}

How does Israel create its own economic growth? (Also, Gringotts.)

There are two constant fears in the Russian Jewish community.  The first is that daughters will sit at the corners of tables and, thus  will never get married. The second is that Obama will never let the administration support Israel because he is  quite obviously, a Muslim (Hussein.  Duh!).  This worry happens pretty much any time we have a new president.  Actually concerns about Israel’s security and U.S. support of Israel was the primary reason I voted for Bush in 2004.  But that was when I was young, stupid, and still drank Vlady.  Please don’t hurt me.  The Vlady was punishment enough.

Before Skype, people could only communicate internationally using flag signals.It was horrible.

When you dig a bit deeper, however, it turns out that, no matter who is in charge, American foreign policy implicitly supports Israel (rah!).  The most telling statistic is this one, from the Congressional Research Service, a non-partisan research service for Congress members, from the Library of Congress.  When I think about CRS, I think goblins at Gringotts.

Anyway, in their 2005 report on American assistance to Israel (PDF), they write,

Israel is not economically self-sufficient,  and relies on foreign assistance and borrowing to maintain its economy.  Since 1985, the  United States has provided $3 billion in grants annually to Israel.  Since 1976, Israel has been  the largest annual recipient of U.S. foreign assistance, and is the largest cumulative recipient since World War II.

So much for Republicans and Democrats contributing different amounts and discouraging Israeli policies.   Also, so much for Zionist self-reliance.

From 1949 through 1965, U.S. aid to Israel averaged about $63 million per year, over 95% of which was economic development assistance and food aid.

From what’s been going on so far, this isn’t going to change anytime soon, even though Obama, may possibly apply lots of pressure to Israel regarding settlements and the two-state solution,  so have others.  But, while he postures, the money will still be coming in regularly.

Israel’s ambassador to Washington thanked the Obama administration for maintaining assistance levels to Israel. A commitment to $2.775 billion in defense assistance in 2010 and to joint defense development projects such as the Arrow anti-missile system appeared in the detailed budget proposal the White House submitted last week to Congress.

Oh, and this year?  Still  $2.5 billion.  Now, it doesn’t take an economist (although I am one, so ha!) to draw the trend line between 1949 and today.  Trend line still positive.

This whole US aid to Israel question is one I struggle with on a regular basis.  Not because I don’t think the United States shouldn’t be giving Israel aid, particularly in the military sector.  Global neighbors got to help each other out.  Especially when your other neighbors are CRAZY and maybe planning to kill you a little bit.  But, because, it really undermines the point of the State of Israel, which is to be a self-sufficient Jewish state.  You know, the hoeing and the planting and the self-made Davidka guns?  I mean, all this showering in U.S. money is great, but what happens if, suddenly, the United States no longer has Israel on its agenda and decides that it doesn’t need us as an ally?  Not that that’s ever happened to Jews before.

I realize it’s hard for a small country with only 7 million people (one million of which, are at any given time, watching Russian tv serials and eating sunflower seeds) to maintain a military the size of Enrique Iglesias’ mole and still continue to contribute to technological and infrastructure growth, which, as every good classical economist knows, are the key to GDP growth, which is the key to self reliance. I’m not judging. If we didn’t have the military, we’d be somewhere between Crete and Istanbul in the deep city of Atlantis. The problem is critical and the solution not imminent.  If I figure it out, I’ll get back to you.  Don’t wait up for my call.

27 Comments

  1. Jewish Thought of The Day

    5/14/2009 at 7:06 am

    Jews have survived and will continue to survive no matter what. We are an eternal people.

    Have you ever seen the 7 wonders of Jewish history?
    http://www.simpletoremember.com/articles/a/7-wonders-of-jewish-history/

  2. LB

    5/14/2009 at 9:44 am

    “it really undermines the point of the State of Israel, which is to be a self-sufficient Jewish state.”

    Exactly. Regardless of what policy Israel wants to pursue – the US can stick its nose in because of “a return on its investment” or whatever other wording is used. Furthermore, in the long run I believe it stifles the Israeli economy.

    If Israel were truly forced to rely on itself then maybe the famed Israeli talent for improvisation would kick in (and eliminate one huge complaint anti-Israel protesters have, too).

  3. josh

    5/14/2009 at 10:44 am

    Jimmy Carter was not and still is not a friend of Israel and apparently, Obama is headed in the same direction. I can’t wait for him to finish his one term and start touring the world with Michelle looking for a nobel prize.

