Tuesday, March 31, 2009

Two Lingering Questions For Krugman

Nobody has earned the the right to say "I told you so" as honestly as Paul Krugman. Like many others, I have not hidden my gratitude. Yet I wonder about two of his claims against Geithner's plan that seem to me both crucial and not sufficiently answered, at least not in Krugman's writings and public appearances I have seen. If we are going to put major banks into receivership--in effect, nationalize them--the answer to both had better be "no." (I have some working hypotheses, but l am prepared to be enlightened.)

1. The first has to do with the meaning of insolvency, or its flip, the recoverable value of mortgage-backed securities on banks' balance sheets. Krugman insists that Geithner is not acknowledging the size of the housing bubble, that is, the very low actual values of these assets, as compared with the values they were booked at. But these values, much like the price of oil, depend almost entirely on the pace of recovery. What, if anything, can be said about that?

The value of housing will almost certainly not get back to what it was at the height of the bubble--probably not even close. And yet, obviously, mortgage-backed securities are worth something very different in an economy that is contracting as opposed to one that is growing at just 2% a year. In that economy, many fewer households are defaulting on their mortgages, fewer loans are "under-water," and so forth.

Krugman attributes to Geithner a Wall Streetish view that "the bad assets on banks' books are really worth much, much more than anyone is currently willing to pay for them." But might they be worth only "much" more? The issue at hand is how fast do we get to reasonable levels of growth and does the nationalizing of major banks hinder or accelerate recovery.

Krugman, looking at the U.S. in the 1930s, or Japan in the 1990s, has concluded that we will not get back to more normal levels of growth for some time. But what exactly does that mean? If our growth is flat for a decade, as in Japan, then these assets are very, very bad indeed, and tax-payers are suckers for leveraging private equity purchases of them. But if the economy starts turning around in, say, 18 months (partly, but not only, as a result of this temporary leveraging), then the assets are merely bad, and Geithner's plan must be seen as the best under the circumstances.

So the first question is this: Given how much faster financial capital and entrepreneurial information move today than they did in the 1930s, or even in Japan in the 1990s, can we not assume that the pace, not only of decline, but recovery, too, will be much faster than any historical precedent? The president implied that he thought so in his "Sixty Minutes" interview last week, when he spoke of how "wired" the world has become.

2. Krugman suggests that Geithner (Summers, etc.) is a creature of Wall Street. But this begs the question of whether personal loyalty to bankers, or grudging professional respect for them, motivates him and, in any case, should concern us.

Krugman is right (and Geithner agrees) that managers of banks, investment banks, hedge-funds, etc., cashed in on government largesse and incompetence in the past. But in spite of their demonstrable greed, and even herd behavior, is replacing hundreds, perhaps thousands, of senior bank executives with public servants a little like disbanding and de-Ba'athifying Sadaam's army, a morally satisfying but systemically catastrophic thing?

So the second question is this: Do bankers, for all their faults and grotesque enrichment, know some important, subtle things about managing risk, assessing business plans, providing financial services, and so forth that we dare not lose during the process of recovery? Is there not real know-how here, not just know-about (that is, insider stuff, like ways of betting against "AIG's book")?

This is not a completely rhetorical question. I have not spent nearly as much time with the managers of banks and funds as I have with managers of technology companies. I really cannot say whether senior bank executives at Citigroup or Bank of America should be compared with executives at Google or IBM; whether they are really creative and talented people or just glorified salespeople with stunning commissions thanks to the sheer size of deals they have been rolling. And I can see the point of forcing the resignation of some banking CEOs, for the same reason GM's Rick Wagoner had to go.

Still, is running a bank like running, well, Phillip Morris, a job with its own challenges, to be sure, but nothing that smart, experienced managers can't pick up after a few months, and with trivial impact on the economy as a whole? Krugman wants bankers to be "boring" again? But in this same "wired" world, can they ever be boring again? Geithner seems to want to keep the management of banks more or less intact, even as he contemplates regulations that may make them more boring. Is this moderation not more prudent?

