Bring Back Draghi

Europe already has a way out.

That is the strange part.

We do not need another committee to discover that Europe is falling behind. We do not need another conference to conclude that productivity is weak, energy is expensive, innovation is too slow, capital markets are fragmented, and the United States and China are playing a harder game than we are.

Mario Draghi already wrote much of it down.

His report on the future of European competitiveness is probably the most serious European document of the last few years. It does not read like a slogan. It reads like a diagnosis by someone who understands both the beauty and the fragility of the European project.

Draghi's core message is brutal: Europe can no longer rely on the conditions that made its old model work. Productivity is too low. Demographics are turning against us. Energy costs are too high. Global competition is more aggressive. The green and digital transitions require investment at a scale Europe has not yet shown it can mobilize.

In the European Parliament, Draghi put the choice even more sharply. Europe faces a choice between "exit, paralysis, or integration".

That is not a technocratic sentence. That is the whole civilizational fork.

Exit means parts of Europe quietly give up on the shared project. Paralysis means we keep talking until reality moves on without us. Integration means we finally build the scale, capital, infrastructure and decision power needed to remain sovereign.

The tragedy is not that Europe has no plan.

The tragedy is that it keeps filing its best plan under "later."

The warning came first

In the previous essay, No Leverage, No Sovereignty, I argued that Europe still behaves as if regulation is power. It is not. Regulation is only power when you have leverage behind it.

A large market used to be enough. Apple, Meta, Google and Microsoft all wanted access to European consumers, so Brussels could impose conditions. The Digital Markets Act is built on that logic: identify gatekeepers, impose obligations, make digital markets fairer and more contestable.

I understand the instinct. Monopoly power is real. Gatekeepers can abuse their position. Markets need boundaries.

But the deeper problem is that Europe is trying to discipline foreign platforms without building enough European platforms, infrastructure and technological power of its own.

That is not sovereignty. That is dependency with paperwork.

The warning scenario Europe 2031 makes the darker version of this argument. It imagines Europe losing the ability to shape its own future because it fails to build the material basis of agency: compute, chips, models, energy, capital, talent and strategic leverage.

My addition is simple: if you do not build bargaining chips, someone else bargains with you.

An American president. A Chinese supply chain. A frontier AI lab. A cloud provider. A chip company. A platform owner.

You may still have values. You may still have laws. You may still have very sophisticated language about digital sovereignty.

But without leverage, your sovereignty becomes a request.

Draghi is the respectable door

This is why Draghi matters.

The positive story cannot be "Europe should become America." That will not land, and it should not land. Europe is not America. It should not copy the American model of extreme inequality, cultural aggression and winner-takes-all mythology.

But Europe also cannot survive by becoming the museum of humane intentions.

Draghi gives Europe a respectable European door. He does not ask Europe to abandon its social model. He says we will not be able to finance that model unless we become more productive. We cannot remain a leader in new technologies, a beacon of climate responsibility and an independent player on the world stage if we refuse the productivity question.

That is the key.

The European social model is not protected by slowing everything down. It is protected by building enough wealth, technology and strategic strength to keep it alive.

Draghi's three priorities are exactly the right frame:

Close the innovation gap with the United States and China.

Link decarbonization to competitiveness instead of treating climate policy as if energy prices and industrial capacity do not matter.

Strengthen security and reduce dependence on foreign powers.

This is not abstract. The European Parliament summary of Draghi's plan mentions annual funding of roughly EUR 750-800 billion for already agreed European objectives. That number is enormous. But the direction is right. Europe cannot regulate its way into a new industrial base. It has to invest.

The question is where that money goes.

Because if EUR 800 billion becomes another bureaucratic distribution machine, it will not create sovereignty. It will create reports, programs, tender documents and safe projects optimized for not embarrassing anyone.

That is not enough.

Draghi gives Europe the door. Entrepreneurs give Europe the engine behind that door.