  4. vicki

    5/14/2009 at 12:58 pm

    @LB Yess. Independence means you don’t have to go to America asking for allowance and them letting you stay up until 11:30.

    @josh Carter is crazy and geriatric now. While he may have pushed for some things, the money never stopped coming. “From 1971 to the present, U.S. aid to Israel has averaged over $2 billion per year, two-thirds of which has been military assistance.” Wouldn’t you think that if you don’t support a government you would stop giving them money?

    • Viki

      2/5/2016 at 8:14 am

      Very foolish girl….

  5. Ben-David

    5/14/2009 at 2:27 pm

    Vicki –
    The tweaking-your-parents’-generation thing wears a bit thin when it comes to this topic.

    Parents who are politically conservative may not be cool, may make you cringe – but they have called everything right for the last 50+ years.

    Yes – Carter is geriatric NOW. But his administration caused Israel great damage. And he – like Obama – came out of the far-left wing of the Democratic party.

    In fact, the current mortgage crisis is the result of socialist legislation introduced by Carter and expanded on by Clinton – and now Obama is doing the same, forcing the banks to obey the government…. to take a non-Israel related example.

    History doesn’t repeat – but it does rhyme.

    Interesting and important things actually did happen before you were born.

  6. vicki

    5/14/2009 at 2:57 pm

    Ben-David
    I’m not tweaking my parents’ generation. It’s pretty prevalent among my generation, too. If I come across as disrepsectful, then I’m not writing correctly. I think my parents are right about 90% of everything, both with respect to world views and personal advice they have given me, as well. I just like to portray my culture, one which I am clearly a part of an hold a majority of its values, in a humorous way.

    It’s not that I don’t think my parents are “cool”, in fact, I don’t know anyone’s parents who dress up like Young Pioneers for Halloween. It’s just that oftentimes in the Russian Jewish community, there is a very strict sense of one-sidedness. “All Muslims are terrorists. Obama will do nothing but bad. Israel is always right” that is frustrating for me, something I strive to convey here with (lame) humor. I love Israel a LOT. I miss it so much sometimes it hurts. But it’s not without its flaws. And the American policy towards Israel is not completely just out of goodwill and solidarity; America gives money as long as it is convenient for Israel to be its lapdog (something that is very painful for me) and no administration, to my knowledge, has reduced funding to Israel so far.

    I agree that Obama is doing great damage to the financial system, but what about Bush? He didn’t do anything to circumvent it, either. Both parties have failed as fiscal conservatives, even the party that is purportedly fiscally conservative.

    I’m asking again, if Carter and Obama dislike Israel and Israeli policies so much, then why do they continue to give billions of dollars to the Israeli government? The rhetoric was definitively anti-Israel at some point, but the billions of dollars in both military and economic spending never stopped coming in, and it’s slated to continue looking forward.

    Anyway, this has stretched into another post, so it looks like it’s time for me to sheket this time around.

  7. LB

    5/14/2009 at 4:02 pm

    Independence also means you don’t an allowance…

    I’m asking again, if Carter and Obama dislike Israel and Israeli policies so much, then why do they continue to give billions of dollars to the Israeli government?

    Because, as far as I know, the President does not control the budget – he has a lot of influence, of course – but the budget is a congressional issue. Lobbying (for any interest) is something that carries a lot more sway over Congress than it does over the President. I don’t want to turn this into a debate over AIPAC, but they do have a lot of influence over the people who actually vote on the budget…

  8. LB

    5/14/2009 at 4:03 pm

    I meant to say – “Independence also means you don’t get an allowance.”

    Stupid typo.

  9. Kari

    5/14/2009 at 9:52 pm

    A few thoughts on what would encourage Israeli economic growth:
    1. No more welfare to Haredi families that refuse to be in the workforce.
    2. Require all citizens to receive some degree of vocational training.
    3. Allow marriage for same-sex couples.
    4. Encourage immigration; not just aliyah, but non-Jews too.
    5. By and large, liberalize the economy.

  10. Kari

    5/14/2009 at 9:54 pm

    Blah. I somehow managed to forget the important two:
    6. Establish a Palestinian state to improve relations and trade with Arab neighbors.
    7. Join or establish free trade area. Customs union is a bonus.

  11. Vicki

    5/14/2009 at 9:58 pm

    @LB Good point in that Congress also has much to do with appropriation. Wouldn’t that weaken the argument then that every time a president says something anti-Israel that it would get followed up on due to partisanship in Congress? Just wondering.

