:

  • Europe Regulates Its Way to Last Place — Europe's regulators tend to act on the mere possibility of harm rather than evidence of it, an approach that can throttle innovation early. The McKinsey Global Institute found that among companies with over $1bn in revenue, U.S. firms spent 80% more on research and development, had 30% higher return on capital, and grew revenue 1.3 percentage points faster.
  • Europe Has Fallen Behind America and the Gap is Growing — The EU economy was somewhat larger than the US in 2008 ($16.2tn versus $14.7tn), but by 2022 the US had grown to $25tn while the EU and UK combined reached only $19.8tn. The dollar's status as the world's reserve currency allows the US to finance its ambitions without unsettling markets.
  • From Strength To Strength — The US produced $25.5tn in GDP, about 25% of the world total—roughly its 1990 share—while China's share stands at 18%; the US share of the G7's nominal GDP rose from 40% in 1990 to 58%. Income per person is now about 30% above western Europe and 54% above Japan, adjusted for purchasing power.
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