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Further reading mentioned in the video:
America’s bullied allies need to toughen up: https://www.economist.com/leaders/2025/03/13/americas-bullied-allies-need-to-toughen-up?itm_source=parsely-api
Is Putin ready to accept a truce with Ukraine? https://www.economist.com/europe/2025/03/11/is-putin-ready-to-accept-a-truce-with-ukraine
Ukraine’s embrace of drone warfare has paid off: https://www.economist.com/science-and-technology/2025/03/12/ukraines-embrace-of-drone-warfare-has-paid-off
If you appreciate the research, consider buying me a ‘coffee’ at https://ko-fi.com/moneymacro or supporting long-term for membership benefits via Patreon: https://www.patreon.com/moneymacro
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SOURCES:
I’ve linked my sources in the blog that goes along with this video. Links are in the text.
https://www.moneymacro.rocks/2025-03-26-europe-stronger/
Timestamps:
00:00 Intro
01:16 Macroeconomics 101
03:15 War economy trilemma
08:41 Why does Europe need a military threat
13:21 Discussion + conclusion
16:11 Sponsor
Attribution:
Music by Epidemic Sound: http://nebula.tv/epidemic
Thank you to AP Archive for access to their archival footage.
Stock footage and others clips by Getty
Narrated and produced by Dr. Joeri Schasfoort
49 Comments
Get access to global coverage at an exclusive 20% discount at https://economist.com/moneymacro
Further reading from the Economist:
1. https://www.economist.com/leaders/2025/03/13/americas-bullied-allies-need-to-toughen-up?itm_source=parsely-api
2. https://www.economist.com/europe/2025/03/11/is-putin-ready-to-accept-a-truce-with-ukraine
3. https://www.economist.com/science-and-technology/2025/03/12/ukraines-embrace-of-drone-warfare-has-paid-off
US citizen here. Pulled my money out of US equities just before the end of the year. I shifted a lot of my investments to europe, Latin america, and some aisia. I want the ecconomy here to absolutely tank so all the dumb diwads in the country throw out MAGAts and trump.
USA have not delivered like 400 f35s, if european countries cancels all that its like 185 billion in planes and support etc. f35s are being made in texas and florida, these states would have insane issues. Its something europe does not produce, but we already have 164 of them, so its all good, still makes european airforces very good, then the rest just base on european products such as gripen, rafael etc. Europeans should dump f16s and order gripens. Europe has 600 f16s, and 30 on order by bulgaria and slovakia. Well not dump, but the ones are going out, replace with gripens.
Another thing is capital flight from the US.
Businesses hates instability more than anything. Nobody knows the effective tax rate even next week in the US. This will cause capital flight from the US to a certain degree
AI will free up labour. hopefully…
Love me a little military Keynesianism – though you do have to look at a war economy. If you get rid of the destruction, it’s really just a really intense government spending on science and technology.
EU became a lame force staying with US. It can't even regulate it's own members in many issues. Need to reform most things.
It's a potential side effect of a necessary evil, not a desirable economic strategy in itself. However, as a neutral outsider I believe Europe Should have always been a security pillar of the free world rather than a security dependent.
CENTRAL EUROPE WAKE UP THE WEST WILL BETRAY US AGAIN
Good for you Europeans, we don't need you and you don't need U.S. Take care now
what the fuck Russia hijacked my YouTube
最欧幻想
Is this cope? Seriously though the European this sounds like the world is gearing up for WW3.
lol, MAGA vs MEGA
Appreciate it is controversial but Bjorn Lomborg suggested that the irrational and ineffective climate policy should be changed and used to fund the military buildup. I am inclined to agree with him.
Europe entering beast mode
You know, from a personnel point, military personnel are more likely to come from the unemployed, or the service sector, manufacturing and consumer goods are not likely rto be affected, actually, manufacturing is likely to grow as we ramp up the production of military stuff.
The opening map is a joke. It's totally out of proportion.
European products are already replacing US brands such as coca cola and mcd, and many others. It is a fact US is already losing the European market.
