Wednesday, October 19, 2011

230 years ago today...

On October 19, 1781, General Cornwallis surrendered to the combined forces of George Washington and the Comte de Rochambeau at Yorktown, Virginia, thus ending the armed warfare period of the American War of Secession. The British Army still had over 100,000 troops in North America and still held New York City, but effectively the war was over.

So the question is, *why* was the war over, if the British still had more than three times as many men on American soil as Washington and Rochambeau combined? The answer is simple: The British Crown had been bankrupted by a Parliament that was run by the same sort of anti-tax people as the Teabaggers, who had refused to raise taxes to pay for the expensive wars the United Kingdom had fought over the past thirty years thus forcing the Crown to borrow more and more money to cover those costs, until the Crown finally arrived at the point where the bankers said "No more!" and refused to loan more money because the Crown wasn't even able to make the interest on the loans.

The net result was that yes, there were over 100,000 British soldiers in North America, but they were half-starved due to the massive expense of provisioning them across a vast ocean and hadn't been paid in months, and thus were useless for purposes of waging war. The vast expense of outfitting the Cornwallis expedition had pretty much been the last gasp of the Royal Treasury. The Crown was bankrupt, pure and simple. Which, after all, had been the original cause of the war -- the Crown had attempted to raise taxes on the colonials to repay their debts because they didn't need permission of Parliament to do that, and the colonists balked at paying taxes that the British public didn't have to pay. Sort of like our 99%'ers are currently protesting in the streets because they pay a higher effective tax rate than the 1% multi-millionaires (remember, the majority of multi-millionaires do *not* pay income tax at 28%+, they pay capital gains tax at 15% due to the way they structure their compensation to evade income taxes... and they do *not* have 7.85%*2 taken out of those paychecks for SSI/Medicare either, it's a flat 15%).

So anyhow, the biggest difference between us now and the British Crown then is that we're not on the gold standard, and can thus just *print* money, which will cause inflation (in China) but means it's effectively impossible to default on our debt. Still, it shows that waging expensive foreign wars without raising taxes to pay for those wars is a loser's game in the end, otherwise our national anthem would be "God Save The Queen" rather than "The Star Spangled Banner".

-- Badtux the History Penguin


  1. Yes, expensive wars without taxation is a losing proposition. The amount of money we spend on them is staggering. If you look closely too, you'll find that these wars benefit a very small number of people. They primarily benefit people with foreign business interests. Guess who?

  2. Bad, the SSA is only 15% for the first $106,000. Not the entire 1mil or more that they make. Then you cut off the medicare, of 5% at 68,000 but then as a business, this is operating expense, and it's tax deductable. The effective rate, coud be less then 0, you know a refund, something i never had happen on federal taxes.

  3. History just keeps repeating itself with different twists.

  4. Even better: The American Revolution also effectively bankrupted France, which ultimately lead to the inspiration for the song You Went the Wrong Way Old King Louie.

  5. BT,
    I often wonder why we don't even bother to have WAR BOND DRIVES in our recent open ended wars.?!
    Our leaders must not think this is worthg the bother.

  6. Ranger, war bonds during WW2 were actually an inflation-fighting mechanism to account for the fact that massive amounts of money were entering the economy to buy war munitions and pay previously-unemployed people to build war munitions, but there was no corresponding increase in consumer goods to spend them on. That money had to be sucked back out of the economy somehow or we would have gone all Weimar. But right now, nobody except the 1% is getting any of the money being spent on our expensive foreign wars, so there's no chance of inflation -- well, at least no chance of inflation in anything other than prices of mansions and limousines and private jets, anyhow.

    Comrade, indeed it was France's financial problems that led to the French Revolution. Both France and Britain had the same issue -- a tax system that simply was incapable of dealing with the demands of empire. Hmm, what other nation's tax system has degraded to that point?

    Jim, when I hear that the effective tax rate of the 1% is around 17% *including* the tiny bit of SSA, when I know my effective tax rate, *with* SSA, is around 38%, you bet it steams my herring.

    Lynne, yes, the wars are benefiting the 1%. Virtually none of the money is getting to the 99%. KBR did a lot of hiring to staff up the commissaries in Iraq and Afghanistan, for example... a lot of hiring in the Philippines, that is. And most of the goods in those commissaries were purchased from Asia also. Nothing to America and Americans. Yay patriotism.

    - Badtux the Snarky Penguin

  7. Interesting last point that bears emphasizing: But for the austerity of the British ruling class, there either 1) wouldn't have been the taxation on the colonies that prompted the revolution in the first place, or 2) the mighty Red coats would have whipped our puny rebellious colonial asses.

    Funny how I never learned that part in American History class.

    Besides none of the money spent on war going to benefit any American 99er, the various phases of QE have also not benefited any of us.


  8. Yah, I went searching for a British perspective because the official propaganda in American history books doesn't make any sense. How could a bunch of rag-tag colonists beat the largest empire on the face of the Earth? Answer: They didn't. National bankruptcy on the part of that empire, plus the declaration of war on the part of France and Spain against that empire, was why that empire finally had to cry uncle.

    In other words, a combination of economics and the French (mostly) is what caused the American colonists to win their independence. Nothing to do with military action on the part of the Americans -- George Washington's most common command was "RETREAT!", the redcoats chased his troops all over the countryside and whenever he went to battle against equal numbers, the redcoats beat his ass, like the humiliating defeat at Long Island that had him throw his hat on the ground and curse the ineptness of the colonial militia. Note that at Yorktown the British were outnumbered by over 2 to 1...

    In short, any explanation of the American War of Secession that doesn't include the economics of the British Empire as a principal cause of the victory of the colonists is just rank propaganda. But then, we already knew that -- I mean, we can't teach *real* history to our K-12 kiddies, right? Sorta like the Filipino-American War and Moro War have been written right out of our history because the U.S. was clearly in the wrong...

    - Badtux the Economics Penguin

  9. Tux, OT, blog on Qadaffi's death and the future of the Libyan nation. I'm curious to read your analysis. My own is very, very negative for all of the countries revised by the "Arab Spring"...

    I expect we'll see a flurry of Islamic "Republics" come to exist in a short time.

  10. But then, we already knew that -- I mean, we can't teach *real* history to our K-12 kiddies, right? Sorta like the Filipino-American War

    I never even knew we'd occupied the Philippines until my husband, a coin/token collector, began to collect coins/tokens from that time/region...

  11. Weird. I went to school in the crappiest school district in all of Michigan and I remember learning about how the economic conditions in England at the time of the Revolutionary War and about the US's history in the Philippines. Maybe not in great depth but I know it was covered.


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