Bibi goes to Washington: what the media forgot to discuss

There has been recently much commotion about the Israeli prime minister Benjamin (Bibi) Netanyahu's speech before the US congress. The prime minister was supposed to lobby against the approaching nuclear deal between Iran and the United States. He was accused of a) breaching the protocol by accepting the invitation from the House speaker John Boehner without consulting with the presidential Administration; b) using the speech (two weeks before the Israeli elections) to boost his re-election chances; and c) playing the partisan divisions in the US and thus undermining the US-Israel relationship.

Citing the above-mentioned "breach of protocol" and the unacceptability of interfering in Israeli elections, US president Obama refused to meet with the prime minister during his visit to Washington, and Vice-president Joe Biden, as well as several dozens democrats, boycotted the speech.

Since much of the coverage focused on the prime-minister's personality (e.g., here), I will leave it out and focus on the aspects of the US-Iran nuclear deal and the Netanyahu's visit which remained largely undiscussed.

1. If Iran goes nuclear, what does it mean for Israel?

If Iran does go nuclear, it will pose a threat to Israel and the Middle East. True, Israel might (or might not) have the second strike capability. From the game theory prospective the Cold War between Iran and Israel is quite different from the Cold War between USA and USSR (or Pakistan and India) due to very different size of these countries. Indeed, the strategy of a Cold War is based on weighing the risk of a nuclear attack versus attacking first and facing the enemy's retaliation. If one can (or believes that he can) neutralize the enemy's ability to retaliate, striking first becomes the preferable option. In this sense, the small size of Israel may create additional insensitives for the first strike by Iran, since Israel can be destroyed by one bomb, while Iran may survive hits killing several millions. This in turn creates greater insensitives for the Israeli first strike...

2. If Iran goes nuclear: what does it mean for the Middle East?

Even if we assume that Israel has sufficient deterrence to prevent direct Iranian attack, Iranian nuclear weapon would change the balance of power in teh Middle East with the countries non-aligned with Iran (starting with Saudi Arabia) either seeking a nuclear weapon of their own or seeking protection of Israel. In the former case we we face a nuclear form of a known question: if everybody had a gone, would it make us safer? In the latter case, there may be interesting motives for peaceful settlement between Israel and Arab states, but also all the unpleasantness of the confrontation between two dominant powers - with proxy wars and a risk of nuclear confrontation driven by a minor miscalculation (aka Cuban Missile Crisis.)

3. Even if Iran doesn't go nuclear: what does it mean for the world?

We don't know whether Iran really goes nuclear. But even if it doesn't, it is already in violation of the nuclear non-proliferation treaty - as certified by the UN watchdog. The Nuclear non-proliferation treaty prohibits the five acknowledges nuclear powers from selling nuclear technologies and materials to non-members of the treaty. The non-nuclear members of the treaty are allowed to buy such technologies in exchange for their obligation not to develop nuclear weapons, which is guaranteed by not enriching uranium beyond certain grade, not using certain technologies and making their nuclear facilities transparent for international inspection. These obligations are violated by Iran, who, as a signatory of the treaty, has purchased nuclear technologies from Russia (e.g., the Busher reactor)

It seems that by signing a treaty with Iran Obama effectively destroys the non-proliferation regime... although it has already done so a few months ago in a "landmark" nuclear deal with India (who, like Israel, is not a treaty member). This is a problem for the World as a whole.

4. Obama's motivations in raising scandal

Whatever were the motivations of Mr. Netanyahu, the situation would not have grown to be so absurd, if the Obama administration and the Democrats didn't make so much fuss about "the breach of protocol". To be sure, Obama administration has ignored, and even committed itself much greater breaches of protocol. For example, a year ago it hosted the un-elected Ukrainian prime-minister just before the elections that were supposed to legitimize the un-democratic change of power in Kiev. The breach of protocol in this case is particularly noticeable, since in parallel the administration took great pains not to show any support for the military coup in Egypt, even though it brought to power a US ally.

