is the health of the State, as Randolph
Bourne put it, then the Israeli state must be bursting
with a monstrous vitality – and so it is. The beleaguered
and shrinking private sector groans under the burden
of a parasitic state that grows fat on an endless stream
of American "aid," both economic and military.
As the Israeli economy goes into another of its periodic
tailspins, and Prime Minister Ariel Sharon's "right-wing"
government calls for higher taxes and "belt-tightening,"
one can almost hear the cry to bail out our good and
faithful ally even before it is uttered. Anticipating
this, why not examine just what sort of economy we are
subsidizing – and ask what we're getting out
of it. THE
SOCIALIST ROOTS OF ISRAEL
was conceived in the minds of its original founders and supporters
as an explicitly
socialist state. The very idea of private property was
anathema to the founders of the state of Israel, who were
almost to a man. However, the early success of the Zionist
project demonstrated, not the superiority of socialism over
capitalism, but quite the opposite. As
Alvin Rabushka points out, prior to independence, virtually
all investment in the country was private, involving the purchase
of land by private individuals and the dispensing of private
funds raised by the Zionist organizations abroad. But it wasn't
just ideology that prompted the still-birth of the Israeli
private sector. After independence, private capital investments
in Israel contracted to no more than 15 percent of the total
between 1948 and 1990. The reason: German reparations. Rabushka
what must rank as one of the great ironies in economic history,
German reparations financed the transformation of Israel from
a private-investment, private-enterprise, free-market economy
to a socialist system that fulfilled the vision of Jewish
leftists…. The German government gave $850 million, a huge
sum at the time, to the government of Israel as collective
compensation for the millions of Jews who died at the hands
of the Nazi regime and had their property stolen."
of being used to build the infrastructure so sorely needed
by the infant economy, however, Prime Minister David Ben-Gurion
handed the dough over to the Jewish Labor Organization, the
Histadrut, which established a network of state-owned
enterprises. No private company or individual was allowed
title or access to their own piece of personal "compensation."
Instead, in accordance with their socialist ideology, the
funds were administered by "the workers" – that
is, by their alleged representatives in the Histadrut
and the various political parties, who appointed the boards
of directors and allocated the cash.
minces no words in characterizing the Israeli economy as socialist
through and through:
is important to point out that the Central Bureau of Statistics
describes business activity in Israel under the rubric of
the business sector, not the private sector. The business
sector in Israel is not really private in the meaningful sense
of the word."
by German reparations, Israeli socialism quickly strangled
any emerging free markets, and, over the long stretch of the
Israeli Labor Party's unbroken rule, "a system of
almost total identity between political and economic power"
Israeli economist Yair Aharoni describes it – was created that persists to this day. The defeat of the Laborites
by the Likud did not change matters: "This high level
of political involvement was a major characteristic also of
the governments created by the Likud parties," Aharoni
writes, who, if anything, deepened Israel's commitment to
the centrally-planned economy:
a wider recognition that market forces may be a better means
for resource allocation decisions, government bureaucracy
and politicians found it extremely hard to give up even a
little bit of their cherished power. Despite much preaching,
government intervention deepened; and the diverse methods
of the intervention continued, irrespective of the party of
power. Government intervention shifted from rationing, ad
hoc decisions and administrative controls to the control of
virtually all sources of capital and their administrative
allocation at varying rates of subsidy."
ENTIRE COUNTRY ON THE DOLE
great hope of the Zionist ultras, Bibi
Netanyahu, when he was Prime Minister, accelerated the
process of complete statization in a "right-ward"
direction: handing out hundreds of millions in subsidies to
the religious parties, the kibbutzim,
and the privileged caste of bureaucrats, their offspring,
sycophants, and other socialist spear-carriers. All were allowed
by Netanyahu to feed ceaselessly at the public trough. A trough,
one notes, that is regularly filled
to the brim with over $3 billion per year in American
aid (a figure that doesn't include loan guarantees and special
financial arrangements that give the Israelis an extra bang
for their buck). In a wonderful article by Zev
Golan, associate director of the Institute
for Advanced Strategic and Political Studies (IASPS) in
Jerusalem, the key to understanding the Israeli economy is
contained in a single axiom:
entire country is on the dole. The huge amount of foreign
aid that comes in props up a bankrupt socialist system and
prevents Israel's private sector from making any real progress.
Those in power live off the money of others and live for it.
system is that which keeps the public-sector half of Israelis
on top of the other half. This holds for Labor Party officials,
or party-appointed officials, as well as Likud, for Jewish
Agency officials, as well as state-paid rabbis. This sector's
main purpose lies in preserving its domination over the productive
sector, over the private sphere, in perpetuating itself. To
this purpose it will subsume any other interests economic
growth, moral integrity, political independence."
then, the answer is to reform, to privatize, to institute
a free market revolution in the only supposedly Western country
left in the socialist camp. But that isn't going to be so
it may be impossible, given not only the exigencies of war,
but, more importantly, the peculiar imperatives of a settler
colony superimposed on the economy by the very nature of the
Zionist project. As Aharoni points out, in Israel:
criteria for the existence of an economic entity were never
its efficiency or its competitive strength. Rather, it was
the ability of the unit to create employment. Israel also
attempted to shield business firms from competition, thus
creating a business culture in which export based on competitive
advantage is neither nourished nor preferred."
