Soft Diets for Europe

The Objective, December 21, 2025

Europe is finally beginning to talk about survival. After recognizing the threat posed by Russia and its own growing political and economic irrelevance, remedies abound that appeal to competitiveness, innovation, and the single market, in the hope of regaining ground on the international stage.

The two most prominent examples are the reports by Mario Draghi and Enrico Letta. Despite being very different, they share a common backdrop: the presence of a kind of magical thinking, insofar as they are presented as compatible with Europe’s existing social and economic structure. They thus persist in the wake of the major European initiatives of past decades, from EU enlargement to the creation of the single currency. They are therefore highly conservative, because they promise major benefits at minimal cost, without altering acquired rights or bearing significant political costs. That, despite this conservatism, they are presented as bold and disruptive gives a good measure of how far we still have to go before beginning to face the reality of our situation.

Both reports avoid the question we have been dodging for decades: how much of today’s European welfare is compatible with greater competition, higher risk, and increased strategic demands? Whatever value one assigns to the welfare state and the social market economy, we must ask whether a system designed to cushion all kinds of losses can be sustained in an environment that requires accepting personal failure, corporate bankruptcies, rapid resource reallocation, and visible distributive conflicts.

Neither Draghi nor his imitators confront this issue. They present innovation as a painless cure: more growth and productivity, more resources for defense and the environment, all without touching acquired rights or assuming recognizable social costs. Seen this way, the promise is attractive because it avoids conflict and is politically easy to digest. It allows one to speak of change without discussing sacrifices or pointing to losers.

But genuine innovation is not an orderly process. It entails creative destruction: the entry and exit of firms, bankruptcies, the loss of established rents, the reallocation of capital and labor, and greater uncertainty. It requires accepting that some win and others lose, and that the state cannot cushion every fall without ultimately suffocating the innovative process itself. To present innovation while concealing the frictions it generates is to falsify its nature. Even more so when it is proposed to promote it massively through public funds, as if disruption could be planned and subsidized away. If it is not disruptive, it does not transform; and if it is, it generates costs that someone must bear. Worse still, when innovation passes through public committees, influence tends to be rewarded rather than risk-taking.

Something similar occurs with the single market, whose deepening Letta advocates. Developing it means intensifying competition, which entails accepting the disappearance of less efficient firms, subjecting economic actors to the discipline imposed by price and wage movements, and increasing exposure to foreign rivals. This would be good news for consumers and productivity, but not for those who live off barriers, exceptions, or tailor-made regulations. Here too there are winners and losers. Pretending otherwise is yet another form of concealment. The single market cannot be completed without firm closures and resource reallocation.

The problem is not that these proposals are incapable of generating change. They have the potential to do so, but by hiding their costs—or presenting them as low-cost social processes—they risk turning into empty rhetoric. They will tend to be postponed and diluted, taking shape as incomplete and ineffective versions: competition will be softened, bankruptcies avoided, and market decisions replaced by political decisions in the interest of rent seekers. Innovation will end up being subsidized, and the single market expanded with new obstacles and conditions—in short, a profusion of the rhetoric of change while its most uncomfortable effects are neutralized and its main benefits are stripped away. One need only look at the recent deregulation of sustainability directives, which is turning into little more than a “simplification” that keeps most of their rent-seeking parasitism intact.

In this respect, the silence of these proposals on tax burdens is revealing. The Draghi report barely mentions them, and in the Letta report taxes appear mainly as a technical problem of fragmentation that should be smoothed out, not as one of the most fundamental political decisions for defining our productive model. Both reports speak of incentives, investment, and financing, but rarely treat effective tax pressure and the structure of public spending as central constraints. At bottom, they seek to renew Europe while keeping the social helm in the hands of the same states that have led it into stagnation. Competitiveness is promised without discussing tax wedges; innovation is invoked without asking who pays for the incentives; resources are discussed as if their scarcity and allocation were technical rather than political matters. When money is lacking, the response is credit. And when some countries no longer have fiscal room, instead of cutting spending, the proposal is to mutualize debt so they can keep spending. That these solutions are presented as painless says a great deal about the decision being avoided.

This bias is not accidental. It reflects a political culture that has learned to reject visible losses and to demand protection as the norm. In such societies, competition is tolerated only as long as it does not close firms; innovation is celebrated only as long as it does not destroy rents; and reform is accepted only if it does not disturb inherited equilibria. With these preferences, fiscal silence is not an oversight but a necessary condition: it allows resources to be promised without an explicit bill and shifts decisions toward debt, subsidies, and exceptions.

Against this cultural backdrop, any attempt at change ends up becoming a management of postponement—that is, the orderly administration of a decline that one prefers not to name. That postponement leaves clear traces: more common debt, more exceptions, more subsidies, and less competition. Innovation works when it is allowed to fail; the single market works when it stops protecting; and politics works when it weighs costs instead of concealing them. Without the honesty required to open those costs to public debate, Europe is not reformed—it is merely administered, and the results of that administration are plain to see.

English version prepared with ChatGPT-5.2