Alan Healy: Patrick Collison's efforts to drag Europe back into the race

Can the billionaire and the banker arrest the continent's decline

Stripe founder Patrick Collison: "Decline is not inevitable, but it is the direction we are heading unless we take urgent action." Picture: Chris Bellew / Fennell Photography

Dragging Europe out of its competitive malaise has two new figureheads in Ireland's Patrick Collison and former European Central Bank chief Mario Draghi.

The pair have joined forces to form the Rhine Group, a private forum with the aim of pulling the continent back into competitiveness. Both can be viewed as true heavy hitters. 

Patrick Collison, who founded payments firm Stripe with his brother John, has long had an interest in economic growth, innovation and science. Draghi gave his name to a recent, landmark report which laid out a blueprint to improve Europe's competitiveness and close the gap with China and the US. Their ambition is real, but the task they face is stark, as they set out in their first statement.

"Of the fifty largest technology companies in the world, only four are European. In every emerging technology that will shape the coming decades, Europe is weak."

It is inspiring to see this brutal truth-telling followed up by a genuine wish to inspire change. The Draghi report listed a litany of issues and blockages holding Europe back as our competitors streak ahead. Energy here is far more expensive, Europe has a stifling bureaucratic and regulatory environment, and there are still internal barriers that fragment and prevent companies from scaling.

Into the fray steps the Rhine Group. "The Rhine Group aims to be one of the places where that work begins," Collison and Draghi state.

The challenge is not identifying the problem. Europe has been producing competitiveness strategies for a quarter-century. The challenge is getting governments to act on them. There have been a litany of other think tanks, strategies and organisations that have attempted to address it.

The Lisbon Strategy in 2000 aimed to make Europe the world's most competitive knowledge economy by 2010 but did not achieve its targets. Its successor, Europe 2020, followed and also fell short. Forums like the Centre for European Policy Studies and Bruegel all focus on European policies and are now joined by the Collison-Draghi initiative.

So far they are setting themselves apart. The Rhine Group is not pitching another report but appears intent on turning years of analysis into an agenda for action. Also, Collison is no EU insider. Draghi's institutional credibility is mixed with the Irishman's tech startup background in Silicon Valley.

The initial makeup of the Rhine Group's wider membership has drawn scrutiny, including a wide mix of economists, CEOs, strategists, editors, and advisors. The list has been criticised for underrepresenting certain sections of Europe both sectorally and geographically, but the overall aim and direction is for a brighter Europe in the decades ahead.

Concerns about competitiveness, innovation and development coming from a Collison may sound familiar. Writing in the Irish Times last October, Patrick's brother John focused on the same issue but confined his essay to Ireland and specifically why we have problems building things.

His diagnosis is that Ireland has plenty of money and low corruption but is strangling its own capacity by scattering power across a variety of different agencies. He pointed out that Ireland created 303 new agencies, quangos or departments since 2000 against 74 in the prior quarter-century, and that the state now "slowly ferments projects rather than energetically gets them done." 

The Collison worldview on the need for implementation is consistent, whether they are talking about Ireland or Europe. The problem is rarely money or ideas, but deeper systemic issues which must be addressed.

The scale of that slippage between Europe and elsewhere requires immediate action. Since 2000, real disposable income has grown almost twice as fast in the US as in the EU, two decades in which American households pulled steadily ahead while European ones largely stood still. In 1990 the then 12-member EU accounted for around a quarter of world economic output; today's 27-member bloc makes up roughly 16%, while the US share has barely moved. 

"Decline is not inevitable, but it is the direction we are heading unless we take urgent action. The alternative is to do what Europe has done before: compete, build, and grow again. We are not a middle power, but the world's second-largest market," the Rhine Group states.

They have correctly diagnosed that Europe doesn't need another diagnosis. Whether they break that loop is the thing worth watching. Perhaps the greatest tell is whether a single proposal survives contact with an actual parliament.