There may be multiple motivations for Obama and Democrats politicizing the scandal:

a) To support a more friendly Israeli party in elections (which immediately makes them look duplicitous due to the accusations against Netanyahu that the speech was a pre-election stunt)

b) To avoid the public discussion of the Iranian deal: the administration wants to take credit for the "landmark nuclear deal", but, as I noted before, its effect on nuclear non-proliferation may be devastating. It is worth reminding that not so long ago, during 2010 Nuclear Security Summit, Mr. Obama still was promoting his vision of the World without nuclear arms.

c) Finally, while supporting Israel always make for good US foreign policy, bushing it often makes for a good policy domestically, especially for the Democrats - who still get to be supported by very liberal Jewish community, but whose party is also a home to multiple anti-semitic and anti-Zionist crowds. In this sense the Netanyahu's speech merely brought out of the closet the partisan divisions regarding Israel that has already existed in the US.

5. Behavior of the Israeli left
Israeli left has made extensive use of the quarrel between the President and the prime-minister in its election campaign, but did it in a way characteristic of the Israeli left: by trumpeting a largely non-existent issue of the damage to the US-Israeli relations. It is surprising, because the prime-minister exposed himself by openly stating that he considered the issue of Iran as superseding all the domestic problems. Focusing on tehse domestic problems, e.g., by proposing a serious economic program, could have done a lot of damage to Netanyahu's standing. This was not done... to the detriment of the Israeli left and of Israel as a whole.

Wag the EU (Synopsis of a movie)

“Why does the dog wag its tail?

Because the dog is smarter than the tail.

If the tail were smarter, it would wag the dog.”

“Wag the Dog”, a movie

The former Soviet republic of Ukraine has log been a place of geopolitical struggle between the United States and the European Union on the one hand, and Russia on the other.

The US has no deeply invested interests in Ukraine, but would like to steer it in the western direction as a part of an effort to sustain its own world dominance. Russia is trying to expand its political and economic influence in order to regain its status as the world power. The EU, although less politically ambitious than the US, is hoping to get access to the Ukrainian market in order to spur its own economic growth, stalled in the wake of the ongoing financial crisis. To this end the EU has engaged Ukraine in the negotiations about the latter becoming a part of the common European market in exchange for potential future integration in the Union.

The Ukrainian people are divided about the issue: while some of them feel excited about the western way of life, the others fear that joining the EU will entail the collapse of the Ukrainian industries, plunging their country into poverty and lawlessness not seen since the early years after the fall of the Soviet Union.

Y., the Ukrainian president elected by his people for the lack of any better alternatives, cares only about his own political survival. He knows that, partially due to his mismanagement, the country is on the brink of declaring a default. Understanding that the EU, burdened by its own economic problems, is unable to help, he walks out of the negotiations in favor of a generous economic aid package offered by Russia.

The Y.’s sudden change of mind triggers public protests in the Ukrainian capital. Experienced American diplomat, V. N., wants to use the protests to replace the Ukrainian president by a more pro-western figure. This effort nearly collapses at the very start when a phone conversation, in which she frankly discusses her interference into the Ukrainian politics, becomes public. The situation is saved by the European leaders, who manage to shift the focus of public attention by blowing out of proportion their indignation about the foul language that V.N. used in respect to the EU.

The Ukrainian opposition however seems to be unable to force Y. to step down. Its leaders turn to the US, asking it to impose sanctions on the Ukrainian president and his circle – the demand which the US, as a western democracy, cannot fulfill. “We are not the USSR, we cannot impose sanctions just because we don’t like the guy,” – reluctantly explains V.N. to the disappointed opposition delegation.

To help the Ukrainian opposition V.N. engages Tough Guy, a former marine and the creator of one of the world biggest social networks. T.G. has earned the trust of V.N. during his fruitful collaboration with the National Security Agency. Now she suggests him a more challenging mission – going to Ukraine and building a pretext for imposing the sanctions on the Ukrainian government.

T.G.’s efforts in Ukraine first fall flat when he encounters the Ukrainian opposition leaders’s naïve belief in honest and peaceful resolution of the political standoff. One of them, a dim-witted former boxing champion, pathetically declares: “No western ideal is worth sacrificing Ukrainian people’s lives.”

In desperation, T.G. turns to an extremist right-wing leader, X. In exchange for a hefty sum of US dollars X. promises to “take the protests a bit further”.

