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Israel’s Capitalist Revolution

With the anniversary of the Six-Day War upon us, it is easy to forget the anniversary of another event nearly as important in the history of the Jewish state. On May 14, 1977, Menachem Begin led the Likud party to its first national electoral victory, defeating Labor (then known as Mapai), which had reigned uninterrupted since 1948. Zev Chafets explains how Begin put the country on the path to becoming the economic powerhouse it is now:

Perhaps the worst accusation [his political opponents] leveled against Begin was that he was a capitalist. That was a bit ironic for a man who was born broke and stayed that way all his life. Even as prime minister, Begin bought his suits on an installment plan.

From Israel’s founding until the 1977 vote, Mapai or its affiliated Histadrut labor organization tightly controlled most of the country’s agriculture and industry, health care and social welfare, infrastructure and development, education, housing, and radio. No detail was too small for the socialists: in 1964, the government banned the Beatles on the grounds that they would subvert the morals of Israel’s pioneering youth.

Begin, who had spent an instructive year in a Siberian Soviet gulag during World War II, was skeptical of such power. He had simple instructions for his finance minister, Simḥah Ehrlich: free the economy and make life better for the common people (by which he meant Likud voters).

Ehrlich, who owned a small optics factory in Tel Aviv, was a short, sixtyish man, pink-cheeked, fastidious, and laconic nearly to the point of silence. He . . . was devoid of formal education or economic training. The Israeli media began calling him a follower of Milton Friedman, the free-market guru who had recently won the Nobel for economics. But Ehrlich, who couldn’t read or write English, didn’t know the first thing about Milton Friedman. . . .

Although Ehrlich’s reforms led to what Chafets describes as a “fiasco,” they paved the way for the more successful reforms of the mid-1980s—which saved a cratering Israeli economy—and for the even more sweeping changes of the 1990s, which allowed for the birth of today’s “start-up nation.”

Read more at Bloomberg

More about: Capitalism, Israel & Zionism, Israeli economy, Israeli history, Menachem Begin

 

In Dealing with Iran, the U.S. Can Learn from Ronald Reagan

When Ronald Reagan arrived at the White House in 1981, the consensus was that, with regard to the Soviet Union, two responsible policy choices presented themselves: détente, or a return to the Truman-era policy of containment. Reagan, however, insisted that the USSR’s influence could not just be checked but rolled back, and without massive bloodshed. A decade later, the Soviet empire collapsed entirely. In crafting a policy toward the Islamic Republic today, David Ignatius urges the current president to draw on Reagan’s success:

A serious strategy to roll back Iran would begin with Syria. The U.S. would maintain the strong military position it has established east of the Euphrates and enhance its garrison at Tanf and other points in southern Syria. Trump’s public comments suggest, however, that he wants to pull these troops out, the sooner the better. This would all but assure continued Iranian power in Syria.

Iraq is another key pressure point. The victory of militant Iraqi nationalist Moqtada al-Sadr in [last week’s] elections should worry Tehran as much as Washington. Sadr has quietly developed good relations with Saudi Arabia, and his movement may offer the best chance of maintaining an Arab Iraq as opposed to a Persian-dominated one. But again, that’s assuming that Washington is serious about backing the Saudis in checking Iran’s regional ambitions. . . .

The Arabs, [however], want the U.S. (or Israel) to do the fighting this time. That’s a bad idea for America, for many reasons, but the biggest is that there’s no U.S. political support for a war against Iran. . . .

Rolling back an aggressive rival seems impossible, until someone dares to try it.

Read more at RealClear Politics

More about: Cold War, Iran, Politics & Current Affairs, Ronald Reagan, U.S. Foreign policy