Friday, March 27, 2009

Education Budgets And Intellectual Capital

Once again, educational budgets are being threatened, this time by political leaders who let treasury officials tell them how to spend, the same way they allow the army general staff to tell them what to fear. Remember, Israel is a country where the norm is 40 students to a high school class, and universities are unable to cover their operating deficits; meanwhile, student achievement has slipped from the top of the Western pyramid to the bottom, teachers earn as much as secretaries, and professors earn perhaps half of what they would make abroad, where 3000 of them already reside.

I have known Finance Ministry employees. I bet the last thing on their minds is a desire to thwart educators. The problem is that most were themselves educated to monetarist logic at a time when "browsers" were still people who didn't want to pay for magazines. If you oppose them, you will meet with exasperation: "Our deficits have been pushing 4 percent of GDP, way above Europe. Before the crash, our debt service was something like a quarter of the budget, current low interest rates cannot last. Meanwhile, some 40-45 percent of spending already goes to social services like education. Do our teachers and professors expect us to cut more from the sick or the elderly - or from the 20 percent going to defense? We can raise tuitions, but parents and students (and professors, to their credit) refuse to allow this. We can print money, but then we commit to mounting shekel devaluations, which help exports in the short-term but discourage long-term direct investment. Do they want world capital markets, which are more skeptical than ever, to regard Israeli bonds as junk? Do they expect Obama to approve loan guarantees?"

The argument sounds compelling but it hinges on two outdated assumptions. The first is that spending on education is the same thing as adding an expenditure for the "social safety net," like welfare. Actually, in a knowledge economy, education should not be considered a welfare expenditure at all, but a revenue-generating capital investment, at least as important as an airport. It requires separate accounting treatment.

During last year's professors' strike, Hebrew University president Menachem Magidor projected that a lost academic year would cost the economy at least one billion dollars. Project, by the same logic, the net gain of getting more of our expat scholars to return, or of simply inspiring teachers to be more productive, to be willing, for example, to mentor students above and beyond the call of duty. The social chemistry that evolves within great schools or a community of scholars may be an end in itself but it is also of supreme economic value. Companies call this their intellectual capital.

WHICH RAISES THE second assumption, namely, that global investors will see a budget deficit and spook. Look, investors are already panicked by balance sheets at global banks nobody really knows what to make of. But one thing is sure: If Israel is viewed as a big commercial entity, its government's balance sheet will be analyzed like that of a software solutions giant like IBM, with perhaps a little tourism on the side - not like a bank, or even a manufacturer.

Already, major technology companies have market capitalizations that reflect perhaps 70 percent "intangible assets" - the chemistry I referred to above, the sheer capacity for productive innovation itself. One expat Israeli, NYU's Baruch Lev, has shown how companies that have cultivated their intellectual capital over a generation have significantly outperformed those that did not. Indeed, if you look at a survivor like IBM - at its stock price and earnings since the early 1990s, even as its markets for manufactured computers and peripherals evaporated - you saw investors sticking with the company because it invested massively in people. Its major asset is its reputation for delivering software solutions.

The point is, investors understand that it is IBM's capacity to innovate - to grow from its stream of products and their anticipated cash flows - that makes investment worth the risk. Okay, monetarists at the treasury are not wrong to worry about the shekel's stability, just as IBM's CFO worries about avoidable expenses that might force dividend reductions. But the key for Israel - a country that has engendered some 4000 start-ups - is to promise to keep new businesses forming.

Bond markets look at deficits, but they already assume that the only hedge against risk in Israel is a government that outruns deficits with above-average revenues from above-average rates of growth. Besides, venture funds and global technology corporations have done the critical foreign investing here over the past generation, not banks. An Israel that allows its educational system to decay is like, say, Libya allowing its oil installations to decay.

Investors, in short, care about Israelis sprouting new business technologies and also that the country will be more or less at peace. They expect Israelis to remain welcome in foreign conference rooms and that tourists will continue to come. If treasury professionals knew their jobs - security professionals, too, for that matter - they would consider how accountants conventionally write down intellectual capital as "goodwill," a semantic convenience, perhaps, but one pointing to a global asset. They would ask if Israeli teens will learn to inspire goodwill when they are 40 to a class, or, for that matter, when they are enforcing an occupation.