Europa kan sterker zijn (Europe can be stronger). But they need to work together well enough to get there. There has to be enough of a vision and understanding of the benefits to make it happen, seeing the forest for the trees. Sadly, that's something enough of the UK didn't see until after they screwed themselves.
Denmark already spends 2.5% on defence and we might just charge the US for allowing them to be on Greenland.
You know, if we have been operating under potential, it's in part because our Kapital lackeys in government have been unwilling to take the money where it is to maintain our education and health care capabiities, to name only to vital sectors that have suffered in recent decades. we don't really need the military spendings to improve the economy, though we do need to improve military capacity, due to America turning flaky and russia proving to still be a dangerous neighbour.
I don't worry. Quite the opposite. More high tech production will have positive impact and besides, there are many areas in wealfare that can be retracted without problem. The most important – education, healtcare, public services are safe 🙂
Inorder to be strong, Europe need to be energy independent instead of depending on Russia….
you know, classical economic theory might hav e been fine before WWII, but things have changed quite a bit since, and manufacturing has lost a lot of its potential and been replaced by the service sector, not a good thing, but so it is.
I notice from your map, does Poland really have a Northern (Germany/Scandinavia) type economy?
So basically Germany and France once again pay for everything. Europe isn’t wired to support entrepreneurs and tackle prohibitive regulation. We must have a strong Europe again, but it won’t occur with current leadership.
Outspend the EU on defense? This is blatantly false information. Russia might spend 120 BN a year, combined EU spends roughly 250-300 now. Comeon man.
great video otherwise
Reality is ignored here, while applying simplistic abstract words. The chemical industry disappeeared when we boycotted Russia and now has the world's most expensive natural gas (the best source of hydrogen, very important in chemical industry) and the world's highest electricity prices. And for the EU it is a purpose in itself to maximize electricity prices, it has already been decided that they must double and double again in the coming years.
The unemployment is hight because tens of millions are analphabets or haven't finished elementary school or refuse to work for cultural reasons (e.g. not allowed to leave home without the company of a male relative). Europe's industries are obsolete, infrastructure is worn down, qualified workforce is lacking, political regulations prevent entrepreneurship. Eurozone public debt is 88% and budget deficit 2.5% of GDP, set to increase with new German and EU megadebts. Companies and households are also highly indebt.
Europe lacks electronics, software and internet success companies. Because the EU has strangled innovation and entrepreneurship wityh its extremely destructive regulations of everything during the last decades. Europe hasn't got a chance to be competitive with EV, for example. The reality is something totally different than the abstract words and drawings presented in this video.
What is there in a car factory that is useful for making a tank? A tank weights 40 times more and has about 10 times as many horsepowers. And I don't think one builds 100,000s of tanks a year, as one does cars. But if one gets rid of all the worthless equipment and machinery in the car factory, one at least has an empty building!
I do understand that if Europe takes care of its own defense and purchases their weapons from EU manufacturers then it will get stronger. The problem is we've seen that before and it did not end well because it played important role in creating the stages for both WWi and WWII.
I would argue that Europe's independence from the US in terms of military defense is good because … well … of Russia. The mess Europe finds itself currently was caused by the US hubris and hegemonic goals. Russia makes a great partner for the EU because of its natural resources. From an strategic point of view, having Russia as a partner moves China's border all the way back to the Russia/Mongolia/China border.
Note about NATO expansion: I remember a lecture by Gen. Wesley Clark (on YouTube) in which he recounts his time working with the Russian military and he tells of a Russian General complaining to him about the expansion and he (Clark) told about what that Russian General said and it is something like "I know why you are expanding NATO: you want to steal that market from us!". Market to what? To a set of industrialized good Russia produces with good price and quality: armaments. Expanding NATO threatened Russia in more than one front.
