08/05/2014 05:13 PM

Gaza Crisis

'The Real Danger to Israel Comes from Within'

Interview Conducted by Julia Amalia Heyer

Rubble of destroyed houses in the southern Gaza Strip after the Israeli withdrawal on Tuesday: "I think Israelis have lost what we can call a 'humanitarian sensibility,' the capacity to identify with the suffering of a distant other."Rubble of destroyed houses in the southern Gaza Strip after the Israeli withdrawal on Tuesday: "I think Israelis have lost what we can call a 'humanitarian sensibility,' the capacity to identify with the suffering of a distant other."


Israel pulled out of the Gaza Strip on Tuesday, but left behind death and destruction. Israeli sociologist Eva Illouz tells SPIEGEL that her country is gripped by fear and is becoming increasingly suspicious of democracy.

SPIEGEL: There was widespread support in Israel for the operation in the Gaza Strip, despite the huge numbers of civilian casualties and the deaths of hundreds of children. Why is that?

Illouz: Where you see human beings, Israelis see enemies. In front of enemies, you close ranks, you unite in fear for your life, and you do not ponder about the fragility of the other.

Israel has a split, schizophrenic self-awareness: It cultivates its strength and yet cannot stop seeing itself as weak and threatened. Moreover, both the fact that Hamas holds a radical Islamist and anti-Semitic ideology and the fact that there is rabid anti-Arab racism in Israel explain why Israelis see Gaza as a bastion of potential or real terrorists. It is difficult to have compassion for a population seen as as threatening the heart of your society.

SPIEGEL: Is that also a function of the fact that Israeli society has become increasingly militaristic?

Illouz: Israel is a colonial military power, a militarized society and a democracy all folded into one. The army, for example, controls the Palestinians through a wide network of colonial tools, such as checkpoints, military courts (governed by a legal system different from the Israeli system), the arbitrary granting of work permits, house demolitions and economic sanctions. It is a militarized civil society because almost every family has a father, son or brother in the army and because the military plays an enormous role in the ordinary mentality of ordinary Israelis and is crucial in both political decisions and in the public sphere. In fact, I would say that "security" is the paramount concept guiding Israeli society and politics. But it is also a democracy, which grants rights to gays and makes it possible for a citizen to sue the state.

SPIEGEL: Still, many would say that Israel has gone too far in this war with Hamas.

Illouz: I think Israelis have lost what we can call a "humanitarian sensibility," the capacity to identify with the suffering of a distant other. In Israel, there has been a change in perception of the "Palestinian other." The Palestinian has become a true enemy in the perception of Israelis, in the sense that "they are there" and "we are here." They ceased having a face and even a name.

SPIEGEL: Do you have an explanation for the shift?

Illouz: Israelis and Palestinians used to be mixed. They worked as construction workers and as cheap, underpaid labor. Then the wall was built. Then the road blocks came, which hampered the Palestinians' freedom of movement. The massive reduction in work permits followed. And in a few years Palestinians disappeared from Israeli society. 

The Second Intifada put the nail in that coffin, so to speak. The nature of Israeli leadership has also changed. The messianic right has progressively gained power in Israel. It used to be marginal and illegitimate; it is now increasingly mainstream. This radical right sits in Parliament, controls budgets and has changed the nature of discourse. Many Israelis do not understand the radical nature of the right in Israel. It successfully disguises itself as "patriotic" or "Jewish."

SPIEGEL: Why is the right so strong at the moment even though there are far fewer terror attacks in Israel than there used to be?

Illouz: Entire generations have been raised with the territories, with Israel being a colonial power. They do not know anything else. You have the settlements which are highly ideological. They expanded and entered Israeli mainstream political life

Settlements were strengthened by systematic government policies: They got tax breaks; they had soldiers to protect them; they built roads and infrastructure which are much better than those inside the country. There are entire segments of the population that have never met a secular person and have been educated religiously. Some of these religious segments are also very nationalist. The reality we are faced with in Israel is that we must choose between liberalism and Jewishness, and if we choose Jewishness, we are condemned to become a religious Sparta which will not be sustainable. Whereas in the 1960s, you could be both socialist and Zionist, today it is not possible because of the policies and identity of Israel. 

