Howard Epstein

HOWARD EPSTEIN: TWO STEPS FROM MELTDOWN

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HOWARD EPSTEIN: TWO STEPS FROM MELTDOWN

Just three weeks ago, the Times of Israel ran an article to the effect that Israel was arguably a few short steps from disaster.

I was dismissive of the central premise. Although I have long believed, without any scientific knowledge or evidence, that much activity operates on the edge of disaster, I have observed that the precipice is rarely traversed. The usual outcome is that, whether by luck or design, or the application of experience, victory is plucked from the jaws of defeat, and life carries on as though there had never been a potential disaster just around the corner.

So far as the warnings about Israel were concerned, I took comfort from my superficial knowledge, but based on various sources that are well-documented, that, whilst there may be strains in its economy, there is much about it that is superior to so many others. But first the problems.

The headline was: “Derelict Economy Could Sink ‘Titanic’ Israel, Experts Warn”. The hyperbole does not help but close reading of the report:

(http://shoresh.institute/policy-brief-eng-strategic-challenges.pdf)

that of the Shoresh Institution for Socio-Economic Research of Jerusalem, makes for sober reading. I for one would not argue with one of its conclusions: that there is far too much poverty in this country, as that has been a favourite theme of mine, oft-repeated in these columns.

There are, indeed, many issues in the Shoresh report could could scare the pants off you, and one hopes that it has been read and absorbed in the PMO, the Finance Ministry and elsewhere in the government center in Jerusalem.

 

 

On the other hand, search as I may within the report I could find no reference to “oil” or “gas”, let alone “oil and gas”, despite the fact that Israel stands on the verge of being better than self-sufficient in both, and of exporting it to Europe, which might regard Israel as a more reliable and less politically-motivated supplier than Putin’s Russia.

Moreover, there was no response to searches for “cyber” or “autonomous” as in “cyber warfare technology” and “autonomous vehicles” – and this despite the fact that half of the companies in the world selling the former are based in Israel, and both Mobileye and General Motors last week received licences to run the latter on Israel’s roads. One would have thought that the Shoresh Institution would have known last month that those applications were in the works and the results about to be announced. (The GM project is particularly interesting because people from the famed IDF unit, 8200, are embedded in the project – as they have been in most of Israel’s most successful hi-tech success stories. Why is this USP of GM beneath the radar of the Shoresh Institution?)

So Shoresh does not know everything and, indeed, they may be said not to know enough. But do they have a point when they warn apocalyptically:-

“The writing is on the wall. One nation-shaking crisis – emanating from the security and/or economic spheres – could spark a process from which there will be no turning back”?

Really? Could such a process be triggered in a modern economy? Did it not take a year or two for what used to be Syria to be turned into the catastrophe that it is today? So could a western country, not beset with the tribalism and nihilism that are the hallmarks of Arab countries, fall into chaos as a result of one or two bad decisions?

Unfortunately, we now know that the answer to that question is in the affirmative. Take the case of the once Great Britain.

Until very recently, the economy and civil society of GB was the envy of Europe. OK its GDP growth at 0.4% pa was 10% of that of Israel (Shoresh, please note), but it was still the highest in the EU. Then the Brits voted to leave the EU and now it is the sick man of Europe, with a miserable set of first quarter 2017 statistics, and industry riven with doubt about the future. (You remember what spooks markets, don’t you? Uncertainty. The Brits have it now in bucket-loads.)

As for civil society, it is markedly less so since a 23 story residential tower-block burned out in a flash last week, taking with it the lives of around 100 of Britain’s poorest people in the wealthiest borough – the Royal Borough of Kensington and Chelsea – in London, one of the wealthiest cities in the world. Now, the public, and the opposition party leader, are baying for empty properties to be made available for occupation by the homeless – enough to raise the dead from the cemeteries of Moscow, and warm the cockles of certain British politicians’ hearts. (Read on….)

 

 

 

None of this is to say that the conflagration catastrophe should not have been avoided, nor that the survivors should not be treated as generously and as mercifully as possible. The problem is that there was a new mood abroad in the communities of the UK before last week’s devastating events. How so?

Just two wretched decisions have changed the face of the UK almost overnight – actually in the space of 18 months. First, a prime minister who thought he was born to rule and thought through precious little, David Cameron, keeping a pre-election promise to hold a referendum on leaving Europe (Brexit), announced it after affording it rather less attention than a resident of the Royal Borough might give to having his or her pet groomed. Instead of setting the bar at (say) 65% and having an informative referendum proposition, Cameron posed a simple in/out question and allowed for a simple majority of those voting to change the course of the prior half a century. So empowered, a tiny majority of the British (who voted) went for Brexit.

Then, as Cameron had not been in favor of Brexit, he resigned and was replaced by Theresa May. It turned out that her judgment was as poor as that of her predecessor. Thinking she could only bury the (until then) hapless Labour Party leader, Jeremy Corbyn, misreading the public mood, forgetting that the Tory party has traditionally been known as the Nasty Party and believing that the public loved her, May forgot what every soldier learns on day one in the army: never volunteer! After all, who knows? During an election campaign period of three weeks there could be two terrorist atrocities. (There were.)

May volunteered for an election to increase her majority, and promptly lost nearly all the seats she visited on her nationwide election campaign! May – who wins the first prize for anticipatory triumphalism since Hitler celebrated his invasion of Russia – now with a minority government, is holed below the water-line, and was last seen taking more water through the portholes, as a result of the revelation of her empathy by-pass, having been unable to “connect” with survivors of the fire.

The Labour party, led by the Hamas/Hezbollah running-dog, Corbyn, claimed a moral or psychological victory – which has since been galvanized by the inferno in the Royal Borough.

Towering Inferno? Towering Incompetence! Two prime ministerial decisions have placed the UK on the road to Venezuela – a country in ruins, that Corbyn openly admires.

Israel sails on, with its huge dollar reserves, not having indulged in Quantative Easing (printing money), exporting far and wide without a subsidized currency (like Germany’s) and opening up new markets in Muslim countries in Africa. In the meantime, unbeknown to the British people, they were, 18 months ago, two steps away from, in more senses than one, melt-down.

So, the Shoresh Institution was right in its theories but wrong in its chosen case study.

© Howard Epstein, June 2017

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