In his book, The World Is Flat, Thomas Friedman gave most Americans a wake up call about the impending competition that it coming from Asia. China does not want to be our cheap production outlet. They want to be us - i.e. the world's dominant economy. By now most people view China and India as real competitive threats - particularly the working class in industries that can be shipped overseas. However, the threat is much more multifaceted that most presume.

I am winding down my last few days of my trip to Europe and La Reunion. Every time I come to Europe (typically about every 2 years) I notice that things have become a little more “American.” No offense to my European friends - I actually mean this as a complement. 

I had the occasion to spend a couple of months in Europe in the 1990s. It was my observation at the time that (generally speaking) Americans and the French (and probably most Europeans) had a basic disconnect in a principle core value. In France, security was the premier value. If you had a good government job, you were at life's peak. Americans, in contrast, value opportunity over security. The middle class does not hate the rich because in America some of the the middle class become the rich. We will trade security for opportunity. It is probably inbred because most of our ancestors took pretty big risks and came to the U.S. with the hope of opportunity.
 
A prime example of the different values is when I left my first law firm. I was a partner making pretty good money. My friends and family in the U.S. thought it was great to take the risk and start a new firm. My wife's family in Europe wondered why I would do something so crazy.

Over the last 16 years there has been a marked shift in European mentality. Instead of nationalizing industries, many European countries and their citizens are becoming more entrepreneurial, reducing the role of government in everything from manufacturing to health care. The French even elected a conservative president.

While it is good news for us that European youth like U.S. clothing styles and U.S. music, they also like the idea of creating something new in the business world.  I had a discussion a few days ago with a late 20s Frenchman. He has already started one company.  He is currently raising capital for a new venture and has two additional businesses already in the queue. Unlike most Americans, he is fluent in three languages and is willing to move wherever his businesses need him to be.

The next time you think about the competitive risk from Asia, remember that there is a generation of young Europeans who are more than willing to out compete us in the world marketplace.