Economically and financially speaking, the USA is much more attractive than pretty much anywhere in Europe. US companies dominate the world in many fields, especially technology: just think of Google, Microsoft, or Amazon. Top earners in the USA earn multiples of what top earners in Europe do: in the USA, bright graduates in highly sought-after specializations (e.g. investment banking) may make as much as 400K USD per year starting out; a salary all but unattainable to anybody in Europe beyond top executives.
All of this are just symptoms: while the Industrial Revolution started in Europe, the continent has fallen behind since compared to the rest of the world, especially the USA. This is dramatically visible if you look at a graph for GDP growth, for example. But why is this the case? As with most things, there is no one answer, but a variety of reasons. Economics Explained did a pretty good video on the topic that I think is worth watching, but I’ve also put together some further thoughts after it.
To summarize the reasons mentioned in the video:
- the USA is a lot more of a unified country than the EU is, which is a huge advantage for local companies: the EU consists of dozens of comparatively tiny countries all speaking different languages and having differing legal, tax, and administrative systems which businesses have to navigate to expand within Europe
- the USA is still pretty much the most attractive target country for immigration
- the USA uses the world reserve currency (the US dollar) and speaks English, making it attractive for investors both small and large
- EU countries tend to prioritize better working conditions and social safety nets (such as unemployment benefit and affordable healthcare) over productivity and economic growth
But, there are other reasons that I think the video misses that are also important factors:
- the two World Wars have devastated Europe and gave the USA a huge head-start, while Eastern Europe has still not really managed to recover (socially as much as economically)
- the USA is a massive country that is incredibly rich in natural resources, while Europe is fairly sparse in comparison
- Europe’s population is aging much faster than the US, partly because of the lower immigration of young professionals; also, the immigration that Europe gets is relatively unskilled, again, compared to the US
Of course, in spite of all of these, Europe remains one of the most desirable places in the world to work and live, especially at lower income levels: I’d much rather be poor in Europe than in the USA, thank you very much. Admittedly, due to the relatively huge tax burdens on the high-earners in Europe, being wealthy in the USA is much more desirable individually, but as a society that does not seem like a good trade-off to make, even if you only look at the pragmatic reason of security.