(This column was published in today's Haaretz.)

Monday, March 23, 2009

Lieberman's Status Quo

Reasonable people, from President Shimon Peres to historian of European fascism Zeev Sternhell, have argued fervently that Kadima's Livni and Labor's Barak should join Netanyahu's coalition--that not doing so, in effect, means that Avigdor Lieberman will get the Israel he wants; that the economy and Iran require national solidarity. Barak is trying.

Actually, there is almost nothing the Israeli government can do about the recession. What can the mayors of Silicon Valley do? The government can tweak some budgets and, if it is sane, try to save the educational system (about which more soon). Kadima and Labor can support such tweaking from Knesset committees and the opposition. Regarding Iran, moreover, there is nothing unilateral Israel will be allowed to do, as America tries to engage more creatively with the Islamic Republic. We will hear a lot about centrifuges and 1938. We may have some columnists who think they are Winston Churchill. But the sun sets on our empire pretty much at the same moment that it sets on us.

THE BASIC QUESTION is Lieberman. And the basic answer, which supporters of joining the coalition seem to miss, is that for Lieberman to get what he wants (settlements and Greater Israel, exclusive sovereignty in Jerusalem, the relegation of Israeli Arabs to second class citizenship, the subordination of the judiciary to the imperatives of Jewish "security") all that he needs to have happen is, well, nothing. The status quo serves him perfectly, whether he is in government or not. In fact, his demagogy is so much a product of the status quo ("let's do what we are doing, only harder") that it should bear his name.

And so, therefore, it should bear his face. Read Akiva Eldar's trenchant column on this point. 

To deny Lieberman his victory, the country has to make significant changes: reorient itself away from the occupation, coordinate strategically with the Obama administration--not try to finesse it. If Livni joins, Eldar shows, she only continues to give his status quo a confusing legitimacy. Let Lieberman try being foreign minister in world that shuns him for saying what so many here just take for granted. Let his supporters see the world shunning him.

Lieberman will desperately try to change perceptions. He will speak, plausibly, of Israel in the European Union. The speed with which he will try to transform himself from Zhirinovsky to De Gaulle will leave some reporters spinning. Do not be fooled: we keep going as we are and he wins.

Friday, March 20, 2009

Child Abuse

The Israeli press is full of stories, now broadcast around the world, of Israeli soldiers acting ruthlessly in Gaza. In various reported cases, soldiers revealed a cavalier attitude toward the lives of civilians, including women and children; consistently, they used overwhelming force--artillery against rifles in built up neighborhoods, say--to protect the lives of fellow soldiers. We are now hearing, in addition, knowing comments about the rules of engagement and the ethics of war. According to one scholar who helped write the IDF's code of conduct, a soldier has to "do his utmost" to avoid civilian casualties and that involves taking some risk. "From the testimonies of these soldiers, it sounds like they didn't practice this norm.”

Let me get this straight. We take tens of thousands of 18 and 19-year-olds, young people who are little more than children themselves, and at a time of life when showing the utmost cool is a kind of sexual ante; a time when ideas about the world are largely received wisdoms; when bodies are at their utmost strength but so is the fear of death, which only reinforces the fear of displaying cowardice; when the people from whom wisdoms are received are parents or mentors loved to the utmost; when minds are just intimidated enough about life's scrum to feel utmost gratitude for family and commonwealth--when the desire to prove one's loyalty is at its most intense.

Then we take these youth--for God's sake, kids who can barely even remember the time of Rabin's assassination--and tell them that the Arabs, deep down, will never want a Jewish state in the neighborhood; that, in any case, the land is sacred, and giving ground is an utmost sin of Jewish law, as is showing mercy to those who would kill you; that "Oslo" offered Palestinians a deal with utmost generosity, but that they came back with terrorism nevertheless; that (though this much has been obvious) terrorism can come in any form, male and female, young and old; that protecting our civilians from random cruelties is the reason they are there.

