Posts Tagged ‘British Empire’

Why and how Britannia ruled the waves

March 16, 2017

One hundred years ago, the British Empire and Commonwealth comprised one-fourth of humanity.   There were British colonies on every continent, and nations on every continent with whom Britain was their greatest trading partner.

Yet this power was largely an illusion.   Britain no longer had the industrial and financial power to maintain a global empire and, 50 years later, it was no longer a world power.

Today the United States is seemingly as supreme as Great Britain was then.   The USA has more than 800 military bases in 160 countries; it can project its military power to places as far from home as Afghanistan and Iraq.

Yet this, too, is largely an illusion.   Our American industrial and economic power is as hollow now as Britain’s was back then.  I don’t think it will take as long as 50 years for this to become apparent.

A few weeks ago, I happened to pick up Paul M. Kennedy’s The Rise and Fall of British Naval Mastery (1976, 1983) in a second-hand bookstore.  Kennedy has a deep understanding of the relationship between military power, economic power, technology and geopolitics, and the ability to explain complex matters clearly.

His book is fascinating for itself, and for its implications for American power.   His story begins in the 16th century, when England depended on sea power, diplomacy and a balance of power to preserve its independence from the powerful Spanish Empire and French Kingdom.   The English Navy was under-financed and under-paid; it used privateers and buccaneers as a kind of guerrilla navy.

In the 17th century, Britain was torn by internal conflict, including a full-scale Civil War.   The British avoided conflict with France and Spain, the great European powers, but built up their merchant marine and fought three wars with the Dutch for rule of the seas.

The British established naval bases worldwide and founded colonies in North America.  Maritime commerce became a source of national wealth and power.   By the end of the century, Britain had subdued Scotland and Ireland, and overcome its internal religious divisions.

Theaters of Britain’s war with France, 1754-1763

From 1689 to 1815, Britain fought a succession of wars against France, all of which (except the French-backed U.S. War of Independence) left Britain richer and more powerful and at the point of becoming the world’s only global power.

The growing British merchant marine added not only to Britain’s wealth, but her number of seamen and access to naval stores.  Wars on French commerce enriched British merchants and shipowners.  Victories added to her colonies and naval bases.   Britain’s new wealth, plus its commercial spirit and resources of coal and iron, gave rise to industrial revolution.

In the 19th century, British supremacy at sea was unchallenged.  There was a kind of naval-industrial complex.  The British Navy created a market for the shipbuilding industry, iron industry (for cannon) and other products, and spurred industrial innovation.

As the first industrial nation, Britain was for a time the workshop of the world.   Industrial power reinforced sea power, and sea power helped open markets for the products of British industry.

During all this time, as Kennedy noted, Britain never tried to dominate the continent of Europe, and could not have done so if it tried.  Instead it tried to maintain a balance of power among the great European countries.    The British could not avoid fighting in Europe, but were unable to win without the support of allies, often financially subsidized allies.

The 19th century British tried to make their world empire acceptable to other European nations.   The British Navy suppressed piracy and the African slave trade (which had been a big source of British wealth in previous centuries).   It financed scientific expeditions, laid oceanic telegraph cables and public navigational charts–all to public benefit.

But in the middle of the 19th century, technological developments shifted the advantage from sea power to land power.

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The five largest empires in history

July 23, 2015

The Roman Empire wasn’t one of them.

 

The USA isn’t invincible, and never was

June 5, 2015

 I’ve written several posts pondering why the United States of America, which has the world’s most extensive and expensive armed force, no longer wins wars.

As I think about it, it seems to me that we Americans have an exaggerated idea of our invincibility in the past.

In the War of Independence, we prevailed against the much larger and more powerful British Empire, in which, however, we needed the help of our French allies.  In the Civil War, we fought with each other, and were fairly evenly matched.

An F-16 jet fighter takes off from Nato airbase in Aviano, northern ItalyOur casualties in both the War of Independence and the Civil War were a proportion of our population equivalent to millions today.   Europeans suffered proportionate casualties in the 20th century world wars.  We Americans did not.

In the First World War and in the European Theater of the Second World War, it was our allies, the British, French and Russians, who bore the brunt of the fighting.  We Americans joined the fight in the middle and, while our intervention may have provided the margin of victory, I sincerely doubt that we could have won all by ourselves.