    @Kari Good points. Wondering about #3-how would that boost economic growth? (not against it, just wondering.) Also, #4 would undermine the nature of Israel as a Jewish state. #6 and #7 would increase GDP 10x.

  12. Kari

    5/14/2009 at 10:18 pm

    Vicki:
    Regarding #3: I don’t know the full details of it, but supposedly legalization of same-sex marriage increases consumption by more than it decreases saving. The net effect on the economy is slightly pareto-superior to the status quo.

    Regarding #4: I would not support #4 myself, as I generally believe that if the tribe wants to get into the practice of nation-state-craft, it should at the very least keep the nation-state a nation-state… But it would encourage economic growth, which is why I said it.

  13. LB

    5/14/2009 at 11:37 pm

    Vicki, the President does, of course, have an enormous amount of sway. The U.S. has not yet (since 1967) had a president that has actively called for the end of aid to Israel. In fact, arguably the time we were closest to that was Bush I’s threat to withhold loan guarantees unless Shamir participated in the Madrid Conference which, of course, he did in the end.

    Kari – #4 is horrendous. Israel’s very raison d’etre is its Judaism. First we get all the Jews to move there, then even think about anyone else. But you said you don’t support it, but that that Israel should become a nation-state if that is how it views it? Can you expand on that? The Jewish people are the nation, aren’t they – and it is our state – isn’t that our “nation-state.” In any case, it seems you are against the modern version of the nation-state, what would you promote in its stead?

  14. Ben-David

    5/15/2009 at 4:41 am

    Regarding #6 – been there, done that – there was/is no significant economic advantage to trade with the Arab world.

    It’s difficult to understand just how much Israel’s economy – and economic sophistication – dwarfs anything going on in Jordan, Lebanon, or Egypt.

    Millions were poured into building industrial zones that would allow Israeli companies to benefit from Pali labor – while providing income for a Pali middle class.

    It never materialized – largely due to terrorists targeting the industrial zones and killing workers there (“Zionist collaborators”).

    Without the oil, the Arab world would be nothing. Really nothing. It’s still not much of a market relative to its population.

  15. Ben-David

    5/15/2009 at 4:42 am

    MOST IMPORTANT CARTOON – Dry Bones has redone a seminal cartoon from the Carter era, in time for Bibi’s meeting with Obama.

    Spread these link far and wide:
    http://www.drybonesproject.com/blog/pages/D09510_3600.html

    http://drybonesblog.blogspot.com/2009/05/when-bibi-meets-obama.html

  16. Kari

    5/15/2009 at 5:59 am

    @LB: I’m not against nation-states… Most of the countries in the world are nation-states simply by virtue of their origin.

    In short, if we Jews are going to build a nation-state we should build a nation-state–a Jewish state. (Isn’t that what most view Zionism as being?) If we just want to build a state where we will be free from persecution (perhaps a broader approach to Zionism) then we can take anyone… But I’ve always believed the general idea behind Zionism is the first goal.

    Some things that would improve Israel’s economy (e.g. #4) are not politically or socially viable. That doesn’t mean they aren’t equally valid answers to the question.

    @Ben-David: Been there, done that? Where is this Palestinian state?

    Egypt, Pakistan, the UAE, Saudi Arabia and Iran all have larger economies than Israel does. Even the Arab countries who have paltry GDPs compared to Israel would benefit from free (or more free) trade with Israel, just as Israel would benefit from them. (See: Rising quality of life in poorer countries that have relatively free trade with the US and Europe. See: Poorer European countries getting stronger due to the Eurozone free trade area.)

    The Arab world is viewed as the new frontier for businesses as the increasing trend of globalization manifests and fresh prospects in East Asia dry up. Israel would benefit from this just as well were it to improve the relations it has with its close and not-so-close neighbors. But that requires giving the Palestinians a state.

    Years ago, the Arabs’ collective economy was oil. Now…That’s not quite so true. Economically, the Arab world is changing, as is the rest of the world. Your opinion on the subject seems to be grounded in an understanding of the broader Arab economy that stopped being true several years ago.

  17. alexk

    5/16/2009 at 12:37 pm

    Vicki, my family doesn’t care what religion this thug in chief is, after all his religion is politics. They care that we escaped communism, to have uneducated Americans and idealistic socialist inspired American Jews vote for a dirty commie gangster. And they’re right. Save it jon Stewart and bill mar fans, I’m not interested in your opinions. I have to live with the consequences already.

  18. alexk

    5/16/2009 at 1:54 pm

    Ok that was obnoxious. Sorry. I get all worked up!