We tell them, moreover, that the civilians they are facing at least tolerated, or even encouraged, the terrorism they must now root out, which is why terrorists are allowed to blend in; that these Arabs are secretly all waiting and hoping for Iran, the new Amalek, to incinerate Tel-Aviv; that if the world had not flinched from hitting at Hitler in 1938, the utmost tragedy would have been prevented; that, anyway, the strategic goal is to reestablish deterrence, which means scaring the shit out of Arabs, so that they will finally accept the fact that, as former chief of staff Moshe Yaalon put it, they are a "defeated" people; oh, and that our great friends in the Bush administration are about to leave office, so time is of the utmost importance, too.

Then, after our children have killed and killed for us, we turn around and tell them they did not take the utmost care in trying to save civilian lives; that "this involves taking some risk"--that if they were braver, more willing to risk their own or their buddies' deaths, they would not have violated the "norm" of combat--in effect, that if they were more worthy, they would not be war criminals.

Presumably, some European state prosecuter will now want to take our children to the world court. But I wonder: if the court had a social worker, would she not just be threatening to take them away from their parents?

Thursday, March 19, 2009

Wonderful Life v.2.0

The most interesting chart showing the connection between executive compensation and company performance--also, I suppose, the arguable importance of retention--is the one I saw proudly displayed on a bulletin board at Motorola corporate offices in Schaumberg Illinois in 1994. George M.C. Fisher, the company's widely admired Chairman and CEO, had resigned without warning a few months before to take over at Eastman-Kodak. By all accounts, Motorola had paid Fisher about $5 million and Kodak offered him $100 million in salary and stock options. He was known as a technologist who was also subtle about people and talent--a good man all round. Nevertheless, Motorola's stock price hardly budged at the announcement of his departure and had recovered completely by the time I was there. "If one leader could matter that much," I was told, "then the leader could not possibly have done his job right."

Investors, like the Motorola executives I talked too, were shrewd to shrug off Fisher's departure, much as some regretted losing his friendship. It would be a great mistake to look at Motorola's subsequent difficulties and attribute them to his leaving any more than attribute Motorola's meteoric ascent in the late 1980s to his taking over from (the more justifiably legendary) Bob Galvin. Make no mistake, I admired Fisher a good deal and liked him personally so far as I knew him. One of the reasons he was widely admired was that my fellow Harvard Business Review editor Bill Taylor and I had published an in depth interview with Fisher in 1989. (He spoke about Motorola becoming interested in an IPO. I joked, lamely, that it was curious why Motorola would bother with the Israel Philharmonic Orchestra. But he laughed and laughed anyway.)  

Anyway, largely because of the Galvin family's legacy, Motorola was very much a place of team play. The corporate culture celebrated, without apparent cynicism, practical engineering, customer service, employee development and cosmopolitan openness. You walked around the Motorola cafeteria wearing a gold identity badge if you accumulated patents; Motorola was mentoring the public schools. By 1989, the company's various people had all but invented the cell phone industry, the corporate university, six sigma quality, and were the first to open up the Chinese telecom market. Fisher had contributed to all of these things but was by no means responsible for them. Even as CEO, he sat in a "two-in-a-box" relationship with the COO, Gary Tooker, who took over from him within hours of his departure. Nobody (as Bill Taylor later put it) is as smart as everybody. 

And Fisher's subsequent run at Kodak was not distinguished.  He probably did better than some other leaders would have, given how the advance of digital technology creatively destroyed Kodak's photography business (much as it destroyed the market for Motorola's analog phones, by the way).  But Fisher certainly did not "turn the company around."  Four years later, his $100 million had shrunk to less than half because of the decline in Kodak stock--a decline that forced him to cut thousands of jobs, but not, revealingly, his own salary.  Fisher is now, and has been since 1996, the most powerful director on the board of General Motors. Enough said.  

