The British American Relationship

I saw The Madness of George III in London yesterday evening on my way to Kabul. The evening included a nice dinner and visit with old friends Tim and Jan Conway, first met in St. Andrews Scotland in 1976. The play, and David Haig’s portrayal of King George III, was spectacular. British theater is the best in the world century after century.

The play set me thinking again about why American’s are so fascinated with England and the English monarchy. My ancestors are mainly English so I may have a slanted perspective. But America’s basic values and institutions, which are respected by all American’s what ever their ancestry, were built upon those of the United Kingdom. We see it most clearly when contemplating the role and place of the British monarchy in British governance.

What fascinates us, I think, is the interaction between the King (or Queen) and his government. From the Magna Carta on Britain has evolved a system of governance based on the rule of law. The powers of the King are limited and checked the powers of Parliament and The Law. This interplay, these checks and balances, are on display in every movie or play about the British monarchy. This, I think, is the core of our fascination with the British monarchy. The King is all-powerful and unquestioned within his household but constrained by tradition and law in his broader exercise of authority.

Indeed, with all of it’s shortcoming, Britain benefits a great deal from the rule of law. The rule of law is much more than having good laws evolved from practical experience (the common law approach of Britain and America rather than the civil law tradition of Europe). The rule of law is an attitude of the members of society. It is the orderly, voluntary adherence to the norms society has agreed on. The result is a much more efficient and relaxed social and economic life.

The English famously queue (line up in an orderly way). It makes the experience of waiting to be served so much more relaxed. Waiting in “line” in Italy, on the other hand is a tension filled, guerrilla warfare effort to minimize being taken advantage of by shamelessly rude Italians, all of whom have relatives or friends ahead of you in line holding their place. On average Italians are more charming than the English. I have concluded that this is necessary to compensate for their disregard for the rule of law. Italians don’t pay their taxes, don’t cue, and in general circumvent at every opportunity the law.

A consequence of the rule of law in Britain and northern Europe more generally and its weaker hold on the behavior of Italians and southern Europeans more generally is that the United Kingdom functions more efficiently. Social interactions are smoother. And members of society enjoy more true liberty. The weaker hold of the rule of law in the south is like a tax on the functioning of the system. The explicit taxes that are not paid by Italians are replace by the tax of higher cost social interactions as they struggle to improve or at least defend their place in line. Italian’s are only fooling themselves to think that they have gotten away with not paying their taxes.

About wcoats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 2003 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My most recent book is One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon.
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1 Response to The British American Relationship

  1. Aldo Graziani says:

    Warren, what an interesting ‘unpolitical’ reflection. – Feel addressed as a German. Different understanding of rule of law is a source of decadence in Germany. – Before the war Germany was closer the ‘anglo-saxon’ understanding. After the war – broken traditions / Wirtschaftswunder – utilitarian mentality took hold of every sector. – Attitude, as the voluntary adherence to norms,
    is instead dominated by the question ‘what are my rights within?’, ‘why am I restricted?’ etc, That’s why I love to be in the UK.It’s so civilised how peolple behave with each other and that’s why so relaxing being around. In a different way I feel the same in the US.- Common law and common sense, not only a play of words. I miss the common sense in Germany.
    Regards
    Aldo

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