The next day the protests erupt into violence which leaves a few dozen of Ukrainians dead. The fact that the numbers of killed protesters and Ukrainian policemen are approximately equal raises many doubts about what exactly happened. But with the help of a charming Ukrainian opposition activist, Oksana, T.G. launches a campaign on social networks convincing the world that the killings were deliberately perpetrated by the Y.’s security forces.

The next day the US and the EU declare the use of force against peaceful protestors unacceptable and impose the sanctions against the Ukrainian government, whereas Russia promises to help Y. to restore the rule of law in his country...

The last frame of the movie shows a social network page commemorating those who died for better Ukraine.

Disclaimer: the account presented here is fictional, although loosely based on real names and events.

Capitalism, Socialism, Communism: formulating the problem

Introduction: I consider the main existing economic systems with the goal to reformulate the centuries-old economic debate as something like a problem in many-body physics (admittedly, very vaguely stated.)

Laissez-faire capitalism, or what is often called “wild capitalism”, is the most liberal, (i.e., free), economic system imaginable, whose description dates back to the works of Adam Smith. It is comprised of many small private units, firms and households, which try to maximize their profit or minimize their expenses. These units exchange goods, (i.e. interact), in a market in such a way that the whole system eventually achieves equilibrium, where the supply of goods from the firms equilibrates the demand for these goods by the households. The role of government is reduced to providing the medium for transactions (i.e., a market and the money) and ensuring that they are done in an honest way.

For someone, familiar with the basics of statistical physics and strongly correlated systems, the existence of such equilibrium in a many-body system does not seem impossible. Adam Smith, living in 18^th century, was in a less fortunate situation. He had to introduce the concept of “the invisible hand” which has incurred much ridicule. “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” - John Maynard Keynes.

Though hypothetically such an equilibrium state is possible, it still remains to be determined under which conditions it exists, whether it is achieved on realistic time-scales, and whether its parameters are always consistent with the demands of the general welfare as whether salaries in the labor market are sufficient to provide livelihood.

Laissez-faire capitalism is known to work in many situations but has also run into spectacular failures, most notably the Great Depression. It now exists only in developing capitalist countries (for example, in Russia), but still has many supporters, such as the Libertarian movement in the United States, represented by Ron Paul.

Communism is the total opposite of Capitalism. A communist government controls all production (i.e. the “firms”) and distributes goods to households. Ideally, even money is not needed under such a system.

In theory a centralized system is capable of producing and distributing required goods more efficiently than the many uncoordinated actors of laissez-faire capitalism. However, in practice it is known to be very slow in adjusting to the demands of households due to the length of the command chain (i.e., government bureaucracy), and its participants’ lack of personal interest in higher efficiency. It is also highly prone to abuse due to the excessive concentration of power in the hands of a small group of people, which tend to abuse this power either through deliberate evil doing or due to simple incompetence. The existing communist countries are examples of such abuses.

Communism also showed itself badly during the Great Depression: a famine in large and normally agriculturally profitable areas of Southern Russia and Ukraine took millions of lives in early 1930’s and even resulted in widespread cannibalism. It remains an open question whether “Holodomor” was the result of a deliberate genocidal policy by Stalin (as the Ukrainian government insists) or simply of his and his advisers’ economic incompetence. In either case it was exacerbated by the high centralization of power.

Regulated Capitalism is an attempt to salvage individual freedom, inherent in the Capitalist system, while limiting the possibility for its failure. It is achieved by establishing “fair rules of the game”: such as anti-monopoly laws when a greater number of competing firms are desirable and regulating natural monopolies where competition is unwelcome (e.g. water and electric supplies and public transportation are often cheaper and more efficient when provided on large scale).

Government may also play a greater role in carrying such functions as building public roads, enforcing law and order, and protecting the environment. While these functions are funded via taxation, it can be argued that taxpayers get fair value in exchange for what they pay. A firm that makes greater use of public roads than a private individual could pay proportionally more in taxes. A similar argument can be extended to funding the police and legal systems since businesses are more dependent on their protection than individuals.

