Watch Israel, and watch it closely

Miscellaneous Current Events
1

Many of you may be aware of the protests currently going on in Israel.

They started out innocently enough with university students protesting against exorbitant rents but they were soon joined by a myriad of other, unrelated groups: retired soldiers, social workers etc.

During this weekend, by the government’s own admission, over a quarter million protesters took over Tel-Aviv. For a country of just seven and a half millions that’s a huge number. So far this has been a pacific protest and, in an unlikely wise move from the “rabid dog”, the police contented itself with keeping an eye out for troublemakers and the army was nowhere to be seen.

Apart from the original students what are the protesters’ demand? Simple: life in Israel is too expensive, the government must do something about this. Before we proceed any further a few facts.

On the paper Israel is a wealthy country. It’s a member of the OECD and average income is US $2500 a month. It possesses a superb high tech industry, a thriving agricultural sector, a good heavy industry, not to mention the defense industry. It recieves billions of dollars in aids and “donations” from the US and a good share of its enormous defense budget is shouldered by foreign countries (for examples the “Dolphin” class submarines are made in Germany).

But if you pay a visit to Israel and “slip the leash” from the omnipresent government supplied “tour guides” you will discover a radically different country. Just a few miles away from the clean, ultra modern city centers with their fashion stores or the high-end bars catering to upper classes youths and tourists there are big slums which look like a cross between a Soviet nightmare and impoverished Arab suburb. Who lives here? The answer is “the second class citizens”. Some of them are Arabs but the bulk are Jewish. Yes, despite all the apparent wealth, despite all the money we pour into Israel, most of the population has serious problems getting to the end of the month.

Life in Israel is incredibly expensive. The houses are expensive, the food is expensive, the clothes are expensives. Taxes are high. Most sectors of the economy are in the hands of government backed oligarchs who, free from competition and feeling completely secure, happily overcharge as much as they want.

Israel has evolved into the perfect warfare-welfare State. The Israeli leadership has been able to convince its citizens they can have both a disproportionate military AND free lunches. For a brief time it worked, then all started to go downhill. Differently from the US, where there are at least people asking to cut welfare or warfare, here everybody expects both. Among the people protesting in Rothschild Avenue (nomen omen?) not a single one held up a sign saying “Cut defense spending to increase welfare spending”. They were all about “Gime, gimme, gimme”.

Which leads directly to the point. This protest isn’t about, say, getting rid of the oligarchs. It’s about increasing entitlements. Without increasing taxes. Without cutting the defense budget. It’s about having more free lunches without realizing they will only add to the burden. Issue more bonds? It worked for Greece, Ireland, Argentina, Portugal and Italy (more on that later). It’s working for the US. Print more money? It worked in Zimbabwe, just ask Dr Gono: he will tell you so. Bully Germany for more war reparations? It will win even more friends than Israel already has. Some of the cooler heads in Israel say this won’t end well. “They’ll start a war to distract people”. Not too hard to image.

2

For a moment I feared some conspiracy thread, glad to see it’s not.

Very enlighting post and a great example that a very educated population won’t be able to compensate for economical wrong doings.

3

There are two major themes that dominate these protests and what almost seems to be on the verge of some kind of a massive mob uprising:

(1) Socialism, ;but also (2) Nationalism

Put the two together and you know what you get.

I have to be honest, this hasn’t gotten any media coverage here thus far, but from what I’ve seen, I think this may qualify as the most anti-capitalistic protest of since I can remember. The chickens are coming home to roost - 3-4 generations of anti-capitalistic indoctrination and nationalism.

BTW, If you see one sign in these protests, and just one sign will be enough, that protests the massive inflationary policy of their central bank over the last 4 years, then please post it here. I bet 300K, even 1 million people in the street there do not know their government has printed massive amounts of money. It is very sad.

4

Thanks for your post, Kakugo.

Given the actions of the Israeli government you know there must be big problems in the country itself, but you only hear about their clashes with others.

5

What you are saying makes a lot of sense but I honestly think that while the protest seems genuine, it really is a gathering of far left voters to try to support israel’s far left political parties. The other problem is is that since socialism is so indocrinated in the country due to how the country was founded, I don’t really feel any optimism will come out. The problem is $8 gallon gasoline, 85% import tax on cars, 16% VAT, and probably loads of other taxes not to mention heavy interventionism to protect a select few companies. Due the people understand that this is caused by government intervention and central banking or is it just a political folly.

It remains to be seen. Taxes are too high while wages don’t keep up=disaster. But your right, cost of living is out of control thanks to the state.

6

I think this is only the start, and not just for Israel. The student riots in Britain last year were the warning shot. After three or four generations of being indoctrinated in extremely high government expectations people have come to believe they have a “right” to free lunches. They have come to believe all it takes to do anything is the stroke of a pen. Now our sins (fiat money, bloated welfare, transfer of capital from the productive part of society to government spending at a faster pace than it can be produced etc) are catching up with us. People fail to see those same free lunches are destroying their income and their savings. By asking for more they are just tightening the noose around their neck.

Of course cries are resonating left and right “tax the rich!”. Problem is the true rich are more or less unaffected. They can lobby for loopholes to be inserted into laws. They can afford excellent lawyers that will exploit those loopholes to the full extent. Failing that they just can move the bulk of their assets in another country in a matter of hours. This means “the rich” rhymes more and more with “the middle class”. The middle class cannot lobby for loopholes and can only afford cheap lawyers. Assets are often in the form of capital goods: they cannot be quickly and easily liquidated, let alone moved. The destruction of the middle class, the lifeblood of the economy, was one of the causes of the fall of the Roman Empire. Free-holding farmers selling their goods on the market were replaced by latifundistas employing hundreds of slaves and selling their grain and wine to the State. The plebs were obviously esthatic: no more were they being “ripped off” by those greedy kulaki. I wondered if they were still so happy when the Empire just couldn’t pay the bills anymore and started “overcharging” itself…

7

Bob Wenzel has a nice comment on this.

http://www.economicpolicyjournal.com/2011/08/libertarian-reports-on-economic.html

8

Thanks for the link.