Then you have the role which Jews who live outside Israel play in Israel. Many of these Jews have very right-wing views and contribute money to newspapers, think tanks and religious institutions inside Israel. Let's face it: the right has been more systematic and more mobilized, both inside and outside Israel.

SPIEGEL: Do Jews in the Diaspora see Israel differently than do Jews in Israel?

Illouz: Diaspora Jews have been shaped by the memory of the Shoah. They often live in societies in which their own democratic rights are guaranteed. Sometimes they are under the assault of anti-Semitism and thus feel an urge to reinforce Jewish identity. They do not understand the distress of Israelis who see democracy progressively eaten away by dark forces. Today, Diaspora Jews and Jews in Israel do not have the same interests anymore.

SPIEGEL: What will happen if democratic principles continue to erode?

Illouz: One or two years ago, the newspaper Haaretz conducted a poll which found that 40 percent of the people said they were considering leaving Israel. I don't know the actual numbers, but I have never heard as much alienation from Israel as during this period. The people who live in secular Tel Aviv have much less in common with their religious counterparts in Jerusalem than they do with people living in Berlin.

SPIEGEL: You describe a fearful, anxious country.

Illouz: Fear is deeply engrained in Israeli society. Fear of the Shoah, fear of anti-Semitism, fear of Islam, fear of Europeans, fear of terror, fear of extermination. You name it. And fear generates a very particular type of thinking, which I would call "catastrophalist." You always think about the worst case scenario, not about a normal course of events. In catastrophalist scenarios, you become allowed to breach many more moral norms than if you imagined a normal course of events.

SPIEGEL: This differing perception of threats and conflict is problematic. Whereas Israel sees itself as the victim, the rest of the world is increasingly seeing the country as a violent occupying power.

Illouz: Imagine that you were a girl raised by a very brutal father. You would develop a "healthy" suspicion of men and would become very cautious. If you were to live for a time in an environment of good and nurturing men, your suspicions would relax

But if you lived in an environment in which some men were very brutal and some were not, your healthy suspicion would turn into an obsessive incapacity to differentiate between different types of men, the brutal and the caring. That is the historical trauma of the consciousness that Jews live with. The Israeli psyche has become incapable of making these distinctions.

SPIEGEL: Does this fear justify the kind of brutal violence that has been visited upon the civilian population in the Gaza Strip?

Illouz: Of course it doesn't. I'm only saying that fear is central to the Israeli psyche. These fears are cynically used by leaders like Prime Minister Benjamin Netanyahu. He makes Israelis believe that they all want to destroy us. Hamas wants to destroy us, the UN wants to destroy us, al-Qaida and Iran want to destroy us. ISIS wants to destroy us. The European anti-Semites want to destroy us. This is basically the filter through which a conflict with Hamas is interpreted by the ordinary Israeli. Another dimension of this prism is that "they" are not human beings. Palestinians are dehumanized because they put their soldiers amongst civilians, send their children to fight, spend and waste their money on building deadly tunnels rather than on building up their own society

Along with the dehumanization of the other, Israelis have a strong sense of their own moral superiority. "We ask people to get out of their houses; we call them on the phone to make sure civilians are evacuated. We behave humanly," the Israeli thinks. An army with good manners.

SPIEGEL: And nevertheless, civilians have been the primary victims, with schools, housing complexes and hospitals being bombed.

Illouz: Yes, despite this, many Israelis still hold on the view they are morally superior. They judge by the intention, whereas the world judges by the consequences.

SPIEGEL: Still, an enormous wave of hatred has become visible in Israel in recent weeks. And it's not only directed at the Palestinians, but also at segments of Israeli society.

Illouz: Some basic norms of speech have been breached by some rabbis and Knesset members, who feel no qualms expressing hatred for Arabs in ways that provide legitimation to hatred. This is very worrisome. It happened because entire generations have been raised believing in religious and ultra-nationalist views. I don't think that there is more hatred in Israel than in some racist pockets of German or French society. But when some Palestinians recently sang in the streets of Paris "Death to the Jews," the reaction of the government of Prime Minister Manuel Valls was swift and clear. 

