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It has been said that two hundred miles is a long journey in the United Kingdom but a short one in the United States of America; 200 years, however, unlike in the US, is a short period in the UK.  (Cambridge University celebrated its 800^th anniversary last year.)  So Donald Rumsfeld, a former US secretary of defence, was right to once refer to “old Europe”, but wrong to adopt a pejorative tone when he did so.  In recognising that the young and the old can learn from each other, it is difficult to deny the value of a wealth of history and centuries of experience which can sometimes help the wise reach reasoned conclusions. 

The US, historically, has its closest connection with the UK and in recognising that the vibrancy and innovation of the US is an immeasurable benefit to not just the UK but the West, it should be appreciated that the UK’s (not to mention Europe’s) encyclopaedic experiences over the centuries can offer sage counsel.  It is an accident of circumstances that today’s superpower, unlike those in the past, has a shallow (in relative terms) history; it was a German historian of Prussian heritage, Professor Rudolf Von Thadden, who once observed that the US has “lost the memory of ancient history”.  History can sit alongside modernity but prejudice sits alone and it is fair to say that, unfortunately, many Europeans do feel threatened by this 21^st-century dominant power. 

As long ago as the 1950s the British writer and politician Harold Nicholson referred to people being scared “that the destinies of the world should be in the hands of a giant with the limbs of an undergraduate and the brain of a peahen”.  Americans, without any help from Mr. Rumsfeld, have reciprocated in kind; several years ago, for example, an article in the National Review called the French “cheese-eating surrender monkeys” – admittedly at a time when international relations were strained following the 2001 US terrorist attacks.  Consider Jean-Paul Sartre, the French philosopher, who once said that the US had “rabies” and Europe should step away in case it was “bitten and infected next”.  The French (as well as the British) owe much to America as it does to them but being different, with their respective weaknesses and strengths, is no reason to build walls of hostility.  Ambrose Bierce, the late American journalist and author, was right to remind us that education “discloses to the wise and disguises from the foolish their lack of understanding”. 

Whether or not Winston Churchill’s belief in a special relationship between his country and the US still remains in place today, it cannot be disputed that Britain’s successor owes most of its identity to its Anglo-Protestant roots.  The late Arthur Schlesinger, US historian and writer, described how America’s language as well as its customs, its literature, its precepts, its prayers, its laws, its institutions and its political ideas “primarily derived from Britain”.  Because of this, it was possible for Winston Churchill in a speech in Fulton Missouri in 1946 (often called his famous “Iron Curtain” speech) to forcefully assert that the great principles of freedom and the rights of man which “through Magna Carta, the Bill of Rights, habeas corpus, trial by jury and the English Common law find their most famous expression in the American Declaration of Independence”.  More than 160 years ago, when Alexis de Tocqueville wrote his famous “Democracy in America”, there were just some 13 million people living in the US and almost all of them came from the UK.  Even although since then the inflow of immigrants from other parts of the world has diluted the Anglo-Protestant influence, it still remains a core element of the country’s foundations.

What is interesting about empires is that the more powerful they are, the more vulnerable they seem to feel.  Even at the zenith of its power, the UK was forever fearful of losing it.  Invincibility must be preserved at all costs.  As Britain’s power declined and its empire ended, especially when India was given independence, fears about its future status drew comparisons with the fall of the Roman Empire; today the same concerns echo across the US as scholars and commentators of all nationalities continue to compare it with imperial Rome.  If the US today is imperialist by virtue of its power, rather than the territories it has conquered, one can understand the British historian Eric Hobsbawm in his autobiography “Interesting Times” saying that we live in two countries these days, our own and the US.  If this is true then history shows us that this will change. 

Adam Smith said, “every empire aims at immortality” but like the Romans, the US has too many frontiers to protect, despite its arsenal of economic and military superiority.  Abominable terrorist attacks, like those suffered in New York and Washington at the beginning of this century, pierce any sense of invincibility and then instil in every subsequent threat (great or small, actual or perceived) an exaggerated degree of danger.  In addition to absorbing the horror of 9/11, what shocked Americans was the fact that such hatred would ever be directed towards the land of the free.  In the 80s BC the Hellenistic King, Mithridates, asked his followers to kill all Roman citizens, naming a specific day for the massacre.   80,000 Romans in local communities in Greece were slaughtered and the Roman empire was shaken to its roots by the atrocity, unable to comprehend how such a cold-blooded act could be directed at them. 

If similarities can be drawn between Rome and Washington, however, the one fundamental difference is that, originally, the US was part of an empire which it then rebelled against.  This reversal of status makes some Americans feel uncomfortable in the global role they find themselves in today whilst others do not accept that their country has the trappings of an empire.  We can all argue about whether superpower and empire are interchangeable descriptions, with Gore Vidal, American author and provocateur, telling us that “no country has been as dominant culturally, economically, technologically or militarily in the history of the world since the Roman empire”.   I, on the other hand, tend to heed the view of another American, Abraham Lincoln, who when asked how many legs a dog had if you call a tail a leg,  said four because a tail is still a tail even if you call it a leg.

