As I wrote yesterday .. https://paulkrugman.substack.com/p/courageous-carney-vs-demented-donald , Donald Trump and his team clearly went to Davos determined to demean and insult their hosts. It was, one might say, a novel approach to diplomacy: “You’re pathetic, your societies and economies are falling apart, now give us Greenland.”
And it worked about as well as you’d expect. Trump may have imagined that the Europeans would cower in the face of his wrath. Instead, they humiliated him. He dropped his latest tariff threats .. https://thehill.com/homenews/administration/5701884-trump-greenland-deal-framework-details/ .. in return for a “framework” that gave the United States essentially nothing it didn’t already have — and left behind a Europe that is finally united in resistance to his bullying.
Trumpian contempt for Europe rests on two beliefs we already knew were false, and a third belief the Europeans proved false this week.
First, Trump and company are wedded to the belief that nonwhite, non-Christian immigrants have destroyed European society, that Europe’s cities are hellscapes of rampant crime and social disorder — the trans-Atlantic version of what they believe about New York. In reality, while Europe has had some problems assimilating immigrants, the continent remains incredibly safe by U.S. standards:
A graph of death from crime AI-generated content may be incorrect.
Second, MAGA types are sure that Europe is an economic disaster area.
I wrote about this last month, arguing that while Europe lags in information technology, this does not mean that the European economy is failing to deliver what matters: higher living standards for its people. I’ve been doing some work comparing the growth of real wages there and here; here’s a preliminary estimate:
A graph of a graph showing the price of a foreign country AI-generated content may be incorrect. Source: Eurostat, European Central Bank, and BLS
European workers took a bigger hit than American workers from the Russian invasion of Ukraine, which cut off much of the continent’s supply of natural gas. But real wages have recovered, and over the longer term European workers have seen their incomes grow at more or less the same rate as their US counterparts.
Europe has problems, as we all do. But when MAGA types declare that a prosperous continent that in many ways delivers a better life for its citizens than we do is a social and economic hellscape, that says more about them than it does about Europe.
Finally, Trump and company believed that Europe is weak, that European leaders would never stand up to U.S. bullying. And Europe’s initial response to Trump’s trade war — an attempt to appease and flatter him, hoping that it would all go away — surely reinforced Trumpian contempt.
But even Eurocrats have their limits. Operation Arctic Endurance, the deployment of European military forces to Greenland, might equally well have been called Operation Rising Gorge. There was rational calculation behind that deployment, but it was also a way for European leaders to say that enough is enough, that they’re done with trying to make nice.
And when Trump threatened to put tariffs on the exports of nations that have sent troops to Greenland, Europe didn’t cower in submission — it got ready to strike back at U.S. businesses.
This isn’t over. There is no reason to believe that Trump has learned a lesson. Learning is not something he does. He’s still the bully he was as a child, and he’s already lashing out in other ways, suing JPMorgan for closing his bank accounts after Jan. 6 and threatening to sue The New York Times over an unfavorable poll.
But Europe has learned a lesson. Appeasing a bully doesn’t work, especially when, as anyone watching Trump’s Davos rant could see, that bully is experiencing rapid cognitive decline. But standing up to him does work.
The question now is whether and when enough influential people here at home will learn the same lesson.
Market Data 
Markets 
AI