Socialism attempts to improve general welfare by forcing the redistribution of wealth and by more heavily regulating business. I focus below on the economic shortcomings of socialism, but it is necessary to note that the main opposition to redistributionist policies is ideological. Although redistribution is often justified on the grounds of fairness, (i.e., general welfare) it is ultimately unfair from the point of view of individual rights, encoded in the laws of all the developed Western societies. Indeed, this redistribution is in fact a forceful confiscation of legally obtained private property. 

From the point of view of welfare, the main drawback of the socialist system is that the attempts to correct market outcomes often result in negative side effects. For example, rent control laws often give advantage to long-term tenants over those who are looking to move in: the latter are forced to pay a higher price for the same kind of property than the former. Similarly, labor unions drive higher benefits and salaries of employed workers (the price of labor) resulting in lower demand in the labor market, and therefore in higher unemployment than would exist in free market conditions.

While all the developed modern economies are to some extent socialist, their current state suggests that the socialist system is unstable. This is mainly due to the lack of a balancing mechanism that would restrict the growth of welfare benefits, which the majority inevitably awards to itself via the democratic process. This growth is usually funded via borrowing or increasing taxes, which are the same via the Ricardian equivalence, practices that cannot continue indefinitely. Eventually socialism either evolves into its logical extreme of Communism, the Marxist view, or faces the threat of economic instability and relapses back into a state with less welfare distribution, which what seems to be currently happening in Southern Europe and Ireland. In Israel such a turn took place as the result of hyperinflation in the 1980’s under the government of Shamir and Peres.

Formulating the problem

We thus face the problem of designing a social system which would be stable and generate satisfactory outcomes in terms of general welfare. This should include:

1. Formalizing the elementary units and the interactions in a laissez-faire capitalism system and finding under which conditions the system self-organizes and when, or whether, it can be stable.

2. Elucidating the basic mechanisms of instability in Socialist and Communist systems.

3. Determining the proper mixture of free competition, enforcing “fair rules of the game”, and wealth redistribution which would be stable, while providing a sufficient level of general welfare.

HaMetziut: the Real Peace Plan

As it is explained in the program of the movement HaMetziut, we do not consider the “peace process” as the main priority of the Israeli politics. Yet, as a serious political party, HaMetziut has a clear position regarding the peace with the Palestinian people and with the Arab states.

The Israeli Right correctly points out that at present there is no Palestinian leader willing to make peace with Israel and/or being able to implement such an agreement in practice. It is also true that most of the concessions to the Palestinians, made by Israel in the last two decades, have brought nothing but more violence and suffering as to the citizens of Israel, as to the Palestinians themselves.

Yet, the Israeli Right has offered no realistic solutions for the problem, and even continues to aggravate it by the unreasonable expansion of the settlements.

The Israeli Left has been recycling the same ideas for the last twenty years: they claim that making peace with the Palestinian people and the Arab states is a question of making big enough concessions. The most extreme ones believe that with big enough concessions the peace can be achieved immediately (“Peace Now”).

The most disgusting aspect of this attitude to the peace is the attempts to disenfranchise a significant part of the Israeli population – the settlers – from their basic citizenship rights, encouraging to reduce the protection, economic assistance and freedom guaranteed by the state to all its citizens.

HaMetsiut acknowledges the Reality: the Peace, that has eluded Israel during the twenty years of the peace process, will not come now. Neither will it come tomorrow. It may take twenty more years to achieve it. Yet, we cannot wait till it comes on its own – instead of making the situation worse, Israel should help create the conditions for peace and prepare itself for various scenarios under which the peace settlement may occur.

Our position is:

- Peace cannot come now, but the status quo will eventually end. Therefore it is obligation of the Israeli government to prepare necessary groundwork for peace, and to carry out policies that lay the groundwork for the peace settlement with the Palestinian people and the Arab States.

- Israel needs real peace rather than a peace agreement. Such peace agreement can be achieved only when there is a Palestinian leader with enough authority to implement such an agreement.

- They key to the peace is fulfilling the right of the Palestinian people for the self-determination. It must be recognized that more than half of the Palestinian people live beyond the territory controlled by Israel. Thus, the Palestinian independence cannot be achieved by means of only Israel’s concessions, but requires active participation of the Arab states with significant Palestinian population (Lebanon, Syria, Jordan).

