Socialism’s Biggest Failure: Israel

Unless you’re an Israel scholar, you may not know that most of the founders of the modern state of Israel were socialists. The system they put in place in 1948 was based on socialist principles, reflecting both the experience many had growing up on kibbutzim or activism in socialist organizations in Europe.

The founders created an economic system dominated by the public sector, which to a certain extent fit the needs of the nascent country at the time. By taxing private enterprise heavily, they sought to build a social infrastructure, including government buildings as well as roads and housing, hoping to handle the massive flow of immigrants into the country.

Labor unions were especially strong which meant Israel’s factories were inefficient in relation to competitors elsewhere. Food and public transportation were heavily subsidized. By the 1980s, Israel was crippled with run-away inflation, mounting national debt and a lack of foreign reserves. Socialism was a failure.

How did that society evolve into the economic miracle of today? In 1985, Prime Minister Shimon Peres, one of the heroes of the War of Independence, convinced the Labor Party to accept drastic measures including deep cuts in public spending, freezing public sector salaries, and cancelling automatic salary adjustments for unionized workers. Further, responsibility for setting interest rates was transferred from the Treasury, which used the printing press to win political support for the government to an apolitical Bank of Israel. Import duties designed to protect local businesses were slashed and Peres began to lower taxes.

In 2003, the current prime minister, Benjamin Netanyahu, added crucial components to the transition from the failed socialist system to free market capitalism, when he reduced social spending, cut taxes, raised the pension age, and sold state assets to the private sector, even the El Al airline.

The result? Today Israel is one of, if not the fastest growing economies in the developed world. Inflation is 0.4%, unemployment is 4%, and the shekel is one of the world’s strongest currencies. Although poverty has not been eliminated, it is less than it was in 1985 and per capita income is about to pass both Britain and Japan. Israel imports more than $100 billion annually and has a trade surplus––something the U.S. has been unable to achieve for decades.

Socialist policies nearly brought about the country’s ruin. They undermined incentive and ingenuity. Today, Israel is known for its technical ingenuity. That could not have taken place under the socialist model where all property belonged to the state and personal initiative was neither encouraged nor rewarded.

Those who argue socialism can’t be judged by its implementation in places like Russia, Cuba or Venezuela, have a hard case to make that it can work anywhere given its failure in Israel where the entire leadership of the country was fully committed to it and gave it nearly forty years to work before throwing in the towel.

Is Bibi Netanyahu a 21st Century Churchill?

You don’t have to be a student of history to learn the lesson of The Darkest Hour,” the story of Winston Churchill’s struggle to save the British Empire when Hitler’s armies threatened to overrun their entire army on the French side of the English Channel. The movie provides insight into a critical moment in world history––when decisive leadership by Winston Churchill and heroic sacrifices by the English people saved three hundred thousand soldiers and in the process prevented Hitler from invading Great Britain––a tragedy that could have irreparably altered the outcome of the Second World War.

Reflecting on critical moments in history, it’s easy to imagine that what needs to be done is obvious, but that’s rarely the case. Churchill had to overcome personal doubts as well as fierce opposition mainly from members of his own party to stick with a plan he knew would cost lives. Lesser considerations often assume great proportion in the minds of those who cannot fathom the seriousness of a situation. That indeed may be the case today with regard to Israel where so many Jews both in Israel and in the diaspora fail to recognize or give sufficient weight to the precariousness of Israel’s existence.

While critics attack Prime Minister Benjamin Netanyahu for one thing or another, it is remarkable that he is able to keep his eye on the ball––focusing on the Dunkirk level threat that Iran’s hegemony in the region represents for the state of Israel.

Britain and France were unprepared for the speed by which the German army plowed through Belgium and defeated the French, thereby endangering the entire British army. It is extremely rare for people to see existential threats before they materialize, which is why I argue the threat Iran poses to the state of Israel is not hypothetical or overblown, and why it must be Israel’s top priority.

