The US economy and the EU were the same size in 2008, the US is now nearly 2X

It's a difficult question to answer thoroughly, but there should be a few obvious factors. Most of the labor market is effectively priced out of acquiring higher valued skills/degrees that would improve their career. Their opportunities for advancement are laughable.

So, then, why is that?

See this one for Spain: https://www.reddit.com/r/SpainFIRE/ or Bogleheads Spain: https://bogleheads.es

The wealth tax also makes FIRE harder, but there are exemptions that make it more manageable.

Here is information about the wealth tax in Valencia: https://atv.gva.es/es/ipatrimoni

Let's use a married couple in Valencia with 2M euro in index funds as an example.

They get 500K allowance each to subtract from their taxable base. Subtracting the 1M total exemption for the couple, their taxable base would be 1M euro for the purposes of the wealth tax. On the remaining 1M, they'd pay 10,595.71 for the first 668,499.75, and 1.12% on the remaining 331,500.25, for an additional 3,712.80. This puts their total yearly wealth tax at 14,308.51, or about 0.7% of their total 2M portfolio.

Generally, 4% is seen as a safe withdrawal rate for a properly managed portfolio for a 30 year retirement. Subtracting 0.7%, that'd give them a 3.3% safe withdrawal rate on their 2M portfolio, which gives them after-wealth-tax money of 66K to play with. Let's say half of what you're pulling each year is taxable for capital gains. With a 20% capital gains tax, that ends up being about 60K. This is a pretty good income for Valencia.

Estimated cost of living for a family of 4 there is about 28K: https://www.numbeo.com/cost-of-living/in/Valencia

That gives them another 32K after tax for travel, luxuries, etc. Not to mention, you also get an exemption of 300K (individual) for your primary residence. There are also some other limits on the tax like it not being able to exceed 60% of your total income.

In the US, with a withdrawal rate of 4% on the 2M and no wealth tax, you'd get 80K. After 15% capital gains on half of what you're pulling each year, 74K. Subtract $1400/month or ~$16K for good health insurance for a family of 4 and it's a basic tie, not accounting if you have to actually hit a deductible. In Spain you will just get free public healthcare if you're a citizen.

It's definitely harder to build that level of wealth because of salaries there, but I don't think it's fair to say that it's completely impossible to FIRE there.

That's not necessarily true, depending on how the PPP is calculated it may not reflect the cost of imported food or energy or other necessities.

You're presuming a fixed demand for labour, regardless of how much value it provides. Imagine if, for a moment, productivity increased to the point where one person could do all current work for all current employers, but of course there were many, many other people who could provide the same productivity. Do you expect that employers would not figure out a way to use some of that additional productivity to make more money?

The demand for a product increases as value it provides increases. The net effect is that employers' profits increase, but so do labours'. The divide on the split is determined by relative strength of their positions, but if it ever goes to zero for either side, it really kills the incentive for increased productivity in the first place (if employers see no benefit from increased worker productivity, there certainly won't be any more demand, and there will be no effort to exploit this new productivity... if employees see no benefit from the increased productivity, they'll have no incentive to be more productive).