short, the Israeli government has, from the beginning, been
concerned not with economic efficiency but in winning the
demographic battle. The essentially military tasks of
pushing the previous inhabitants out and creating a territorially
contiguous and defensible state overrode purely economic considerations,
as they always do. Given the egalitarian and socialist roots
of Zionism, it was only natural for the embryonic Israeli
state to offer newcomers generous housing and other subsidies
in addition to government-created jobs. But it is difficult
to imagine that Israel could have survived otherwise. The
Zionist movement could call on the Jews of the world to commit
to aliya, and come live in the
land God had promised them, until they were blue in the face,
but if they didn't offer guaranteed jobs and other inducements,
the number of immigrants would have been radically reduced.
a socialist Sparta,
could never adopt radical free market reforms and still retain its identity
as a distinctively Jewish state. Multiculturalism – in the
truest, and only meaningful sense of that much abused term
– is the inevitable result of free commerce: laissez-faire
dissolves artificial boundaries of race and religion and divides
the world up into natural geographic and economic units. It
also tends to wash away irrational prejudices, which soon
become economically not viable. In undergoing a free market
revolution – not just privatizing
garbage collection and legalizing cloning, but unchaining
the small private sector, eliminating religious-based immigration,
and dismantling the Israeli welfare state, including the settlements
– Israel would become something completely other than what
its founders envisioned: a free market Athens where religion
is entirely a private affair.
SOCIALISM IN ACTION
Israeli society is presently headed in the opposite direction,
towards Sparta, and is now embarked on a campaign of conquest
that aims at driving the Palestinians out of the occupied
territories and into Jordan. The recent military operation
had all the earmarks of a classic ethnic cleansing operation:
or else why level the Palestinian Education Ministry, the
Department of Public Works, and physically destroy entire
exemplified the foreign policy of a national socialist regime
in action, but this missive from the IASPS – "Fascism in Israel?" –
puts Israeli domestic policy in the proper perspective. IASPS
reports on a meeting held late last year where Israel's economic
leaders met and established a task force to bail out the sinking
economy. The group's prescription: a freeze in public sector
wages and a freeze in lay-offs, more inflation, and
increased subsidies for the industrial dinosaurs of the state-owned
sector. This decision was made by the Finance Minister, the
Governor of the Bank of Israel, the head of the Manufacturers
Association and the Histadrut labor union boss. In
it is: money, big government, big business, and big labor,
the cornerstones of the fascist economy. But not everyone
is equal in the fascist state. Some are more equal than others.
In this case, Histadrut rules the roost. Peretz warned that
any deal will not be 'on the workers' backs.' 'After all,
said Peretz, 'the economy belongs to the workers. Governments
rise and fall, but the workers remain constant.'"
difficulty of being a libertarian or a libertarian sympathizer
in the Israel of today is reflected in the bitterly despairing
tone of the writer's concluding remarks:
reassuring in this age of globalism, multi-national corporations,
capitalism, and markets, that Israel can remain true to its
economic heritage: the fascist state led by the workers."
COMES DOWN TO YOU
is surely among the most ludicrous ironies of history that,
having defeated two forms of socialism in the past 50 or so
years – one on the battlefield, and the other in the hearts
of men – the US is now supporting, single-handedly, one of
the last socialist regimes on earth. This is particularly
odd, coming from a Republican administration that trumpets
its desire to spread free markets far and wide. We are often
told that the moral superiority of Israel is inherent in its
democratic form of government. But there's a slight problem:
in a democracy you can vote yourself a guaranteed annual income
at somebody else's expense, and, in Israel's case, that somebody boils down to
you, the American taxpayer.
to you, the American taxpayer, the socialist ideal didn't
die with the collapse of the old Soviet Empire. You are paying
for Israeli socialism, including for the provocative settlements
the purpose of which is only to create a pretext for war.
You are footing the bill for those American-provided tanks
rolling over Ramallah and an army outfitted with the best
weapons US tax dollars can buy. US
aid to Israel has been increased, yet again, and still
it isn't enough. The Israeli economy is on the brink of collapse,
and, although Israeli officials are trying to blame skyrocketing
deficits on the war, it seems that
isn't the whole story, as the Los Angeles Times
officials have blamed the nation's economic ills, including
a budget deficit of about $2.7 billion, primarily on the latest
violence, but other analysts say the conflict is only partly
to blame. Several say the government's budget, passed two
months late in February, was bloated from the start. Nonetheless,
'wars cost money and a lot of it,' Finance Minister Silvan
Shalom said as he urged Israelis to tighten their belts and
support the government's proposals for spending cuts, tax
hikes and salary freezes. Speaking with Israel Radio, Shalom
said the nation needs to embark on an economic 'Defensive
Shield' program, akin to the army's just-completed West Bank
offensive of the same name."
yes, that's just what Israel needs – and we know who's
going to be paying for it. But it isn't just the cost to the
overburdened US Treasury. A larger point needs to be made
here by asking: what is it buying us?
