There must be a substantial body of empirical literature to substantiate the claim that the main causal determinant of lack of innovation in Europe is labor law, right?
This is an interesting counterexample. I wonder how exactly the restrictivity of labour laws is measured? Perhaps it’s multidimensional? Typically these questions are answered in the primary literature so I was wondering whether the author would provide some sources to defend his main claim.
Tesla delivered 1.6M vehicles globally in 2025 and the trend is downward, VW alone and just in Europe - 1.5M. Tesla revenue was 25-30B USD, VW revenue - 360B EUR. Is innovation in the room with us?
Yes, rating Tesla's "worth" on market cap is misleading. Its underlying figures don't support that value. It is doubtful that anyone is betting on the company as a carmaker in the future, rather than on one man's claims for its future deviation into humanoid robots.
Hmmm. Its a complicated topic. I work for an american company in belgium. Protections are ok and as its chemical sector we are covered by the chemical union’s agreement. Still, if they fire me, i get 2 month notice for 3 years worked and then its off to unemployment bureau. No one in Europe wants US style. Its harsh and unfair. You talk about the need for companies to fix their mistakes. What u dont mention is that C-suite who make those mistakes get cushy severances and can cash in stock options. So in US they get off easy for making multi billion dollar mistakes but the average joe shouldnt get a severance. Diess was an example you used. That idiot was told (we supply automotive, so i know people in WV) multiple times that WV doesnt do software, shouldnt do software. He went for it because he didnt want to be in the hock to Amazon or Meta. What happened? Bugs you mentioned. HE screwed up the company, HE was the reason (with his executive team of course) why WV wanted to close 3 factories to cut costs. Guess what severance Diess got? Why wouldnt average joe or heinrich working in Wolfsburg get something too?
Love it. The failure costs (€610M to close Audi Brussels) are what happens when worker security gets embedded as firm-level "anti-synchronization costs" instead of socialized maintenance. Flexicurity separates the two.
If the key factor holding back European growth is excessively protective labor laws, one should perhaps expect mass automation to be better for Europe than for the US. Even in the EU, there's no requirement to pay your AI agent instances severance worth multiple years of wages if you decide to turn them off, no need to negotiate with an AI works council, and so on. European firms will be able to reallocate AI labor much more easily than they can reallocate human labor.
You make a good point on incremental improvements. The US seems allergic to that kind of approach. If US carmakers sit comfortably producing ICE cars with very limited changes in technology, they may hold new car prices down, but they won't compete in foreign markets (particularly where fuel costs are higher). Buyers may save some money on their initial purchase, but they will pay more on fuel.
This must explain why German train station staff completely ignore anyone asking for help.
There must be a substantial body of empirical literature to substantiate the claim that the main causal determinant of lack of innovation in Europe is labor law, right?
Sweden has the most restrictive labour laws in Europe but is also considered the Eoropean leader in Innovation with the most unicorns per capita.
This is an interesting counterexample. I wonder how exactly the restrictivity of labour laws is measured? Perhaps it’s multidimensional? Typically these questions are answered in the primary literature so I was wondering whether the author would provide some sources to defend his main claim.
Tesla delivered 1.6M vehicles globally in 2025 and the trend is downward, VW alone and just in Europe - 1.5M. Tesla revenue was 25-30B USD, VW revenue - 360B EUR. Is innovation in the room with us?
Yes, rating Tesla's "worth" on market cap is misleading. Its underlying figures don't support that value. It is doubtful that anyone is betting on the company as a carmaker in the future, rather than on one man's claims for its future deviation into humanoid robots.
Hmmm. Its a complicated topic. I work for an american company in belgium. Protections are ok and as its chemical sector we are covered by the chemical union’s agreement. Still, if they fire me, i get 2 month notice for 3 years worked and then its off to unemployment bureau. No one in Europe wants US style. Its harsh and unfair. You talk about the need for companies to fix their mistakes. What u dont mention is that C-suite who make those mistakes get cushy severances and can cash in stock options. So in US they get off easy for making multi billion dollar mistakes but the average joe shouldnt get a severance. Diess was an example you used. That idiot was told (we supply automotive, so i know people in WV) multiple times that WV doesnt do software, shouldnt do software. He went for it because he didnt want to be in the hock to Amazon or Meta. What happened? Bugs you mentioned. HE screwed up the company, HE was the reason (with his executive team of course) why WV wanted to close 3 factories to cut costs. Guess what severance Diess got? Why wouldnt average joe or heinrich working in Wolfsburg get something too?
Love it. The failure costs (€610M to close Audi Brussels) are what happens when worker security gets embedded as firm-level "anti-synchronization costs" instead of socialized maintenance. Flexicurity separates the two.
https://www.symmetrybroken.com/maintaining-divergence/#the-missing-line-item-maintenance
If the key factor holding back European growth is excessively protective labor laws, one should perhaps expect mass automation to be better for Europe than for the US. Even in the EU, there's no requirement to pay your AI agent instances severance worth multiple years of wages if you decide to turn them off, no need to negotiate with an AI works council, and so on. European firms will be able to reallocate AI labor much more easily than they can reallocate human labor.
You make a good point on incremental improvements. The US seems allergic to that kind of approach. If US carmakers sit comfortably producing ICE cars with very limited changes in technology, they may hold new car prices down, but they won't compete in foreign markets (particularly where fuel costs are higher). Buyers may save some money on their initial purchase, but they will pay more on fuel.
Terrific article; informative, comprehensive, and persuasive.