The threat not only comes from Iran’s potential as a nuclear power––the result of the terrible deal President Obama negotiated, the threat to Israel’s survival exists on a second front in the form of Iran’s surrogate Hezbollah. The later organization, which now controls much of Lebanon, was allowed to finance the expansion of its military and political power in recent decades by money laundering and cocaine sales, practices that the Obama administration knew about and allowed to continue in order to assure Obama could deliver his signature billion dollar get out of jail nuclear card to Iran’s autocratic government.

While Netanyahu recognizes the Iran/Hezbollah threat, so many others in Israel and in the U.S. are focused on lesser matters, including the fact that Netanyahu has been forced to ally himself with the most conservative religious parties in Israel and as a result to concede to some of their demands.

One example of a lesser issue whose proponents seem willing to define as the most important matter facing Israel’s future is the issue of women praying at the Western Wall. Netanyahu backed down on an earlier agreement that would have resolved this issue in order to appease the ultra-orthodox members of his government. To put it bluntly those who are unhappy with the collapse of the prior agreement need to ask themselves how they would feel if their efforts resulted in a situation where no Jews—men or women—could pray at the Western Wall––a potential outcome if Israel is not led by someone who understands the Iranian/Hezbollah threat.

The same question must be asked of those who are attacking Netanyahu for minor personal indiscretions––an example of a common political disease––expecting one’s leaders to be godlike with no past indiscretions or mistakes. History shows us the danger of such thinking as those men and women who have the courage to act in moments of crises are always people who have learned from past mistakes. The perfect human would be unable to see the potential evil facing him having never been exposed to wrong-doing (or admitting such), which is why so few are capable of greatness. Most of us view ourselves as perfect, never suffering doubts or admitting to past failures. We cannot imagine evil’s winning and thus bring that very outcome into play.

Eventually Bibi Netanyahu will be replaced––as Churchill was after he successfully prevented Hitler from conquering his country. Will pressure from the diaspora over lesser issues and internal politics result in the election of a Neville Chamberlain like person or will the people once again ignore the media and their American cousins and vote for someone who can separate the existential wheat from petty concerns chaff? Time will tell.

Two Must Reads to Understand International Politics in a Trump Presidency

People spending their limited energy trying to reverse the election results or demonize Donald Trump in hopes he will fail and be impeached are missing a huge opportunity to understand what lies ahead of the U.S. on the world stage.

Two brilliant articles provide insightful analysis of the implications of Trump’s victory for those with the ability to remain dispassionate and advance their personal comprehension of where things stand internationally and what needs to be done.

Start with Ruthie Blum’s “Why Abbas does not emulate Sadat,” which can be found at http://www.israelhayom.com/site/newsletter_opinion.php?id=17707&r=1.

The title doesn’t do justice to the column which reviews past peace negotiations and explains why any hope that the leader of the “Palestinians” will negotiate a peace deal with Israel is a pipe dream.

Next read the lengthy, but brilliant analysis of the current world order based on Henry Kissinger’s recent book (World Order, 2014) and his own reading of U.S. history by Niall Ferguson, entitled “Donald Trump’s New World Order,” which can be found here: http://www.the-american-interest.com/2016/11/21/donald-trumps-new-world-order/.

Ferguson lays out a potential path for Donald Trump’s administration to re-balance the world order reversing the disastrous policies of Barack Obama and taking a Teddy Roosevelt-like approach, based on existing realities and actual power alignments rather than wishful interpretations.

 

You don’t have to agree with every point made by Blum or Ferguson to come away with a greater understanding of where things stand in the world and the positions a Trump administration might take to bring restore America’s role as the number one superpower on the world stage.

The Israeli Solution: A Review (Part Two)

The Israeli Solution: A One-State Plan for Peace in the Middle East by Caroline Glick (Crown Forum, 2014)

In Part One of my review of Caroline Glick’s The Israeli Solution, I describe her rationale for rejecting the two-state solution to the Arab-Israeli conflict that has been a leading policy objective of presidents Clinton, Bush, and Obama.

Glick argues that advocates of that “solution” incorrectly claim that giving the Palestinians their own state will reduce violence in the region. Events, including the escalating Sunni-Shi’a conflict, the rise of ISIS, the dissolution of Syria, and Iran’s nuclear ambitions, should put that thesis to bed.