I'VE BEEN THINKING of Fisher's record, what with the dust-up over AIG bonuses. Okay, who hasn't wondered if America hasn't become what Bedford Falls would have become if George Baily had just taken Mr. Potter's money. Then again, Potter offered $20,000 a year, not $2 million. I have no doubt that Fisher remains an honorable man, as fascinated now about how things work as he was back in Bell Labs in the 1970s, when he toiled away, ahead of its time, on the video-phone. He was probably less drawn to the money than to proving himself, that is, without the Galvin family's prestige blowing at his back. Still, there was a hubris here that feels somewhat beyond Frank Capra's imagination. How did a decent man leading an inventive, collaborative company, someone already earning a hundred times what a public school teacher earned, get up one morning and tell himself he was actually worth 2000 times this?

Ideas about ordinary Mephistophelean bargains seem unimaginative here, for somebody was willing to pay him. This was not just about his weaknesses for power. Greed shmeed. The real question is, how did we get to a public standard that considered business talent in this way? Wall Street, Sinclair Lewis knew, was always just an exaggerated version of Main Street. So how did Main Street--or even HBR readers--get comfortable with the idea that most every senior business executive should be earning something like, say, Mick Jagger?

I know this is complicated, but I think that little acronym IPO is relevant here.  I remember Ted Levitt, HBR's chief editor, coming into my office one day back in1989, brooding as usual, but also chewing on an insight, the revolutionary qualities of software. Suddenly, he said, the brain's logic can simply be embodied--"externalized," he said--in film full of electrons. You make it for one, and you've made it for a million. The "marginal cost" of adding a customer, he might have added, is more or less zero. Need I add that this was the time Microsoft stock, and Bill Gates' net worth, was beginning to make MBAs drool? 

And Levitt's vision was prophetic in its way. Launching a software company, or a product with a large component of software, paid you back much the way a hit record did. Suddenly Peoplesoft took off.  Suddenly we had Siebel and Netscape. And then Yahoo and Google and Pets.com. What this meant for the business class was that young people did not get just rich. They got hyper-rich. You made it for one and you were making it for a million--or a billion, if you included China and India and Brazil. Twenty-somethings were making more than the entire management of a Fortune 500 company put together. 

TO BE SURE, Tom Wolfe had already written Bonfire of the Vanities, and Michael Milken had already copped a plea. So it was not as if we lacked other, less savory models for enrichment. But I don't believe that George Fisher, or AIG executives for that matter, really saw themsleves as masters of the universe, trading and trading, making cut after cut on mega deals. I think they saw themselves as selling "products," indeed that they were making the world more stable. But I think they also assumed that, in joining the heights of the business class, they had entered a kind of magical kingdom spreading east from Silicon Valley; the top centile which a "new economy" decreed was worth the bottom 99; a place where, as in a successful IPO, a million gets you 100 million, where exponents replace multipliers.    

It may be time to start radically increasing marginal tax rates above, say, Fisher's original $5 million. It may be time to start capping the management salaries in public companies. It may be time to stop permitting stock bonuses for performance spanning less than, say, four years. It may be time for transparency and shame. But the blockbuster logic of software and entrepreneurship and IPOs will, if anything, get stronger as the web becomes ever more pervasive. I am not sure the president can get us to fairness just by conjuring the values of Bedford Falls.

Wednesday, March 18, 2009

Reading My Mind: Deterrence

The always trenchant Yitzhak Laor on "deterrence." And here is some grim reading, a list of young Palestinian prisoners implicated in various atrocities. You read the list and cannot help feel that we are dealing with a kind of historical flood. The young man who caught my eye, for obvious enough reasons, is Ibrahim Hamed, who was charged (though I'm not sure what that means) with the attacks on Moment Cafe and Hebrew University cafeteria. I wonder what his list would look like. And why he was not deterred.

Tuesday, March 17, 2009

Blood On Their Hands

The fate of Gilad Shalit, thought resolved last night, is now again in doubt. Every problem needs a face, and Gilad's soft stare has become synonymous with the standoff between Hamas and the Israeli defense establishment. According to leaked reports, Hamas wants all of its 450 (or so) cadres released, though there has been talk of the group's agreement to have some released to Gaza, not to the West Bank, or even to have some go abroad. Israel is saying the number must be less, and is bargaining especially to release as few people as possible with "blood on their hands."