Banks will not build the frontier

Europe still reaches too quickly for banks.

That is understandable. Banks are familiar. They are regulated. They sit close to the old economy. They understand collateral, mortgages, predictable cash flow and downside control.

But the frontier does not look like that.

A company building a new AI infrastructure layer, robotics platform, defense technology, biotech system, energy storage breakthrough, industrial software stack or semiconductor tool will often look insane before it looks obvious. It may fail completely. It may burn capital for years. It may have no normal collateral. It may need investors who understand that nine failures can be the price of the one company that becomes strategically indispensable.

Banks are structurally bad at that.

Europe needs more risk-bearing capital. More serious venture funds. More patient growth capital. More founder-facing money. More mechanisms that allow losses to be absorbed without treating failure as moral collapse.

The state should not become the entrepreneur. That is another European temptation. The answer to weak markets is not that the government starts pretending to be the market party.

The state should create the conditions under which market parties can emerge.

Capital availability. Fast permitting. Simple rules. Deep capital markets. Public procurement that helps European companies scale. Tax rules that do not punish ownership and upside. Research pipelines that connect to companies. Energy infrastructure. Defense procurement that buys European capability when it is good enough and helps it become better.

Not command.

Oxygen.

The DMA mistake

This is where the Digital Markets Act becomes a useful symbol.

The DMA wants digital markets to be fairer and more contestable. Good. But contestability without European contenders is mostly a legal mood.

You do not defeat monopolies by asking them to become smaller in a market where you have built nobody large enough to matter.

You defeat monopoly power by building market power of your own.

That does not mean every sector should produce one giant European monopoly. It means Europe needs companies and infrastructures with enough scale to matter globally. AI labs. Compute clusters. Cloud systems. chip supply chains. Robotics companies. Defense technology. Industrial software. Energy platforms. Biotech. Cybersecurity. Payment rails. Data infrastructure.

The point is not that monopolies are good. The point is that power must be answered with power.

Regulation can shape markets. It cannot replace them.

Draghi is useful here because he does not merely complain about regulation. He names the machinery. The report says Europe claims to favor innovation while continuing to add regulatory burdens that are especially costly for SMEs and self-defeating in digital sectors. It says more than half of European SMEs see regulatory obstacles and administrative burden as their greatest challenge. It notes that the EU has around 100 tech-focused laws and more than 270 regulators active in digital networks across Member States.

That is not a startup environment.

That is a compliance landscape with some innovation sprinkled on top.

Draghi's answer is not crude deregulation. It is disciplined regulation. Simplification. A competitiveness test. Fewer reporting obligations. A serious application of subsidiarity. Self-restraint from the Commission. Even a possible 28th company rulebook for innovative companies, so founders do not have to navigate 27 different legal realities before they can scale.

This is exactly the right direction.

The Commission must become less of a rule factory and more of a competitiveness machine.

Tax is innovation policy

Capital does not only need funds. It needs permission to stay.

This is the part Europe still does not want to look at honestly. We say we want entrepreneurs, startups, investors and technological champions. Then we design tax and compliance systems that teach ambitious people to leave.

Wealth taxes, capital taxes, unrealized-gain style regimes, complex allowances, punitive treatment of ownership and endless administrative friction all send a signal.

The signal is: if you build something here and it works, we may treat that success as a problem to be corrected.

That is deadly.

You cannot ask founders to build Europe's future while designing a tax system that teaches them to leave.

This does not mean Europe should become a low-tax libertarian fantasy. That would be intellectually lazy. Europe has a social model worth preserving. Healthcare, education, public safety, infrastructure, rule of law, social cohesion: these are not weaknesses. They are part of Europe's beauty.

But solidarity without oxygen becomes suffocation.

A good tax system should fund the common good while making it attractive to build, invest and stay. It should be simpler. It should reward productive risk. It should distinguish between passive extraction and the messy creation of new value. It should make founders feel that Europe wants them to win here, not merely tolerate them until they become taxable enough to resent.

