US allies facing dire threat MAGA isn’t telling you about: Nobel economist

Liberal economist Paul Krugman strongly disagrees with many of President Donald Trump and his allies' arguments about European economies, which, he argues, are much better off than MAGA Republicans are claiming. Many European countries, according to Krugman, are ahead of the United States when it comes to everything from health care access to life expectancy to parental leave to infrastructure. But in a Substack column posted on Thursday, Krugman zeroes in on a problem in Europe that he says is quite real.

Europe, according to Krugman, "has done well at making use of technologies developed elsewhere." But Europe's problem, he warns, is having ready access to IT technologies it needs but did not develop.

"What should worry Europe, instead, are the geopolitical implications of U.S./Chinese leadership in advanced technology," Krugman explains. "We used to have a global economic system overseen by a mostly benign and, in any case, law-abiding hegemon. That system was, however, gradually eroding with the rise of China, and has now taken a drastic hit with America's abandonment of the rules it largely created. In this new world, Europe — one of the world's three great economic superpowers — unfortunately can't be sure that it will always have access to new technologies developed and produced in the other superpowers."

The former New York Times columnist continues, "The risk of being cut off from strategically important technologies, once minimal, is now very real. And that risk, rather than misleading numbers about trends in real GDP (gross domestic policy) per worker hour, is what should concern European policymakers."

A prominent talking point among MAGA Republicans and Trump allies is that because Europe is lagging behind the United States from a GDP standpoint, its economies are in a very weak position. Krugman, however, is dismissive of that argument. Krugman isn't worried about Europe's GDP, but he is concerned about the United States' longtime European allies having quick access to technologies it will need. And Krugman contends that in some cases, "European adoption of new technologies is handicapped by market fragmentation."

"It is a fact that the U.S. plays a much bigger role in the global IT industry than Europe does," Krugman notes. "Few of the biggest tech companies are European. The current race to dominate AI is overwhelmingly a tournament among U.S. companies. Chinese companies taking a different, less computation-heavy approach may be serious contenders, but Europe isn't in the game. But does this matter? The big benefits of IT come from applying it, rather than creating it. And as I've tried to show, the data show Europe holding its own in the relative value of the goods it produces, indicating that European economies are doing fine when it comes to applying technological advances."

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