As long as the european leadership and the german government stay as they are nothing will ever get better. These people have no credentials besides profiting themselfes and casting their ages old perceptions on to their constituents. They are stone age governors of the new age. Its ridiculous. They will try to protect dying industry at the cost of each citizen, will deprave rights and freedoms to preserve those of the richest. They are the most unuseful people when it comes to reinventing europe. What we need is a movement rising from the populus instead from politics itself. Its time to MAGA europe but in a good way – that means abolishing the current forms of government and establish a great eueopean network that is actually looking after itself. Politicians working for their image in a system where they are effectively unreplacable is something we can no longer afford.
Maybe.
Good analysis.
The only critique point is, that defense spending wouldn't actually be needed, if Europes countries would stop protecting their old, inefficient companies and overregulating employment.
However, if this external threat is reason enough to update the policies and regulation, I still welcome it.
(I claim, that german employment regulation is the main reason for low wages in Germany. The employment market is very stagnant, causing a much higher degree of inefficiency. This inefficiency again, causes low wages. It would me much better to lower the bar to fire people. While it could increase the % of unemployment contribution. Switzerland has much a more flexible system, and has much higher wages and similar unemployment rates.)
You assume an “unemployed” person is literally one that has no income and is in dire need of one. That is because you rely on data from the political systems. However, I can guarantee you 90% of the so-called unemployed people do in fact make money under the table and use various tricks to avoid declaring income. They are in no need of a job from the “system”. They’re perfectly fine in their own.
😭😭😭 Europeans are truly delusional if they believe this mess. Europe is moving off the world stage completely. They will need to gut social welfare to pay for a revamp of its military. Then Europe has no natural resources. African countries are increasingly kicking out European exploitative companies. And lastly europe makes nothing the rest of the world needs in large capacity.
This euphoria is same as before WW I. Current state provides security, otherwise Germany will try to restore all Prussia land and start a war with Russia.
MEGA? Lmfao.
Not sure your point about collective bargering is right. Collective bargaining can end with workers getting paid less then other wise but, it play a significant role in promoting fair wages and ensuring workers receive a fair share of profits. Additionally, the concept of "creative destruction," where less productive businesses go bankrupt, can lead to a more efficient allocation of resources, fostering overall economic productivity and innovation.
🤣🤣🤣🤣🤣🤣
They could start by legalizing the sale of firearms
Stop paying the rents of migrants from Africa and Asia! Stop giving them "children money"! In fact , send them ALL back home! This would save hundreads of billions of Euros at EU level!
7:00 Yes, unlike Germany … but you must remember that Germany did some bad things in the late 1930s and early 1940s and was left with no arms industry for quite some time. Strangely, the occupation of Germany legally ended only in 1990 but since 1955 Germany was allowed to have arms industry. Well … since West Germany had joined NATO in 1955 that makes sense. West Germany joined NATO on May 6, 1955. The Warsaw Pact was established on May 14, 1955. And that's how the Cold War survived Stalin's death.
As an American, I hope Europe becomes stronger. I want everyone to be successful and peaceful. But as I tell my friends around the world, I think the USA needs to fix its own problems first before we spend money to help other countries.
So if you think you'll be better without US involvement; great, I'm happy for you.
For the countries that might rely on us for strength, I'm sorry, but don't we have the obligation to fix our own home first?
You know, there's a now famoust Twilight Zone episode from 1964 called "The Encounter" featuring George Takei. IMHO a lot of people misread the episode attibuting the continuation of animosities to the resentment both characters share against each other. I think that what caused violence wasn't the resentment – it was the sword … the weapon.
'the US wants out of Europe' meanwhile they are building the biggest military base in Eastern Europe in Romania, Kogalniceanu.
Another point is that I think Russia has no plans to invade Europe or the EU and if that happened things like the economy, education and welfare would simply disapeer since not freezing to death and finding food would be the priority of each and every human being on Earth.
Europe needed the US in NATO because of the nukes. Now, the times have changed, and once the US leaves the NATO, there will be peace again in Europe.
And how would you exploit these factories to their full potential without cheap energy? After two decades of anti-nuclear propaganda plus the destruction of North stream 2, Europe is left depleted. You can have as much workforce and factories as you want, if the kW/h is twice the one you find in the other continents, you're basically f****ed