In the fall of 2022 Liz Truss was the UK's Prime Minister for 44 days. Her tenure was cut short by turmoil in the financial markets, as her attempts to roll out policies similar to the US’s 1980’s program of “Reaganomics” that combined lower taxes and higher deficits triggered panic and an intervention from the Bank of England. In retrospect, the problem was that the British elite periodically forgets that it’s the not US, it’s not the largest economy in the world and the pound sterling is not the world’s reserve currency. The US, unlike any other nation, can print money to escape its fiscal straijackets.
History hangs over Britain, and the shadows of the past always impinge upon the present. The UK still sees itself as an imperial nation, but today India has a larger economy than its one-time colonizer. The idea of the British Empire persisted deep into the 20th century, but the US was already the larger economy by the end of the 19th century. With World War I, the UK became a debtor to the US, and the power dynamic of the “special relationship” inverted as the mother country became the junior partner.
Today Razib talks to Samuel Mcilhagga about Britain’s contemporary status as a post-imperial nation-state caught in economic stagnancy. They discuss his piece in Palladium, Britain Is Dead, which is a reflection of the structural and human realities of a fallen empire. Razib and Mcilhagga address the recent divergence between the UK and US from a point of rough parity in 2008, at the peak influence of high finance in developed economies, which placed the City of London in an advantageous position. Economic stagnation and high inflation have afflicted the UK since the great recession, and Britain has lagged niy only the US but fallen behind its continental peers, France and Germany. Mcilhagga attributed some of this to the British elite's inability to move beyond their role as imperial administrators and rentiers; he contrasts the productive and economically innovative American oligarchs to the complacent British upper class. Razib wonders about the strangeness of the difference between the two societies given their shared history, language and culture. Mcilhagga paints a picture of a small and prosperous professional class that benefited from globalization, and a broader populace that has been slowly ground into immiseration over the last two generations.