Vassal State: How America Runs Britain by Angus Hanton

Angus Hanton studied Economics at University of Oxford. He is an entrepreneur. He founded the Intergenerational Foundation "to promote intergenerational fairness and protect the interests of younger and future generations across all areas of policy."

The book "Vassal State lays bare the extent to which US corporations own and control Britain's economy."

It explores how it happened, consequences of it, and what can be done to restore Britain's sovereignty over its decisions, economy, and its future.

How Britain became a Vassal State?

Britain became a Vassal State partly because its leaders and politicians sold off their country. Britain's politicians and leaders did not have the foresight to see the consequences of their decisions. British politicians eventually became irrelevant and pawns to American businesses.


Britain became a Vassal State partly because America invests in its people, innovates, and scales.

"It is companies like Apple and Amazon, private equity ingenuity and corporate muscle that have conquered Britain through innovation, determination and sheer size."

"the best US businesses simply offer customers better products with more features and more reliability than they can receive anywhere else."

Britain became a Vassal State partly because Britain did not do anything.

"Britain’s appalling failure to confront the reality of dealing with a superpower ally with a dynamic and innovative commercial approach that has outmanoeuvred and outperformed its junior partner. "

The author gives examples, "the most rapidly growing form of storage, data in the ‘cloud’, has no British suppliers – that market has been sewn up by the US tech giants."

It is the same story in entertainment, food, retail etc. The author explores in detail how British Brands were sold to American companies. British businesses did not develop their industries in emerging fields like cloud computing and tech sector.

Consequences of Britain becoming a Vassal State

"The rest of us can see the outlines of the problem: our high streets and small businesses are under pressure, crushed by slick, US-dominated online competition and a tax regime which makes far greater claims on domestic businesses than on US corporations."

"Most of our digital infrastructure and even our principal system of exchange – card payments – are overwhelmingly US-owned... British consumers are paying a royalty to US businesses on most transactions, moving from one-off purchasers to renters and subscribers, who slog away on payment treadmills for the benefit of shareholders on the other side of the Atlantic."

"As a result, the British constantly have to pay royalties to access their home market."


"Mississippi is the poorest of the 50 US states: one person in five lives in poverty and it has the highest infant mortality rate in America. Yet, if the UK were the fifty-first state, it would be, by some estimates, poorer than Mississippi and certainly among the poorest five or six US states."

How other countries avoided becoming vassals

Compared to Britain, Europe has relatively avoided becoming vassals to America.

The author gives examples and compares Britain and Europe:

Compare Britain and Europe
	Sales of Multinationals as percentage of GDP	Percentage of workforce employed by US multinationals
UK	25%	6%
Italy	5%	0.8%
Spain	6%	0.9%
France	7%	1.2%
Germany	9%	1.2%

"Unlike Britain, most other countries do not welcome the purchase of their companies by foreigners, and many regulate with laws limiting foreign ownership to 49 per cent. This has been the case for many industries in China, India and Indonesia. Some countries, such as Iran and Saudi Arabia, limit ownership in oil, telecoms and media."

British businesses are incompetent

British businesses are incompetent.

Specifically, they do not invest in their employees. They underpay them.

British businesses do not scale up. "Britain’s new businesses do not tend to scale up to become global challengers." "To the Forbes list of the biggest 100 publicly traded companies, Britain contributes just three... [and they] have their origins not in the dot-com boom, or even in the post-war period, but in the nineteenth century."

"Britain’s tech firms suffer not from a lack of ideas, talent or research capacity but because they cannot scale up effectively: ‘Europe actually doesn’t have a startup problem. We produce more startups than the US. It’s not a startup problem, but we have a scale-up problem.’"

Using cash

The author looks at use of cash in Britain and Europe.

Europeans use cash more. They spend within their budget. Not using Visa and Mastercard avoids charges which are ultimately sent to America.

In contrast, British use Visa and Mastercard cards more. Every transaction send a percentage to America. British also tend to fall prey to 'buy now, pay later' schemes which make them poorer.

Overtaxed citizens

Britain overtaxes its citizens, and undertaxes American corporations operating in Britain.

"Large companies can revel in the fact that about 80 per cent of UK tax is collected from taxes on individuals: payroll taxes (income tax and National Insurance), property taxes (council tax and stamp duty) and sales taxes (VAT and excise duty).
Less than 8 per cent of UK government revenue comes from corporation tax, of which multinationals pay only a small fraction. The new global tax deal won't change that significantly, so the multinationals will continue their free ride while the UK government demands that its citizens pick up the tab."

The author gives examples of American companies which pay minimal taxes, yet use infrastructure paid for and maintained by high taxes on British individual taxpayers.

What can Britain do now?

The author gives useful suggestions.

Stop the sell-offs: "In contrast to the UK, both France and Germany try to resist takeovers of their existing companies, and they work to protect their employees."

Government should actively support innovation: There is no culture of supporting innovation in Britain.

Invest in people: British businesses do not support innovators. The best in Britain are left to fend for themselves in America.


"The sum of all these contracts is not just the money flowing abroad but the loss of jobs, opportunity, skills and taxes. And the bigger picture is of a UK government which is, directly and indirectly, beholden to the US. The power of these corporations and the UK’s dependence on them means that the UK has ceded control of much of its economy, and is cooperating in the continuing loss of wealth and income."

"The British establishment appears to underestimate how poor and indebted its country has become. This may be partly because most policy-makers are based in London, which is in many ways an island of wealth. More than a million Londoners are dollar millionaires, mostly through the value of their homes; Londoners own over half the UK’s wealth, and average income per person in the capital is double that of the rest of the country. 'Problems look mighty small from 150 miles up.'"

"Many of Britain’s problems have stemmed from a failure to measure, and a thoughtless drift into the arms of the Americans."

"US corporations may not have consciously planned to turn Britain into a vassal state, the effects of their commercial prowess, combined with UK policy-makers’ open-armed welcome, has produced exactly that result."






Tweet

Related articles

The Road to Serfdom by Friedrich Hayek

Fundamentals of Prosperity: What They Are and Whence They Come by Roger Ward Babson

External Links