Drones and Paupers

It is from this philosophical background that one can switch easily from terrorism to taxes, a subject unavoidably connected with offshore financial services, a subject of much interest to many readers.  America’s economic Twin-Tower moment probably happened in August, 2007, which saw the wealth on Wall Street start to evaporate leaving the country debt-ridden and its government penniless.  This sense of vulnerability (whether physical or fiscal) has pushed to the forefront tax evasion and much of the fury this has generated was initially directed at Switzerland.  In the last world war, when surrounded by the Axis Powers, the Swiss made plans to dynamite bridges and tunnels to defend themselves from invasion but quickly realised that this time such a strategy wouldn’t work against a superpower not reliant on a land army storming ramparts. Some Swiss banks have simply decided to exit the US market and seek business elsewhere.  Wegelin & Co. established in 1741 (more than 30 years before America’s war of independence), and reputed to be Switzerland’s oldest private bankers, has pointed out the gradual global shift of power and influence from the US in a long goodbye (8 pages) to its US clients entitled “Farewell to America”. There are certainly lots of opportunities for the bank to explore, especially in emerging markets which the US and other developed countries will need to turn to as they struggle to get out of the economic mess they now find themselves in.  Such a European bank, of course, has lived through many changes in power and influence and although, unlike Sartre, it has not accused the US of having rabies, it takes the position that the US is intent on taking advantage of its current position to force its own ideas (and laws) on the rest of the world.

Living in, not just visiting, different countries (understanding the difference between using a front door key rather than a plastic one) exposes you to different cultures for extended periods and this has been an invaluable aid in my career.  I may have worked in the US and Europe (and although born in the latter, I left when I was 7 years old, only to return for a couple of years when I worked in London) but carry no strong allegiance to either so when applying the two-hundred mile analogy, let’s not forget that the UK’s pedigree falls far short of, for example, Byzantium’s which spanned eleven hundred years and is a treasure trove of history; its 90 emperors and countless conflicts illustrate much about political, military and religious activities which still resonate today. 

In my own profession we speak of the birth of equity, as applied to common-law trusts but a similar system was in place by the sixth century in Byzantium and, like equity, it was taught along with the empire’s general law, producing its own treatises and commentaries.  Byzantine law, in fact, developed from the Roman legal system which is one of Rome’s greatest contributions to world civilisation:  all this before considering, for example, China’s history.  But this much is certain:  if America shares some of Byzantium’s characteristics of empire, one of them is not its longevity as a ruling power. 

As we (hopefully) stagger out into the daylight from this recession’s tunnel, consider these comments:  “Their intention is to make loans to such imprudent people or by buying up their property to hope to increase their own wealth and influence” while “The moneymakers continue to inject the toxic sting of their loans wherever they can, and to ask for high rates of interest, with the result that the city becomes full of drones and paupers”.  If you thought these pearls of wisdom were spoken recently you would be very wrong:  that was Socrates speaking in Plato’s “The Republic” in 380 B.C.  What better illustration of the potency of history?

Freedom’s flagship, the US, would not agree with everything Plato said for he was no fan of democracy, especially in the context of human nature and thought that excessive freedom “is only slavery in the individual and in the society”.  He believed that “tyranny develops out of no other constitution than democracy – from the very heights of liberty, I take it, to extreme and savage servitude”.  Socrates, I should add, felt that democracy is “a wonderfully pleasant way of carrying on in the short term”.  (In my April, 2008, Latin Letter column (“Joseph’s Coat”) in Offshore Investment.com I wrote about the variations of democracy vis á vis Latin America.)

Were those “surrender monkeys” right to give the US its abiding symbol of freedom, the Statue of Liberty? 

Blocks of Ice and Houses of Stone

Greece, which influenced both the Roman and Byzantine civilisations, is now having its influence on world stock markets with its economy, like the Acropolis, crumbling.  This comes at a time when the shape of the global economic recovery (described in January at the World Economic Forum as “fragile”) is uncertain with a group of artists choosing ice to stage what was described as a “literal meltdown”, by placing a 1500 lb ice sculpture of the word “economy” in New York’s Manhattan Foley (should this be Folly?) Square.  Pundits, gurus and various experts, on the other hand, have frequently relied on the visual effect of the alphabet to express how this (eventual) world recovery might look by using the letters U, V and W.  Optimists see a V, cautious optimists a U and others see a double-dip W.  Will Greece contribute to some seeing the letter M?

For those like me who respect history, and who not only have experienced first-hand both political turmoil and its associated violence, they might appreciate why I seek no guidance from the alphabet but instead look to the figure 8.  The alphabet may serve short-termism, but the figure 8 is a constant for the long game and although I am not a chiffrephile, a lover of figures, it is no coincidence that in Western numerology 8 denotes cycles and repetition (besides opportunity, infinity and balance).  That’s what history (modern or ancient) illustrates time and again:  we witness events similar to those which have happened before, with the only uncertainty being the duration of the figure 8 cycles that infinitely flow from its lower to its upper part.  It’s that old enemy and friend, timing, that is elusive. 

Within those cycles, change has to be appreciated.  This month in my Latin Letter column (Brazil: The Future Arrives) I write about Stefan Zweig, the Austrian author famous for the quip that Brazil was the country of the future, knew something about change.  In his sobering biography “The World of Yesterday” he recalled a golden age of security as a child during the beginning of globalisation which prefaced the tragedy and violence of two world wars.  He describes how people in Vienna before the first world war had “little belief in the possibility of wars between the peoples of Europe as there was in witches and ghosts”.  Fathers then, like his, believed that boundaries between nations would eventually disappear but “now that the great storm has long since smashed it, we finally know that the world of security was naught but a castle of dreams; my parents lived in it as if it had been a house of stone”.  Mine did too, along with myself, years later and in another continent midst the dying days of British colonial rule. 

Not just change but the suddenness of it must also be appreciated, especially by professional trustees when advising clients.  I certainly do, as did many displaced White Russians in Shanghai in the early part of the last century fleeing revolution who lost both their country and a sense of belonging.  White Rhodesians, like White Russians, have, in large numbers, suffered a similar fate.  Fate, however, has been kind to this one who can claim to be permanently in Panama (thankfully) yet still feel, like Socrates, to be a citizen of the world.