DYNAMICS OF PERPETUAL WAR
system described by Zev Golan – a self-perpetuating kleptocracy
such as existed in the former Soviet Union – is empowered
by war, and so the war will continue. As long as Israel is
in a state of perpetual conflict with its neighbors, and the
US aid machine keeps running, the socialist power elite who
run the country will maintain and extend their power. This
accounts for the intractability of the Israelis in negotiating
a fair peace.
must be geographically contiguous, the early Zionists declared:
they would not have been content with disparate Bantustans,
broken up by settlements and "Arab only" roads.
But the Palestinians are not to be so favored. A peaceful
compromise and the evolution of a bi-national solution to
the Palestinian question would reduce the rationale for overseas
aid, both governmental and private, and threaten the perks
and privileges of Israel's state-supported middle and upper
classes. Therefore, it will never happen, unless….
that George W. Bush becomes half the President his father
was and decides to play the aid to Israel card. As unlikely
as that seems, just bear with me for a moment, and conjure
a picture of Dubya getting up there and, instead of begging
and pleading and cajoling the Israelis to please, please,
pretty please get out of the occupied territories,
the President declares: get out, or else the free ride
think he couldn't get away with it. He's given Sharon every
opportunity, every benefit of the doubt – and enough rope
to hang himself with. The President has allowed the US to
be humiliated in the eyes of the world, as the Israeli tail
seems to be wagging the American dog, and suddenly George
W. Bush seems less presidential. Bush's personal authority
has been diminished by Sharon, and there is only one way to
reassert it – and, at the same time, assert the primacy of
raw American power, i.e. economic power.
A NEW UNILATERALISM
said "get out" three different times, three different
ways. Now is the time to add: or else! The sheer unilateralist
verve of such an action would immediately restore his stature,
and also mute the protests of the "Israel First"
wing of the conservative movement – which would be so stunned,
at first, that they wouldn't know how to react.
would never go along with it, you say, but a President emboldened
by a steely determination – or a sense of crisis could
simply issue an executive order and assert the vast powers
granted to him, purportedly to safeguard the "national
security." With the stroke of a pen he could prevent
the transfer of any aid to Israel and bend Sharon to his will.
Abroad, the American President would be hailed for standing
up to the Israelis, while at home he would face a storm of
protest – but only from a very small, if quite noisy, minority.
The majority of Americans, I believe, would admire the unilateral
boldness of such a decisive act, while readily absorbing the
lesson that we have to lay down the law to our alleged allies
as well as to our adversaries. And if Sharon and his supporters
in this country raise too much of a ruckus, if the fight gets
particularly ugly, I'm sure the President has at least a couple of dimes
he can drop on the Israelis.
a fantasy, I admit, but as the President's poll numbers keeping
dipping, and Sharon's defiance continues to diminish the
American President's stature on the world stage, some in the
administration who call for a more even-handed approach to
the Middle East may gain Dubya's ear. Perhaps his father can
talk some sense into him. An article in Slate reminds
us that the elder Bush once openly complained, during a 1991
White House encounter with the press, about the strength of
the Israeli lobby on Capitol Hill. "On another occasion,"
writes Anne E. Kornblut,
reminded his critics that the United States gives 'Israel
the equivalent of $1,000 for every Israeli citizen.'"
Dubya listen to the good advice of his father, or will he
be bullied into allowing himself to be made into a fool? The
education of George W. Bush is looking like it's going to
be a long and tortuous procedure, and rather painful for the
President as well as the country, but it appears some progress
has been made. The Saudi
peace plan, a comprehensive framework for ending the stand-off,
has been endorsed in principle by the US, and Powell did,
after all, meet with Arafat, a symbolic gesture of great import
for both sides of the Israeli-Palestinian conflict.
yes, one recalls the first Bush administration, when the President
of the United States and his advisors didn't take orders from
their satellites, with a pang of genuine nostalgia. Why, I
remember that era of legend, when a Secretary of State could
get away with cursing out American supporters of Israel –
even using the "f"-word! – in what he thought was
a private conversation, noting that "they didn't vote
for us anyway." Will those halcyon days ever return?
POLITICS OF ISRAEL
politics of this issue would seem to dictate it. Since the
Democrats, led by Senator Joe Lieberman and Dianne Feinstein,
out a position of 100 percent unconditional support for
Sharon, James Baker's cold political calculation seems right
on the mark this time around, too: those voters for whom support
to Israel is the number one priority are already lost to the
other party. If and when the President chooses to butt horns
with Sharon, the political costs are bound to be manageable.
Most Christian fundamentalists, whose allegiance to Israel
is based on theology, will grumble, a
very few will defect, and the rest will go along with
the program, since they have nowhere else to go.
the end, of course, it all depends on the President of the
United States, his personal character, his inner life, his
influences, his whims – and his integrity, or lack of it.
The fate of the Republic, and the world, rests on the whims,
the moods, the knowledge – or lack of it – of a single individual,
one elevated to heights of power so dizzying as to drive any
ordinary man over the brink of madness. That's what we bought
into when we voted to give up our old Republic for an Empire.
uh, but I don't remember voting on that – do you?