The attempts to put full responsibility for the resolution of the Palestinian problem at Israel’s feet amount to trying to wash hands of the Palestinian suffering (when such attempts come from within Israel) and to shift the focus onto Israel from other problems and conflicts in the Middle East (when such attempts come from abroad).

Israel should confront Western and Arab leaders with the fact that economically viable and nationally complete Palestinian state cannot exist within the territories consisting of the West Bank and Gaza.

- HaMetziut will propose a series of economic and political measures to be carried out within the next 10-20 years with the aim to make peace agreement more likely. This laying of Groundwork for Peace will include:

a. Restraining settlement activity

b. Encouraging economic and cultural development of the Palestinian people, as well as their economic and cultural ties with Israel.

c. Consistently promoting democratization in the Middle East with understanding that governments responsible to their people will be more willing to conclude peace agreement with Israel.

d. Supporting the transformation of the political system in Jordan with the goal that the Palestinian people living there would have proportional and fair representation in the government, and having in mind eventual re-unification of the Palestinian people living in Jordan and the West Bank.

e. Acknowledging the right of people to live in the place to which they experience significant attachment, such as a place where they were born and spent their childhood, or the place where they have spent significant part of their life. In particular, we will lobby the United Nations for extending the full citizenship rights for the descendants of the Palestinian refugees currently living in Syria and Lebanon. This is consistent with our intention to keep under Israeli control the territories in which Israeli citizens have been living for already more than one generation.

Political program

I post this in view of approaching Parliamentary elections in Israel (January 22nd, 2013). If I had a political party running for the Knesset, the following would be my likely program:

HaMetziut (“The Reality”)

1. Peace process is not the main priority

We are aware of the reality: the decades of failure in the Arab-Israeli peacemaking and the non-democratic nature of the most of the Middle Eastesrn states. Therefore we believe that the peaceful political settlement of the Arab-Israeli conflict is not possible in the nearest future. The conflict should be managed in order to i) ensure the safety of the Israeli citizens, while also ii) minimizing the casualties among the civilian population of Israel’s adversaries.

2. Personal freedom

We believe in the equality of rights for all Israeli citizens, regardless of their religious beliefs, ethnic origin or geographic location.

In particular:

i) We will encourage deeper integration of the Israeli Arab citizens and the other ethnic minorities into the mainstream Israeli society to forge one common Israeli identity.

ii) All citizens should have equal rights and obligations when it comes to military service, taxation, aid to big families, etc.

iii) Although we do not intend to encourage the settlement activity, we believe that the settlers are equal citizens of the State of Israel. Therefore we will oppose any legislation intended to impose boycotts/sanctions or otherwise discriminate against this group of population, as well as against any other ethnic/religious/demographic group.

iv) We will promote civil marriage/unions as well as other measures intended to provide equal rights to all Israeli citizens, regardless of their religious beliefs, ethnic origin, sexual preferences, etc.    

3. Economic Freedom

It is a duty of the State to help less fortunate of its citizens, whenever their misfortune results from poor health, lack of opportunity, accidents, advanced age or other reasons beyond their control. However, we believe that it is the obligation of young, healthy, educated and otherwise fortunate part of the society to take the economic, social, and political responsibility for the country’s well-being. We believe that the role of the State is to provide equal opportunity and “fair rules of the game” to this active part of the population, rather than to subsidize it.

 

Baywatch and protectionism (Do foreign workers steal domestic jobs?)

This article provides an interesting example of issues raised by protectionism, describing a summer guest-worker program in the US, under which young foreigners take short-term jobs in the US at the expense of higher unemployment among young Americans. A particular example given is lifeguards at swimming pools. Employers admit a number of reasons for preferring guest workers to hiring more Americans, such as cheaper labor (no need to pay high taxes), greater availability during the season, lower demands posed by the workers, and a shortage of Americans willing to work as lifeguards etc.

Protectionism here is expressed by a visa policy that restricts foreign workers from competing in the labor market. Thus, guest-worker programs are the easing of protectionism. This style of protectionism is very common and therefore often overlooked; indeed the very existence of nation-states aims at giving a group of people (the nationals of a particular state) various advantages over foreigners, particularly, in access to the domestic labor market. While many countries practice visa-free regimes for tourist visits, working invariably requires obtaining a visa. Even within the European Union employers are encouraged to prefer domestic workers.