The authorities sent a strong message that there are forms of speech and forms of belief that are inadmissible. What is lacking in Israeli society is that kind of very strong moral normative claim coming from its leaders.

SPIEGEL: How do you explain this paradox -- the hate on the one hand and Israel's emphasis on its liberal values on the other?

Illouz: Israel started as a modern nation. It derived its legitimacy from the fact that it had democratic institutions. But it was also building highly anti-modern institutions in wanting to create a Jewish democracy by giving power to rabbis, in creating deep ethnic inequalities between different ethnic groups such Jews of Arab countries vs. Jews of European descent; Arabs vs. Jews; Jews vs. non-Jews. It thus blocked universalist thinking.

SPIEGEL: Would you say that the Jewish character of the country has subsumed the democratic character?

Illouz: Yes, definitely. We are at the point where it has become clear that Jewishness has hijacked democracy and its contents. It happened increasingly when the school curriculum started getting changed and emphasizing more Jewish content and less universal content; when the Ministry of the Interior expelled foreign workers because Shas party members were afraid non-Jews would inter-marry with Jews; when human rights are thought of as being left-wing only because human rights presuppose that Jews and non-Jews are equal.

SPIEGEL: That doesn't sound particularly encouraging.

Illouz: The only response is to create a vast camp of people who defend democracy. The right-left divide is no longer important. There is something more urgent right now: the defense of democracy. The voice of the extreme right is much louder and clearer than it was before

That's what's new: a racist right that is not ashamed of itself, that persecutes dissenters and even people who dare express compassion for the other side. The real danger to Israel and its sustainability comes from within. The fascist and racist elements are no less a security threat than the outside enemies.

SPIEGEL: Israeli enemies have also accused the country of no longer being democratic. Does that bother you?

Illouz: With all my critique and occasional disgust at Israeli arrogance, I am also puzzled that Israel is indeed singled out. Look at what happens in Syria or in Nigeria or Iraq. Why isn't the world demonstrating in the streets in the same way it is doing for Israel? America has also a shocking record outside its own borders. Where are the intellectuals who are going to boycott America? Where are they?

SPIEGEL: Do you support the military operation in the Gaza Strip?

Illouz: No, I don't. I'm not a pacifist in the sense that I do not think that military operations are always wrong. But I'm not in favor of this operation because there was no political process beforehand. 

Netanyahu gave such obvious sings that he was not interested in a political process. Instead, Netanyahu constantly undermined Palestinian Authority President Mahmoud Abbas. I refuse categorically the idea that our only relationship with the Palestinians is a military one. We are in a march of folly. There is an increasingly large group of people who really think that they can subdue the Palestinian population and sustain a regime where Israel keeps dominating them.

SPIEGEL: Is that not the consequence of 47 years of occupation, this feeling of not having to make any more concessions?

Illouz: Israelis pay a price, but we are not really aware of it. We don't know how it feels to live in a peaceful society, devoted exclusively to culture, education and improving the living conditions of everyone. People don't make a connection between the bad living conditions they have and the amount of resources invested in the settlements and in the army. In psychology, they call it dissociation. Israeli society has become very insensitive. Not only to the suffering of others, but also to its own suffering.


The Deflation Menace

Aug. 5, 2014 7:46 AM ET

by: Peter Schiff

Summary

  • Falling prices should be embraced, not feared.
  • Falling prices did not cause The Great Depression, but it did help people survive the depression.
  • Prior to the creation of the Federal Reserve, falling prices was the norm.


Dedicated readers of The Wall Street Journal have recently been offered many dire warnings about a clear and present danger that is stalking the global economy. They are not referring to a possible looming stock or real estate bubble. Nor are they talking about other usual suspects such as global warming, peak oil, the Arab Spring, sovereign defaults, the breakup of the euro, Miley Cyrus, a nuclear Iran, or Obamacare

Instead they are warning about the horror that could result from falling prices, otherwise known as deflation. Get the kids into the basement Mom... they just marked down Cheerios!

In order to justify our current monetary and fiscal policies, in which governments refuse to reign in runaway deficits while central banks furiously expand the money supply, economists must convince us that inflation, which results in rising prices, is vital for economic growth.