I am pretty sure we’ve all been there in a way or another: you talk to people about your beliefs (less government intervention, solid money etc) and they seem pretty convinced but that’s about as far as you go. A few moments later they are already clamoring again for “free stuff” and “tax the rich”.

9

This is not a problem but a good thing, if it were true. The less people that are affected the better. The only possible path to a rise in the general well being of the population is capital formation and its accumulation. Taxing the rich proportionally destroys more capital then taxing the poor. Not that you should tax the poor but not the rich, of course. Taxes are bad period.

However, don’t be fooled by the rhetoric of most of these activists, particularly, the active leaders and coordinators of these demonstrations. They do not wish to close the “social gap” or raise any standard of living for anybody. If that is what they wanted, they would simply advocate for direct transfers of wealth in forms of cash, or at minimum, in the form of vouchers (not that not such methods are economically less harmful. That is not my point). No, what they want is for all “solutions” to be implemented via government bureaucracy. They want all “benefits” to be handed out by the State apparatus. They are hardcore socialists capitalizing on an opportunity to further destroy the market. That is their goal and only goal.

10

It spreads: http://english.aljazeera.net/news/middleeast/2011/08/201181319385805796.html

'Demonstrators carried banners and placards that read: “the south is angry,” and “toward a welfare state - now.”

Crowds chanted, “the people demand social justice,” the slogan of the protests since they began a month ago with the appearance of the first protest tent along Rothschild Boulevard in Tel Aviv’s most upscale district.’

11

Again thanks for the link.

It begs about what will happen next. As I’ve already related some of the cooler heads in Israel fear to distract people a war, or at least a deep crisis, could be in the works. It has transpired Syrian President Assad had seriously considered initiating and escalating a crisis with Israel on the Golan Heights to distract his own people before the present bloody riots erupted. It would have amounted to military and diplomatical suicide: the Syrian military is no match for the IDF and attacking Israel right now would mean having the US and their Euro-serfs at your throat in a matter of minutes. Yet he was ready to take the gamble: he knew the UN would have intervened and negotiate a ceasefire before Israel could give Syria more than a bloody nose a few broken bones.He’s aware of what Georgia did in 2007: despite being soundly defeated by Russia on the battlefield, Sakhashvili survived unscathed and could even turn the situation to his own advantage internally. Israeli leaders are not much better than Assad. In fact they feel even more secure due to having the US and NATO backing them up both militarily and diplomatically. Israel survived unscathed the bombing of an alleged nuclear facility in Syria, the 2006 invasion of Lebanon and Operation Cast Lead. Iran got into deep troubles for much less.

12

There is aslight difference between Syria and Israel when it comes to going to war. The people of Syria, from what I gather, can only grumble and soldier on if Assad leads them into war. They may hate it, but there is nothing they can do about it.

Israel, on the other hand, has a huge anti-war party that has been very active for decades. In the midst of any war, they will recruit the MSM to go full blast against the war. There will be mass protests, etc etc.

Also, the people of Israel are indeed tired of war. Nobody wants it. What militarism existed back in the day is long gone. It’s a small country, and an extended war means every almost every family has a relative dead when it’s over. This makes wars very very unpopular.

13

War being spoken of: http://rt.com/news/israel-hezbollah-syria-lebanon/

What other option does the Israeli government have except for a diversion? Debt and the printing press? Is collapse on the horizon?

14

A war is not a diversion for Israel. Diversions are effective only if they do not drastically increase the severity of the very problem they are trying to divert attention from.

Israel is a small country. A war puts an incredible strain on its economy. The basic problem is that they are broke. A war will only make them more broke.

And if you think that at least it will provide an excuse, that the govt will be able to say, “Sure we are broke, but the war did it, so don’t blame us,” that is not going to happen, and everyone knows it. The MSM in Israel will be quick to blame those who declared war as to blame, not the war itself.

It’s an interesting q. What does a govt do when its many meddlings have driven the country to bankruptcy? It’s a question being asked around the world now.

15

Sorry I don’t think I was clear - I meant that even the typical diversionary option is probably not open to them and I was wondering if there was anything else they could do to prevent a possible collapse. Do you think - at least out of the Western states - that Israel is the furthest down this road?

16

What you say is corroborated by what happened during the 2006 invasion of Lebanon, when whole infantry units refused to carry Hezbollah positions or did so with less of the expected enthusiasm. The same happened when reserve units were recalled this year to reinforce the Syrian border. The General Staff has taken notice morale is on a steep decline. The tactics employed during Operation Cast Lead (heavy reliance on air support, artillery and sniper fire) were developed exactly to cope with this loss of morale from the reserve units, which make up the bulk of the IDF.
Yet the Israeli leadership has other ways of keeping their own people on the hedge of the seat than invading a neighboring country. Lately there are rumors multilateral armed action is being considered against Syria, perhaps under a UN mandate. Turkey, which historically has good relationships with Syria, Iran (the only Syrian ally in the region) and Israel, has been tasked with delivering the ultimatum. There are few doubts Turkey has both the military and political muscle to lead the coalition. Israel would only be pleased if, just like it happened in Iraq, somebody else would knock out an historical foe for them. They can mobilize the IDF, like they did in 1991, but not fight the war and let somebody else do the fighting and killing.

17

That’s a naive view.

18

Marko,

Tell me about the many times they have refused to fight.

19

Why would I do that?