Under Barack Obama, the U.S. has increased pressure on Israel to accept a two-state solution. In his “New Beginning” speech in Cairo in June 2009, Obama described the lack of a Palestinian state as ‘intolerable,’ and equated the Palestinian’s aspirations for statehood with those of the Jewish people.

Notwithstanding the fact that the Palestinians as a distinct national group is a recent construct, the main reason the two-state solution won’t succeed Glick argues is that it has never been the goal of the PLO or its successors to live side by side a Jewish state.

Evidence that their demanding a state of their own has functioned mainly as a component of their strategy to attack Israel in the international arena is the fact that they have walked away from the table each time Israel has accepted terms that would have led to a Palestinian state. Their true objective from the beginning to today has been the destruction of the Jewish state as the so-called moderate Mahmoud Abbas made clear as recently as the 2013 anniversary of the founding of the PLO.

The One-State Alternative

Caroline Glick’s alternative solution is to incorporate Samaria, Judea, and Arab Jerusalem into the state of Israel. Israel’s legal claim to those territories stems from a 1922 resolution the League of Nations that defined the British Mandate as extending to the Jordan River. That boundary remains in force Glick argues based on United Nations Resolution 242 that stipulates all states have the “right to live in peace within secure and recognized boundaries.”

Recognizing that her solution will face fierce opposition, Glick examines each of the potential opponents and finds them wanting in terms of their ability to prevent Israel from formally declaring those regions part of the state of Israel. None of the Arab League nations are likely to go to war over the issue, Europe is already engaged in supporting the Palestinian Authority and Hamas in myriad ways, but Israel could tolerate more boycotts and other likely interference. The key to the one-state solution is the United States must support it.

Glick makes a case that Israel’s staking its claim to the disputed territories would be in the best strategic interest of the United States. For one, Israel represents a counter-balance to Iranian and Russian ambitions in the region. In addition, Israel represents the only country in the region whose society is also modeled on the rule of law and democratic rights. The connection is one of people-to-people, while the U.S. relationship to other countries is largely regime-to-regime.

The Price for U.S. Backing

The price the U.S. would pay for backing a one-state solution would be more noise than substance. If U.S. stopped giving Palestinian and Arab leaders hope that it would appease them on the Palestine issue, we could deal with them more honestly on the conflicts I cited above. In terms of aid, it would eliminate the millions of U.S. tax dollars being used to prop up the Palestinian Authority.

Questions have been raised as to whether Israel would want to add the approximately 1.6 million Arabs currently living in the disputed territories to its population. Glick answers these concerns to my satisfaction, including the claim that the Arab population would eventually outnumber the Jewish population and win the war by having more babies than the Jews. She disputes Arab census and birthrate data and while she doesn’t discount the likelihood that there would be considerable problems, she argues the alternatives––continuation of the status quo, or giving Israel’s enemies a free hand to attack at will––are worse.

There is a model for what would happen were Israel to shut down the Palestinian Authority and declare the disputed territories formally part of Israel. That model is the Golan Heights where many Druze who once vowed to resist Israeli rule today apply for Israeli citizenship.

Over time the Arabs living in Judea and Samaria would see improvements in their living standards and economic well-being. They would learn to appreciate, as Arab Israelis have come to appreciate, the benefits of living in a society based on equal treatment under the rule of law––as opposed to arbitrary treatment where laws are made up on the fly––and where one can accomplish legitimate goals without resorting to arms.

Those Arabs who would not want to live in Israel would be able to move to Gaza, which would not become part of Israel, or elsewhere. Then, freed from having to focus on creating a Palestinian state in Israel, the U.S. could pressure Jordan, Saudi Arabia, and the other Arab states to offer the Palestinians citizenship so they could move out of the refugee camps. The world also needs to free the Palestinian people from the autocratic rule of Hamas, the PLO, and other terrorist groups. Palestinian nationalism should not be ignored, but it needs to find a home of its own and not look to what belongs by history and by international law to Israel and the Jewish people.