Wednesday, June 3, 2015

Israeli financial Operations are no Economy

If you define an economy as being the production and consumption of goods and services inside a jurisdiction such that a rough balance exists between the levels of production and consumption, you cannot call Israel's financial operations an economy.

That is so because Israel produces very little and consumes a great deal more, with the difference between the two being made-up by charitable donations from outside the jurisdiction; by false compensation claims extorted from the Europeans by the American Congress on behalf of Israel, and by loans that end up being forgiven by the same Congress under the guise of contributing to Israel's security.

Thus, if you avoid talking about Israel as if it had a real economy, and talk about it instead as the worldwide charitable effort that it is, you'll know that the statistics which would mean something when applied to a normal economy, mean something else or nothing at all when applied to Israel's operations. Yet, as absurdly as it sounds, economy is what Israel's setup is often called, a habit that came about for reasons that might make sense in politics but not in the realm of economics.

Not to break with that tradition but acutely aware of the vacuity that is Israel's production machine, William A. Galston wrote an article on the subject, shedding much light on the reality of what is going on while taking into account the political sensitivities that come with the territory. He wrote: “How Bureaucracy Bogs Down Israel's Economy,” an article that also came under the subtitle: “In the U.S. it takes six working days to start a business. In Israel: 34.” It was published on June 3, 2015 in the Wall Street Journal.

Here is the passage that exposes the political sensitivities of talking about this subject, yet says something about the true nature of Israel's operations: “Most Americans know little about Israel's economy, and most of what they think they know is shaped by the country's high-tech sector. But Israel's economy is more varied – and its overall performance more troubled – than glowing reports about the latest IT breakthroughs convey.”

Of course, most Americans heard nothing about actual instances of Israeli breakthroughs in the realm of Information Technology (IT) either because there has been none. Those that follow the developments of this industry would be aware of the giant leaps happening in the neighboring Arab countries because every time that there is a worldwide competition conducted by the giants of the industry – American and otherwise – Arab students make it as finalists in large numbers, and never did a single Israeli share that honor as of now.

Galston goes on to use statistics that apply to a normal economy – telling not of the level of production in Israeli goods and services, but of the level of donations contributed by the worldwide donors who fill the coffers of the artificial concoction they call Israel. He then reaches this conclusion: “This poor performance extends virtually across the board … Israel looks mediocre in manufacturing and finance, and woeful in construction, trade and services. Agriculture is the only sector in which Israel approaches the [level of] developed economies.”

The true explanation for all this is that agriculture is the sector which remains in the hands of the Palestinians, the original inhabitants of the Land of Milk and Honey – part of the Fertile Crescent that the Jews falsely claimed was a desert made to bloom by them who were textile workers, jewelers and musicians from Eastern Europe.

As to manufacturing, finance and trade, the truth is that Israel has no manufacturing to speak of. But wealthy Jews around the world own shares in companies which are situated in their respective countries. They establish an address in Israel to make it look like their business overseas is based in Israel. Using and manipulating the tax code of each country, they end up paying little or no taxes in those countries, diverting the money to Israel.

The author further explains: “In the long run, the economy rests on the performance of its educational system. And here too, Israel faces structural problems … On major international exams; the performance of Jewish Israeli high-school pupils is below average.” No Einsteins coming out of there in the near future.

What Galston neglected to mention is that the same goes for the healthcare system where hospitals are closing due to lack of funds, and where a shortage of doctors and nurses has developed because people are leaving the jurisdiction to seek a better life elsewhere in the world. Good for them.