I do not of course question the valor of Americans who fought in these wars.  They went through things I am glad I have never had to do.   But the British, French and Russians, and the Germans and other nations also were brave.

The idea of American military exceptionalism is an illusion, and a dangerous illusion, because it prevents us from understanding reality and learning from mistakes.   It leads American military officers and politicians to think we can successfully confront the Russians and Chinese in their own neighborhoods.

I think we Americans would fight as bravely as our ancestors did if our homeland were attacked.  But I don’t think many of us are interested in shedding blood to support a claim that the USA is the world’s sole superpower.

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Inside the hidden world empire of money

April 18, 2013

The International Consortium of Investigative Journalists is in the process of publishing reports on how the world’s millionaires and billionaires escape taxation and the law through the use of tax havens.   Many are from countries in financial crisis that are in the process of raising taxes and reducing government services for working people and the middle class.

The Tax Justice Network, an anti-tax haven organization, estimated that as much as a third of the world’s wealth is held in tax havens, and half of the world’s trade flows through them.  I don’t know the basis for that estimate.  The fact is that the amount is huge, and that there is no accurate way of measuring it.

Tax havens also are havens from the criminal law.  They hide the wealth of corrupt politicians, crooked financiers, narcotics traffickers and terrorist networks, and they are used by nations such as North Korea and Iran to evade international economic sanctions.  At least two supposedly respectable British-based banks, HSBC and Standard Chartered, actively sought money laundering business in Mexico and other countries.

Switzerland was once the go-to country for secret, numbered bank accounts, but now the United Kingdom and its overseas territories are the key players in the secret world financial network.  Tax shelters in territories such as the Cayman Island, the Cook Islands and the British Virgin Islands are linked to banks in the City of London, which itself is a separate jurisdiction with its own government separate from the rest of London.

Vanity Fair magazine reported in its current issue—

It comes as a surprise to most people that the most important player in the global offshore system of tax havens is not Switzerland or the Cayman Islands, but Britain, sitting at the center of a web of British-linked tax havens, the last remnants of empire. 

An inner ring consists of the British Crown Dependencies—Jersey, Guernsey and the Isle of Man.

Farther afield are Britain’s 14 Overseas Territories, half of them tax havens, including such offshore giants as the Caymans, the British Virgin Islands (B.V.I.) and Bermuda. 

Still further out, numerous British Commonwealth countries and former colonies such as Hong Kong, with deep and old links to London, continue to feed vast financial flows—clean, questionable and dirty—into the City. 

The half-in, half-out relationship provides the reassuring British legal bedrock while providing enough distance to let the U.K. say,  “There is nothing we can do” when scandal hits.

***

Britain could close down this tax-haven secrecy overnight if it wanted, but the City of London won’t let it. “We have, to put it provocatively, a second British empire, which is at the very core of global financial markets today,” explains Ronen Palan, professor of international political economy at City University in London. “And Britain is very good at not advertising its position.”

via Vanity Fair

Bill Black, an expert on white collar crime and financial fraud, noted in an interview on the Real News Network that few Americans appear in the ICIJ reports, compared to Russian oligarchs and Central Asian and African dictators.  He said that is because the United States is more aggressive than most of the world’s governments in tracking down and taxing overseas wealth.

American citizens are required to report foreign income to the Internal Revenue Service, and our top income tax rates, especially capital gains, are lower than in most nations, so Americans have more to lose and less to gain than most people by using foreign tax havens.   That is not to say that the United States does not welcome foreign investors who want to escape taxation in their own countries.

American corporations are another matter, Black said.  Divisions of global companies buy and sell to each other, and a smart accountant can easily set things up so that most of the profitable sales are all in low-tax or no-tax jurisdictions, and most of the losses are in high-tax jurisdictions.  But this is outside the scope of the report so far.

I think what’s needed is an international organization similar to the World Trade Organization which would impose economic sanctions on nations whose governments foster money laundering.  However, the direction of international economic agreements, from the North American Free Trade Agreement to the proposed Trans-Pacific Partnership Agreement, is to impose sanctions on nations that impede the free flow of money, whether dirty or clean.

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