In this session of More MPE, host Professor Ray Horton speaks with Tano Santos about Europe. Santos is the director of the Heilbrunn Center for Graham and Dodd Investing and Robert Heilbrunn Professor of Asset Management and Finance at Columbia Business School.

The conversation begins with talking about the major problems facing Europe today, which Santos believes are two-fold. The first and most obvious problem is the war between Russia and Ukraine. Europe has a huge stake in containing Russia’s desire to expand its influence westward, but Europe’s response to the invasion of Ukraine is muted by its economic dependence, particularly Germany’s, on Russian oil and gas. 

The second major problem facing Europe, China, is related to the first. To reduce its economic dependence on Russian oil and gas, not to mention to play a meaningful role in fighting global warming, Europe needs to dramatically increase its reliance on clean energy, solar energy particularly. But like the United States, Europe takes a distant back seat to China in the production of solar panels.

Next, we discuss the major problems facing Europe tomorrow that nobody’s paying enough attention to today. Santos’s worries begin with concerns for the long-run economy. Europeans are aging, and it’s hard for economies to grow if the number of workers doesn’t grow. In theory, the migration of people from other countries could bolster the working-age population, but the reality is that migrants find it hard to enter European labor markets for a number of reasons. In theory, productivity gains due to technological advances could help solve the shortfall of workers, but the major technological change in the offing is AI, which Santos fears will bite heavily into the demand for workers in the advanced service sector.

Mentioned in this episode: