"Europe is far behind in their economy
500 years ago, European nations conquered and ran as much as 80% of the planet. They shaped the globe as their wars killed millions of people, and- surprisingly- it was the birth place of modern capitalism, as well as the Industrial Revolution. Over the last 15 years, though, their economy has essentially been treading water.
Their share of the global economic output was 33% 20 years ago, and as of 2024, it was only 23%. It's estimated to be their lowest portion of the global economy since the Middle Ages. Household wealth growth has also been a problem for Europe, as it's grown by a third as much as that of Americans since 2009. Per capita GDP in the US is about $86,000 a year versus $56,000 a year for Germany, and only $53,000 for the UK.
You may think Europe is a great place to live, but Americans have a far higher standard of living. Here in the United States, we have over 50% more living space on average per person, and four out of five Americans have air conditioning and clothes dryers at home. Compare this to Europeans, for whom the numbers range between one in five and one in three.
The high tax revenue needed to finance their welfare-spending could also be causing problems. I was blown away by the fact that Europe's welfare states account for half of the planet's welfare spending. Looking at tax revenue as a share of economic output, it's currently around 38% in Germany, 43% in Italy, and 44% in France. The US is only at 25%. Their politics subsidize vacations and back to school equipment for children, and public transit is free for everyone. Another big problem is that their workforce is at risk of declining due to an aging population. The average European is nearly 45 years old, compared to 39 for the average American, and the continent's working-age population is predicted to fall by nearly 50 million by 2050.
The question is, who will pay all the tax revenue if there are less people working and more people collecting? We have our problems here at home in the US, but I worry Europe is on a troubling economic path. I was just in Europe a couple weeks ago, and from what I saw of Spain and Portugal, I was not that impressed. It seemed every single piece of blank space, new and old, was covered with graffiti; I also noticed at the airport in Munich that it was really dark as they appeared to only use half the lights, to save energy. One may like to visit places in Europe for the history, but I believe that over the next 10 years they're going to have a meeting with reality: that you cannot keep giving your citizens free stuff as less and less people work."
Reference: Brent Wilsey, Wilsey Asset Management