tThere is much to admire about America. The great French social observer Alexis de Tocqueville, almost 200 years ago, praised its commitment to civic virtue, individual self-improvement, and hard work, legacies of its Puritan founders.
Those traits are still evident today, but a darker one has emerged alongside them. The United States, the hegemonic power of the 20th century still committed to democracy, has changed. It has transmuted into an imperial power that does not care about democracy but is increasingly willing to demand economic tribute from its vassal states.
No country has become more of a vassal to the United States than the United Kingdom. This evolution is set out in a revealing book, Vassal state: how America Leads Great Britain. The imminent inauguration of Donald Trump, accompanied by threats of tariffs and the downgrading of his commitment to NATO unless his client states bend even further to his will, has shaken Western capitals. But, as author Angus Hanton carefully documents, this is not new; America has been putting America first for decades. Trump is only raising the tone of a long-standing phenomenon. Changing this requires more than appointing the devious Lord Mandelson as British ambassador to the United States: it is about recognizing the extent of what is happening and then fighting fire with fire. It’s time to put Britain first.
Hanton writes that 25% of Britain’s GDP is made up of the sales of 1,256 American multinationals operating in Britain. Includes everyday sectors: breakfast cereals, soft drinks, car manufacturing, taxis, food delivery, online shopping, travel, coffee, social media, entertainment (Kellogg’s, Coca-Cola, Ford, Uber, Deliveroo, Amazon, Expedia, Starbucks, X). , Netflix) – and knowledge-intensive sectors ranging from data (Apple, Meta/Facebook, Google, Microsoft) to finance (Goldman Sachs, Morgan Stanley, BlackRock). As you reel off the statistics and scope of the exploitative domain, your head is spinning.
Because this is not benign. Britain is so blind to the negative dimensions of the loss of control – from tax evasion to the dispossession of strategic technologies – that, surprisingly, as Hanton writes, politicians blithely praise the process as “being open for business”. Thus, over the last 20 years there has been a tsunami of acquisitions of brilliant British technology companies by American corporations and private equity houses. The innovative artificial intelligence company DeepMind, for example, is now owned by Google. Cyberspace pioneer Darktrace was recently bought by US private equity firm Thoma Bravo and biotech Abcam by Washington DC’s Danaher, part of a $12.7 billion investment in Cambridge University companies only in 2024. There are fears at Oxford University that the newly created and luxurious Ellison Institute, funded by Oracle founder Larry Ellison, is about to launch a similar US attack on its intellectual property, its spin-off companies and its new companies.
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Some decision-making and research remains in Britain but, as Hanton observes, it more often moves to the United States after the headquarters acquisition. Goodbye to our significant presence in the space sector, as Inmarsat was bought by California’s Viasat and Britain has been downgraded from a potential first-tier space power to a third-tier one. High-tech 3D printer Meggitt has migrated to Cleveland-based Parker Hannifin (part of what, along with Chobham and Ultra, were our aerospace and defense “crown jewels” identified by the US International Trade Administration . US in 2019, but are now all US-owned), while Worldpay, spun off from NatWest, is now headquartered in Cincinnati. It’s not just the loss of crucial intellectual property, Hanton reports; Migration makes cities across America more prosperous, a geographical equity that Brits can only dream of.
Tech entrepreneur and financier Hermann Hauser, co-founder of Arm, which is now listed in New York but started life in the UK and would now have been our third most-listed company, writes that there are three litmus tests for acquisitions technological: we still control technology in the UK; Is there access from other countries? And if not, does the UK seller have secure, guaranteed and unrestricted access? If the answer to all three is no, then the “danger is becoming a new vassal state of these technological giants… of a new type of colonialism.” That’s happening as we watch.
Then there is America’s attitude toward taxes. The tax departments of American multinationals are considered profit centers, and use all available means: selling to the United Kingdom from low-tax Ireland, channeling their profits through tax havens often under British control, artificially reducing profits in Great Britain through transfer pricing, so on average it represents only 5% of profits. If the effective tax rate was just 15% on just the profits we know, Britain would be at least $10bn (£8bn) a year better off. The real figure is almost certainly half again. And if Britain dares to suggest even a mild corrective, such as the proposed 2% digital services tax in the 2018 budget, intense lobbying by the US government forces the idea to be abandoned.
What makes this whole story so daunting is that, with more courage and willingness to put Britain first, we could now be Europe’s technological powerhouse with a vibrant economy and growing tax base. We have many of the necessary assets, from great universities to huge reserves of venture capital, but we have allowed the fruits to fuel America’s growth. Of course, the United States is a powerful magnet by virtue of its size and dynamism, but not to the extent that we have allowed ourselves to.
Hanton urges that to fight back, Britain must first stop the sell-offs, for which an initial step is to distinguish between American direct investment that is beneficial (starting businesses here) and that which is destructive (acquiring so many of our high-value companies). technology). and intellectual property and export them to the United States). Secondly, the UK needs to take research, development and innovation as seriously as the Americans, and start building its own cohort of high-tech growth companies. Like Americans, we should invest in, rather than neglect, a college education. And we must recognize that an effective response means making common cause with Europe.
Amen to all that, but the omens are not good. Nigel Farage presents himself as some kind of national savior, rather than being called a de facto American collaborationist backed by a largely fifth-column media determined to intensify our vassalage. The Labor government has appointed Clare Barclay, chief executive of Microsoft UK, to chair the Industrial Strategy Council, while BlackRock’s board received five-star treatment with a meeting in Downing Street. There is little push to strengthen ties with the EU.
To be fair, the government’s planned industrial strategy offers a possible path to improvement. And the only good thing about Trump’s impending presidency is that it epitomizes the nature of our vassalage. Instead, how about we make Britain great again? A wealthy, progressive donor: Dale Vince? Gary Lubner? Clive Cowdery? – must ensure that every parliamentarian and peer receives a copy of vassal state. Our true American friends will admire us for trying to rebalance the relationship; That, after all, is what they would do if the situation were on the other foot.