Israel Trips Over Basic Economics

Bureaucrats with vision can be helpful.  Without vision, and when lacking understanding, they can be disastrous to a county's economic health.  Consider Israel's oil and gas finds in the Mediterranean.  The news sounded great.  Assured fuel for Israel.

But, then the bickering began.  How much gas for Israel and how much for export?  Not all that easy a question, but one that was dealt with.

Now, some bureau that deals with monopolies steps in.  "We're giving these big oil companies a monopoly."  Monopoly, oligopoly, schmolopoly -- sure, but what are the underlying issues?)  Yes, a free market is generally the most efficient market.  Restraining a free market leads to inefficiencies and poorer economic growth.  Okay, so much for economics 101.

Now, let's turn to the real world where we sometimes find situations where a perfectly competitive environment doesn't exist.  In the old days, GM, Ford, and Chrysler had a virtual lock on the American automotive market.  This did, in fact, result in an unhealthy economic state of affairs that was corrected only when the Japanese finally got a foot in the U.S. market.  That would, of course, seem to justify attacking oligopolies.

Not quite.  Consider airplane construction.  Consider Boeing versus Airbus.  These are industries of an even larger dimension than automotives.  It's an industry where American manufacturers contributed over $118 billion, in 2012,  in an export surplus.  And, this from and industry that was largely monopolistic.  Note: The U.S. production of cars and parts in 2012 amounted to $32 billion -- a big number but one, nevertheless, over shadowed by aeronautics.

What distinguishes these industries is the huge capital investment needed to be a player.  It must also be noted that, when you get to companies of this size, the cooperation of governments that profit from their services becomes critical.  That brings us to the oil and gas industries.  Here again, only very large companies have the assets needed to participate.  And, by participate, I mean to participate on a global scale.

Let's turn our attention to Israel and its off shore discoveries.  To those of us who love her, Israel is the most important spot on the earth.  And, in terms of acreage, it is indeed a "spot".  But, its discoveries amount to just one discovery among many when you consider exploration on a global scale.  It nevertheless took an enormous amount of money to make the find.  It will take lots more to exploit it.  "Exploiting" will take more than simply retrieving it and sending the oil and gas to eager customers.  It will mean protecting this resource against attacks from Israel's numerous enemies.

How many companies do you imagine would want to get involved with helping Israel in the face of opposition from oil-rich, Islamic nations who would be delighted if Israel never got to retrieve a spoonful of its bounty of gas and oil?  There are probably less such companies than you can count on the fingers of one hand.  These stalwart companies should be viewed as valued partners rather than as blood-sucking monopolies.

The Palestinians: A Disenfranchised People?

Are the Palestinians a disenfranchised people as Roger Cohen contends?  The answer is both yes, and no.  But, why this ambiguity exists can be understood only if one looks at the behavior of the Palestinian leadership, or would it be more accurate to use the word "dictatorship."

The Palestinians and the Israelis might have lived together in peace, if it had been left to the people.  But that was not to be.  Arafat, hand picked by the Egyptians, led a war against Israel under the guise of seeking an independent Palestinian nation.  Using the usual tools of all totalitarian leaders; namely, coercion and propaganda, he inculcated hostility towards Israel on the part of the Palestinians.  His two-faced successor Abbas, has followed in his footsteps.

Israel must work everyday to ensure it's survival.  Not so Arab societies.  They fight not so much to ensure  the survival of their Arab culture, but rather to gain supremacy over their ethnic Muslim groups within the context of Arab society.  It's the Sunnis versus the Shiia.  It's the secular Muslims versus the Islamists.  It's the Alawites trying to maintain their perch over all the others.  It's Fatah vs. Hamas.  It's clan against clan.  Israel's only part in this drama is that virtually all Muslims, of whatever orientation, are hostile to Jews.

It was once said that Polish anti-Semitism sprang from the mother's milk.  That may be changing.  But, Islamic hostility to Jews is easily traced to the Quran.  Giving land to Abbas changes nothing other than to weaken Israel and make it more vulnerable.

Some suggest that we should work with Fayyad rather than Abbas.  Not a bad idea, if there were the slightest chance he might ever gain a position of leadership in the Palestinian community.  Until that happens the Palestinians will continue to stew in this mess of their own making.  Israel can only stand and watch.

Obama's Cuban Move: Good or Bad

Good or bad regarding America's Cuban Move depends on whose interests are being served.  Here's the run down:

1. Obama -- For him this is a great move.  It's a feel good more.  It meets his twin criteria of "hope" and "change."  It's turning a charitable face to Cuba.  Who can be against that?

2. Fidel and Raoul Castro -- It's a brilliant move.  The Castros hated America, and probably still do.  Nevertheless, they're pragmatic.  Their first sponsor, Russia, went broke.  As luck would have it, Venezuela with it's bountiful supply of oil stepped in and and took over the support of the Castros and their island nation.  The Castros supplied the muscle Chavez needed to keep his people in line and Chaves supplied the oil.  (The Castros also threw in a few teachers and doctors to help out the Venezuelians.)

But, now with oil prices going down to the floor, it was clear that Venezuela's role in supporting the Cuban economy would be greatly diminished.  For Cuba it would be curtains.  But, wait!  The Americans had been panting to reestablish relations with them.  This was Obama's big chance to do a Nixon-in-China shtick and Cuba would magnanimously agree.  Ironically, the hated Americans would now pull Castro's chestnuts out of the fire.  (The Castros have no problem with irony.)

3. The Cuban people --  On one hand, their living conditions are bound to improve.  But, the rather more important question is how much?  Cuba will remain a dictatorship ruled by the Castros.  Their economy will remain stretched over the economic framework of Communism.  Yes, some of the money will trickle down to the people, but it would appear most will remain with the Castros who will use it to strengthen their control over the people.