Tax is not just fiscal policy.

Tax is innovation policy.

If it repels capital, it repels the future.

The hardest reform is cultural

The technical pieces are difficult but imaginable.

Mobilize Draghi-scale capital. Deepen capital markets. Simplify rules. Reduce reporting burdens. Build compute. Accelerate energy. Reform procurement. Give founders better legal and tax structures. Support venture capital. Create European industrial clusters. Use public money to unlock private risk rather than smother it.

All of that is possible.

The harder reform is cultural.

Europe has a deep suspicion of success. Not everywhere, not always, but enough to matter. Too often, we confuse solidarity with resentment. We see large winners and ask first how to limit them, tax them, regulate them, discipline them, make them safer, make them smaller.

Sometimes that instinct is justified. Power corrupts. Monopolies can abuse. Markets can become cruel. A society that worships billionaires becomes spiritually ugly very quickly.

But the opposite mistake is just as dangerous.

A continent cannot produce bargaining chips if it treats the builders of bargaining chips as moral suspects.

Europe needs a strange synthesis: solidarity without resentment, capitalism without cruelty, ambition without American vulgarity.

That is a harder sentence than it looks.

It means we must make entrepreneurship beautiful again. Not in the shallow LinkedIn sense. Not hustle porn. Not the cult of the founder. But the older, deeper admiration for people who create something that did not exist before and make it useful in the world.

Builders are not morally superior. But they are necessary.

And right now Europe needs them.

Morality needs market truth

This is the deeper philosophical point.

The answer is not less morality.

The answer is more market truth behind morality.

Europe is right to care about dignity, privacy, fairness, social cohesion, climate and human flourishing. Those values matter. I do not want a future where technology is shaped only by capital, military power and platform incentives.

But values that never meet reality become theatre.

Truth is not a policy preference. Truth is contact with reality.

Markets are not sacred. They do not solve everything. They fail, distort, concentrate power and ignore what cannot be priced. That is why we need law, democracy and moral boundaries.

But markets do one thing Europe desperately needs: they answer back.

Customers answer back. Capital answers back. Builders answer back. Failure answers back. Adoption answers back. Competition answers back. Use answers back.

If nobody uses it, funds it, scales it or depends on it, it is not yet power. It is a wish.

Market mechanisms are reality sensors. Europe needs them not because money is holy, but because feedback is holy.

This is what our institutions have forgotten. They often act as if legitimacy can substitute for feedback. A process was followed, a law was passed, a consultation was held, a strategy was published, so something real must have happened.

But reality does not care that the process was legitimate.

Reality cares whether the thing works.

Europe's way out

So yes, Europe has a way out.

Bring Draghi back to the front of the table. Not as another report to admire, but as the operating spine of a European renewal.

Use the EUR 750-800 billion investment challenge as a serious mobilization frame. But do not route it mainly through old institutional reflexes. Build risk-bearing capital. Give venture funds and growth investors more firepower. Use public money to unlock private courage. Make procurement a scaling engine. Build compute, energy, chips, AI, robotics, defense tech, biotech and industrial software.

Simplify the rule machine. The Commission should regulate where regulation protects human dignity, fair competition and public goods. But it should stop treating every concern as a new compliance layer. Europe needs fewer deadweight rules and more strategic force.

Reform tax so founders and capital want to stay. Keep the social model, but stop making success feel like a violation. Productive risk should have room.

And culturally, make builders legitimate again.

Not because entrepreneurs are saints. They are not. Not because markets are sacred. They are not.

Because Europe needs bargaining chips.

And bargaining chips are built by people who are allowed to take reality seriously.

This is the synthesis.

Not less morality.

More market truth behind morality.

If Europe can do that, its values become enforceable again. Its regulation becomes more than theater. Its social model becomes fundable. Its sovereignty becomes material.

If it cannot, the rest is language.

And we have enough language already.