Getting back to the situation at hand, there are four different groups of actors involved: the companies/employers, consumers of services (i.e. those who are using swimming pools), domestic workers, and foreign workers. Companies and the two types of workers are engaged via the labor market.

Economically, the outcome of hiring is most efficient if the domestic and foreign workers have equal access to the labor market so companies can employ the maximum number of workers under the most profitable conditions and provide cheaper and higher quality services to their consumers.

Socially the economically efficient outcome is not necessarily the best. One might, for example, see higher social value in ensuring maximum domestic employment while disregarding foreigners. Tightening visa requirements may force companies to put more effort in finding domestic labor, and to offer better salaries/work conditions/employment periods in order to hire a sufficient number. The downside of this outcome is that it will hit negatively at the domestic producer (i.e. the companies/swimming pools), as well as at the domestic consumer, who will have to pay a higher price for using a swimming pool, or be at greater risk of drowning due to the shortage of lifeguards, or face the closure of some pools due to their economic inefficiency or lack of lifeguards.

What I find most interesting is how this simple case raises uncomfortable questions regarding the traditional “right vs. left” political views as they exist in the US and Europe.

In particular, the moderate “left” (represented, for example, by Barack Obama and François Hollande) advocates government involvement to improve market outcomes, along with more compassion towards foreign workers (i.e. potential immigrants). Here, government interference (i.e. tightening visa rules) would improve the market outcome domestically, but hit immigrants.

Conversely, the moderate “right” (Mitt Romney and Nicholas Sarkozy) would find it hard to reconcile a pro-free-market position with its tougher views on immigration.

In this light it is not surprising that the positions of nationalists (such as Marine LePen) and Communist-like movements (Jean-Luc Melenchon) are often so similar and isolationist: the right sees protectionism as a way to hit hard against disliked immigrants, whereas the left sees protecting domestic workers as a convenient justification for striking “the rich” (i.e. the companies).

On war

Here is an article by Senator Joe Lieberman, making a case for US intervention in Syria:
"What is happening in Syria is a humanitarian catastrophe, with at least 10,000 dead, more than 1 million people displaced and horrific human rights abuses perpetrated daily, including the widespread and deliberate use of rape and other sexual violence as weapons of war."

Predictably, many of the comments following the article accuse Lieberman of  war-mongering and being a "neo-con". As I show below, there is no perfectly moral way to take a position in regard to a war, but there is one way that is clearly wrong: making one's position fit the one's biases or political preferences.

One may oppose any war and all violence. This is a highly principled, although a somewhat naive position. On the surface it also looks like a highly moral one. Yet, the morality of confronting violence with inaction is questionable, as is illustrated by the famous poem "First they came...".

One may adopt the "responsibility to protect" attitude, and always take the side of victims against the oppressors. This is a principled position as well, which perhaps culminated in the George W. Bush's "Freedom agenda". The problem is with deciding who is a victim and who is the oppressor, since one can easily transform into the other. In addition, killing in the name of protecting someone is still killing. Oppressors are no less human their victims.

One may adopt a "realistic" view and support a war when one may benefit from it economically, politically or in terms of one's own safety, while opposing it when no benefit is forthcoming. This is a cynical and cruel attitude, but it is a consistent position... and perhaps the only one that a national leader should adopt.

The attitude that one shouldn't adopt is the hypocritical one: such as supporting the military action initiated by a Democratic President, while opposing the "Republican" wars; or supporting the "resistance" by Hamas/Hezbollah, while opposing Israel's self-defense measures.

Unfortunately, the fact that the events in Syria are largely overlooked, while much smaller scale events in other places, for example in Israel, trigger worldwide protests, is a testimony to the widespread hypocricy. The same can be said about those who passionately oppose the wars in Afghanistan and Iraq, while cheering the "real leadership" that President Obama has shown in ordering the raid against Osama bin Laden, in "leading from behind" the "humanitarian" strikes in Libya, and in waging the "smart war" using unmanned aerial vehicles in Pakistan and Yemen, which has taken thousands of lives.