Simultaneously they make the case that falling prices are bad. This is a difficult proposition to make because most people have long suspected that inflation is a sign of economic distress and that high prices qualify as a problem not a solution. But the absurdity of the position has not stopped our top economists, and their acolytes in the media, from making the case.

An article in The Wall Street Journal earlier this year described the economic situation in Europe by saying, "Anxieties are rising in the euro zone that deflation-the phenomenon of persistent falling prices across the economy that blighted the lives of millions in the 1930s-may be starting to take root as it did in Japan in the mid-1990s." Really, blighted the lives of millions? When was the last time you were "blighted" by a store's mark down? If you own a business, are you "blighted" when your suppliers drop their prices?

The Journal is advancing a classic "wet sidewalks cause rain" argument, confusing and inverting cause and effect. It suggests that falling prices caused the Great Depression and in turn the widespread consumer suffering that went along with it. But this puts the cart way in front of the horse. The Great Depression was triggered by the bursting of a speculative bubble (resulted from too much easy money in the latter half of the 1920s). The resulting economic contraction, prolonged unnecessarily by the anti-market policies of Hoover and Roosevelt, was part of a necessary re-balancing. A bad economy encourages people to reduce current consumption and save for the future. The resulting drop in demand brings down prices.

But lower prices function as a counterweight to a contracting economy by cushioning the blow of the downturn. I would argue that those who lived through the Great Depression were grateful that they were able to buy more with what little money they had. Imagine how much worse it would have been if they had to contend with rising consumer prices as well. Consumers always want to buy, but sometimes they forego or defer purchases because they can't afford a desired good or service. Higher prices will only compound the problem. It may surprise many Nobel Prize-winning economists, but discounts often motivate consumers to buy-try the experiment yourself the next time you walk past the sale rack.

Economists will argue that expectations for future prices are a much bigger motivation than current prices themselves. But those economists concerned with deflation expect there to be, at most, a one or two percent decrease in prices. Can consumers be expected not to buy something today because they expect it to be one percent cheaper in a year? Bear in mind that something that a consumer can buy and use today is more valuable to the purchaser than the same item that is not bought until next year. The costs of going without a desired purchase are overlooked by those warning about the danger of deflation.

In another article, the Journal hit readers with the same message: "Annual euro-zone inflation weakened further below the European Central Bank's target [...] rekindling fears that too little inflation or outright consumer-price declines may threaten the currency area's fragile economy." In this case, the paper adds "too little inflation" to the list of woes that needs to be avoided.
Apparently, if prices don't rise briskly enough, the wheels of an economy stop turning.

Neither article mentions some very important historical context. For the first 120 years of the existence of the United States (before the establishment of the Federal Reserve), general prices trended downward. According to the Department of Commerce's Statistical Abstract of the United States, the "General Price Index" declined by 19% from 1801 to 1900. This stands in contrast to the 2,280% increase of the CPI between 1913 and 2013.

While the 19th century had plenty of well-documented ups and downs, people tend to forget that the country experienced tremendous economic growth during that time. Living standards for the average American at the end of the century were leaps and bounds higher than they were at the beginning. The 19th Century turned a formerly inconsequential agricultural nation into the richest, most productive, and economically dynamic nation on Earth. Immigrants could not come here fast enough. But all this happened against a backdrop of consistently falling prices.

Thomas Edison once said that his goal was to make electricity so cheap that only the rich would burn candles. He was fortunate to have no Nobel economists on his marketing team. They certainly would have advised him to raise prices to increase sales. But Edison's strategy of driving sales volume through lower prices is clearly visible today in industries all over the world. By lowering prices, companies not only grow their customer base, but they tend to increase profits as well. Most visibly, consumer electronics has seen chronic deflation for years without crimping demand or hurting profits. According to the Wall Street Journal, this should be impossible.

The truth is the media is merely helping the government to spread propaganda. It is highly indebted governments that need inflation, not consumers. But before government can lead a self-serving crusade to create inflation, they must first convince the public that higher prices is a goal worth pursuing. Since inflation also helps sustain asset bubbles and prop up banks, in this instance The Wall Street Journal and the government seem to be perfectly aligned.