The Future of European Competitiveness

This is an astonishing document in the sense that you rarely see frankness like this coming out of the EC. It raises strong criticisms of a number of high-profile "core" regulatory initiatives, including the GDPR, DSA, and EU AI Act. There clearly is a fight building between the Thierry Breton camp and the Mario Draghi camp.

For a taste of what is in here, see e.g., page 26 of the first document:

>Regulatory barriers constrain growth in several ways. First, complex and costly procedures across fragmented national systems discourage inventors from

filing Intellectual Property Rights (IPRs), hindering young companies from leveraging the Single Market. Second, the EU’s regulatory stance towards tech companies hampers innovation: the EU now has around 100 tech-focused

lawsxi and over 270 regulators active in digital networks across all Member States. Many EU laws take a precautionary approach, dictating specific business practices ex ante to avert potential risks ex post. For example, the AI

Act imposes additional regulatory requirements on general purpose AI models that exceed a pre-defined threshold of computational power – a threshold which some state-of-the-art models already exceed. Third, digital companies are deterred from doing business across the EU via subsidiaries, as they face heterogeneous requirements, a proliferation of regulatory agencies and “gold plating” of EU legislation by national authorities. Fourth, limitations on data storing and processing create high compliance costs and hinder the creation of large, integrated data sets for training AI models. This fragmentation puts EU companies at a disadvantage relative to the US, which relies on the private sector to build vast data sets, and China, which can leverage its central institutions for data aggregation. This problem is compounded by EU competition enforcement possibly inhibiting intra-industry cooperation. Finally, multiple different national rules in public procurement generate high ongoing costs for cloud providers. The net effect of this burden of regulation is that only larger companies – which are often non-EU based – have the financial capacity and incentive to bear the costs of complying. Young innovative tech companies may choose not to operate in the EU at all.

Apparently, Draghi asked Pieter Levels (@levelsio on Twitter) for some input: https://x.com/levelsio/status/1833126426142179653, pretty cool.

> Regulatory barriers constrain growth in several ways

I fail to see why it is a bad thing. We need to curb CO2 emissions which, in some wya or another, implies consuming less energy. Limiting the growth would certainly beneficial and would allow us to transition to world where growth is less central.

As an American, what I've seen, and what the statistics appear to show, is mostly stagnation for the majority of the population. Any modest post-pandemic wage gains have been offset by consumer product inflation. What we experience in the United States is the continuation of a trend going back 40-50 years: disparity of wealth, concentrating at the top. Of course those at the top have experienced spectacular growth in compensation and wealth, but it hasn't really trickled down much. Everyone else is experiencing outrageous costs of housing, education, and medical care that undermine what should be a comfortable, secure middle class existence (and retirement!), given the total wealth of the nation.

This may be the wrong crowd for such a message, though.

Canada also suffers from lack of competitiveness, productivity, etc and I always wonder if we actually have the political constituency for a pro-growth agenda. I don't think we do it seems the group that would vocally back this is likely For example the governing Liberals have been pretty bad on the economic file and will most certainly lose the election next year, but the alternatives are: 1) A Russian-propaganda fuelled Conservative party led by an obsessive culture warrior who's never known life outside politics (a 45 year old who has been an MP for 20 years) 2) a leftist party that thinks more regulation and taxes is what we need.

The "Abundance Agenda" types just don't fit in anywhere, except perhaps as a small faction of the Liberals.