I have myself lost loved ones in a terrorist attack, and accept the claim that prison may only harden the desire to strike at Israeli civilians. I don't deny that there are serious moral questions, at least in the abstract, about democracies capitulating to terror groups. Yet I find it hard to see much value in the government's endless bargaining, which is engendering a public spectacle that often swings between soap opera and the The Price Is Right. Gilad's poor parents are camped outside the prime minister's residence, while a counter-demonstration of grief-stricken terror victims goes on across the street. Olmert's ministers are warning darkly about how Bibi Netanyahu's government will never offer as good a deal as the current government has. You can't tell bluff from spin.  

FOR MOST ISRAELIS by now, the issue of bloody hands has come to seem particularly abstract. As Haaretz's hard-headed economic columnist, Nehemia Shtrasler, writes, "Who exactly doesn't have blood on his hands in the long war that has been raging in the Middle East?" The IDF has been willing to accept the deaths of perhaps 400 Gaza children to protect its soldiers in operation Cast Lead.  Who in the country does not assume, given so much tit-for-tat, that there are new cadres to replace those imprisoned? Does having anyone behind bars mean that the IDF can somehow relax its guard? Has it weakened Hamas or changed the price to Israel of evading diplomatic concessions? 

If there is a moral opportunity here, let it be a utilitarian one.  If Gilad is home, then every Israeli soldier will know that he or she will, if captured, not be condemned to rot in some dungeon. If Gilad is home, then Hilary Clinton can get on with trying to draw Hamas into a unity government and a diplomatic process. If Gilad is home, then Marwan Barghouti will be home, and can begin to build an alternative leadership to the failing Fatah group in Ramallah.  If Gilad is home, then we can have a face for a page that has been turned.

What strikes me as particularly sad about this bargaining is that, like so much else our current crop of defense intellectuals touch, the question of an exchange does not clarify how Israel's long-term interests are served, but rather how long-term interests boil down to short-term deterrent power.  If Hamas can be forced to compromise, so the argument goes, that is a sign that deterrence has been reestablished. But if Israel capitulates, giving Hamas what it wants, is that not a sign that deterrence has eroded? 

Hamas--having virtually nothing to offer but steadfastness--has virtually nothing to lose by walking away. This does not mean Israel is weak. But, so the argument continues, Israel cannot let itself appear weak, or it will encourage terror, come to think of it, just like being strong and ruthless encourages terror. Either way, the question of deterrence distracts us from seeking an end to the occupation. I can already see some of these Hamas people, thirty years from now, sitting in the Cafe de Flore in Paris, giving melancholy interviews about the hubris of their mentors and horrors of their youth. I wish I could be sure that Gilad Shalit will be there as well.

Friday, March 13, 2009

Still Waiting

Last night, Messiah came to Jerusalem, a performance of Handel's masterpiece by a fittingly humble contingent of Israel Philharmonic Orchestra players, under the direction of Helmuth Rilling, who brought his brilliant choir, G├Ąchinger Kantorei, from Stuttgart with him. The piece worked its usual magic, and as we approached the Hallelujah Chorus, the question crossed my mind:  Stand or not stand?

"The kingdom of this world,
Is become the kingdom of our Lord,
And of His Christ, and of His Christ:
And He shall reign for ever and ever,
For ever and ever, forever and ever."

I sat.

Standing at this climax has been a tradition since George II. Every musical impulse, every feeling of homage, suggested that I get to my feet. But this is Jerusalem, Israel, right? This is what we've been waiting for. Jews don't kneel (or so Menachem Begin said), and they don't stand for messianic preemptions. Anyway, it is simple courtesy. There are over a thousand people here in the hall. Why spoil the moment by calling attention to myself? If others don't stand and I do, I will be blocking somebody's view, right?

Then, out of the corner of my eye, I noticed a man a few rows in front and well to the right, getting up. What was more, he was wearing a knitted yarmulke, you know, the usual sign of halakhic orthodoxy tinged with Zionist celebration. As the chorus gained power, and he noticed he was blocking others, he smoothly slipped out to the aisle and stood there quietly, his gaze forward, a rapt smile on his face. He must be from England, I told myself: standing was a little manifest demonstration of home sickness. 

