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Published at Sun Sep 15 2024 in
Rows HQ

2024 week 38 - Being competitive in the EU

Humberto Ayres Pereira
Humberto Ayres Pereira, CEO and Co-Founder, Rows
Blog - AI team

We're a company, not a political outlet, but we operate in a world of politics, and 2024 makes it ideal to reflect a bit on what's going on.

🇪🇺 EU and the Ease of Doing Business

On Sept 9, Mario Draghi wrote a viral letter about what is missing from Europe.

We all know what we need: MORE ECONOMIC GROWTH.

It makes sense. Economic growth gives citizens prosperity and gives us space to invest into social change. This new plan is an improvement, so let's do it. But we can still improve it by making de-bureaucratization a key goal (see Chart!).

blog - ease of doing Spoiler: my argument is that we need to make business easier in the EU.

  1. Draghi's punchier point is that the EU needs to invest +$800b annually to increase productivity.

    1. More than half ($450b) is for green energy transition. I fail to see how green energy will become the number 1 priority for EU productivity. If we want more green energy that fuels productivity, we need an atomic energy policy. Atomic energy is inexpensive, scalable and flexible, and safe, and it's an active topic of top top research. Don't take me wrong, I like investing into green energy, let's do it!, but its too much "politics" to make it into the key productivity argument. Atm green energy is not particularly cheap, we're not leaders in solar and it's doubtful we will ever be, on wind we're much better positioned.. but I still fail to see how that will be the biggest contributor to productivity gains.. so if we want productivity gains from energy -> go for the cheaper, more innovation-rich energy -> go for nuclear.

    2. The rest of the money is to be directed at high-value add/ high-growth areas of Tech, AI and Pharma. That will surely increase productivity, because all of these advances make our lives easier and empower us to do more, so that's good for productivity.

  2. A lot of his ideas are about competitiveness through reform, which again is good. I think it focuses too much at the top and too little at the bottom.

    1. Mario sees a big common financial market, mergers in tech and telco to create "giants", energy reform, common financing of countries. All good, but not enough IMO.

    2. While he also mentions SMBs frequently, I would prefer if he'd placed much more emphasis on competitiveness through less bureaucracy. How much more emphasis? I believe one of the top 3 goals for EU prosperity should be to "create an *easy* environment for SMBs". It's still a pain to open and manage small businesses in europe, and its not one problem but a million things, starting at the company register for opening, changing and closing companies, how equity and taxation works, maintaining a workforce spread across the EU, hiring from abroad, VISAs, HR rules and subsystems (you need a PhD to read a payslip), invoicing/VAT, representation in legal deeds and the $%&/$# "digital signatures", selling into a single market, selling to the government, GDPR, and more. First, I think, we need SMBs to sell more, much more, and then they have a client basis to kick a fly-wheel of innovation into action (more innovation -> more advances -> more sales -> more innovation -> ... -> become a leader!) ! Some top leaders/ bureaucrats think it's the other way around, that changes at the top will make small companies better. Finally, Europe has developed a subsidy industry that lives off public grants which doesn't seem too healthy, it's all very complex and fat, especially in an age of AI content generation.

Mario's letter helps.

Europe can and will improve. SMBs deserve all the love they can get!

Let's go!

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Every week I post about one thing that happened at Rows. We're building in public!

See you next week!

Humberto