  19. Vicki

    5/17/2009 at 5:32 pm

    Alex,
    I wouldn’t call Obama a dirty commie gangster. True, in my opinion, 80% of his policies suck (from an economic as well as political perspective.) But in the Russian Jewish community, the fact that his father was (a non-practicing) Muslim is a main point of why Obama is a failure, and I’m pretty tired of hearing about it. “Oh, that Muslim will bring us to ruin,” or, “Oh, what do you expect, he’s Muslim,” constantly comes up in conversation. It’s frustrating for me, not only because it’s not true that he is, but because, if he was, then my answer would be, “So what? Does his religion influence his policies? If not, I don’t care if he’s a lapsed Mormon polygamist” (if he was, that would be AWESOME because I’m a fan of Big Love.)

  20. Kari

    5/17/2009 at 7:14 pm

    Vicki: I’d dispute that his policies thus far are bad economically (politically… that’s another story).

    In any case, I’d agree with you that his religion shouldn’t matter if it doesn’t influence his policies… But it does. He bills himself as a religious Christian and he clearly recognizes that at least enough Christians voted for him to get him into office.

    I view the near-constant pandering to Christian groups in the US political system as a fundamental problem with the country.

  21. AlexK

    5/20/2009 at 3:51 pm

    Vicki,

    Apparently, your Russian Jewish community has different views than the one I am familiar with in Detroit. Since most of us came in 79 and early 80’s waves, we were escaping communism and not parastroyka. Of course we weren’t too thrilled about his Muslim roots, which are undeniable, the bigger concern was how he would destroy this country both economically and with his Utopian worldview. As far as his religion is concerned, he’s obviously a believer of self empowerment and self preservation more than any g-d. In fact, his 20 years in an anti-Semitic and racist church without making a peep, in order to build his African American street cred are one example, while the fact that this deeply spiritual man has not found a new church since moving to DC and avoiding National Prayer Day are more proof that he is only concerned about politics than spiritual enlightenment.

    It’s funny though, the double standards that have been applied to Bush and Obama vis a vis religious observation.

    Lastly, call me ethnocentric, narrow minded, or bigoted, but I don’t understand how any Jew could in their right mind not take into account a politicians’ religion when voting for them, especially if they were Muslim. Sure, when I was a bleeding heart liberal in my twenties who believed in peace, love, and puppies, I’d go for that. But I must have also believed what a politician would have told me back then too. Boy am I glad to have grown up.

  22. vicki

    5/21/2009 at 3:37 pm

    Alex,

    I would say the majority of Russian Jews did not come in 79 and the early 80s…only a couple thousand were let through. The floodgates opened in 1991, which is when the majority immigrated to both Israel and America.

    I agree with you that he is pretty much undermining the economy with big government. I don’t really believe in peace, love, and puppies, or that Obama or McCain would have fulfilled the majority of their campaign promises. However, I don’t understand why we should fear his Muslim roots.

    As Kari said, I’m more concerned about the fact that he is pro-choice due to his religious beliefs as a Christian.

  23. AlexK

    5/21/2009 at 5:13 pm

    If either of you really believe he has any religious beliefs, then you are even more gullible than I’d like to think. The guy is a politician, and a great one at that, as as you know, a politician’s personal beliefs are at an inverse relationship to their political acumen. The difference between him and other politicians is that suckers actually believe this lying POS.

    On the other hand, how you could exclude a person’s religious connections and upbringing from their current worldview is beyond me.

    Vicki, will you be my adopted sister? Because I’m already finding the urge to disagree with everything you say and love you at the same time.

    I’d like to keep Froylein in more of an aunt role anyway. If she’s cool with that?

  24. AlexK

    5/21/2009 at 5:16 pm

    I have great friends that are Muslims. Would I want them to have any say or power over Jewish issues and our survival? Hell no.

    I honestly believe that its more of a Jewish need to always feel righteous, fair, and open-minded than to use common sense.

  25. vicki

    5/23/2009 at 5:37 pm

    Alex,

    Adopted sister sounds cool. I don’t have any siblings now anyway. 🙂

    If you don’t want Muslims/Christians to have any say over Jewish issues, the answer would be to live in Israel, a state founded primarily for Jewish interests. As a Jew living in America, your interests will always be marginalized, and I don’t see why a Muslim is any worse than a Christian marginalizing them.

    Also, you say that like being fair and open-minded is a bad thing. You can be practical and fair. Keep Jewish interests at heart, but don’t hate other people because of it.

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