As we were walking out, I approached this man, mostly to congratulate him on his little bravery. Envy, they say, is a secularist's faith. He shook my hand warmly, and said, in a heavy German accent, and without a trace of irony or reproach, "How can one not stand at such a moment?" There was a twinkling in his eye. And I thought, "We shall be changed."

Here is the chorus. You may stand if you wish.

Wednesday, March 11, 2009

Not So Fast

It's Purim in Jerusalem today, the day after Purim in the rest of the country, which means that Tel-Aviv 20-somethings with a car have a very long party. But this is also the day after Purim in the rest of the world, which means that emails sent to me on Purim in America, even after I go to bed in Jerusalem, get to me the next morning on Purim. Kapish? Anyway, I wake up on Purim to find my friend Rick Hertzberg has forwarded an email to me from the National Jewish Democratic Council, sent out on Purim, announcing Rush Limbaugh's conversion to Judaism. "It has just been reported," the NJDC email states, "that Rush Limbaugh wants to become a Member of the Tribe."

This reminds me of the time Katz tried to get Orenstein into the Suffering Pines Country Club. Katz goes to the acceptance committee and launches in:

"Let me tell you about Orenstein: A, he's adorable; B, he's brilliant; C, he's charming ....

(Apologies to Philip Roth, who tells this better than anyone.)

Monday, March 9, 2009

No Touching

On the day of the Israeli election I found myself a poll-watcher in a National Religious school in Gilo, an Eastern suburb of Jerusalem, which was thrown up over the Green Line a couple of miles from Bethlehem. We don't call it a settlement simply because of its proximity and density. Anyway, on the wall outside of the classroom, which served as our polling station, was this poster, one of a half dozen depicting the spirit with which a good Jewish child obeys the Ten Commandments. 

This one, obviously enough, is about keeping the Sabbath. Little brother's panic (and--as with biblical younger brothers--spiritual triumph) is plain. Older brother is so carried away drawing pictures of the Rebbe, Jerusalem scenes, and Sabbath candles, that he has failed to notice Mother and little sister actually lighting the Sabbath candles, which is bringing him dangerously close to sin. A potential violation of the Sabbath is just seconds away. Thank God for younger brother.

THE VERY NEXT day, as it happens, I found myself flying off to Florence, a 60th. birthday present from Sidra; soon I was visiting the Convent of San Marco, whose murals by Fra Angelico--I now could not stop thinking!--seemed to me curiously like the posters in Gilo. Okay, the Fra Angelicos are masterpieces, though in truth some San Marco murals (apparently done by lesser artists) are ho-hum depictions of Gospel scenes, the blood of martyrs dripping in cartoony ways. Overall, however, the energies of indoctrination were pervasive in either place: not hard to imagine being novice. The real difference was that San Marco was a 15th. century tribute to Dominicans, supported by the Pope, feudal tithes, and Florentine merchants. The Gilo school was built a few years ago by a democratic state, with public tax dollars.

Columbia's legendary Sidney Morgenbesser, once quipped: "The philosopher's axiom is Ought implies Can, while the Jewish version is Can implies Don't." As the child of an orthodox family, I suppose he knew about the fear of touching crayons. Presumably, he also knew about San Marco, where the fear of touching was raised to a higher power. But then, he also knew about Columbia classrooms, where all such fears turned into punch-lines. 

Thursday, March 5, 2009

Presence Of Justice

Among the strange, but actually most revealing, preoccupations of politicians and journalists since the last election is Avigdor Lieberman's insistence that Olmert's Justice Minister, Professor Daniel Friedman, be reappointed. Ehud Barak (who anyway likes being Defense Minister) has said that Friedman represents a danger so dire that Labor should consider joining the Netanyahu government just to block him. Rumor has it that former Chief Justice Aharon Barak thinks so, too. (I heard the latter Barak on the radio a couple of days ago and he denied advising the former Barak; but he was clear that he shares a great fear that Friedman will stay on.) 

Friedman is an Israel Prize winner and former Dean of the Tel-Aviv University Law School.  He is an outspoken critic of "judicial activism," something like Professor Robert Bork in his heyday. But Friedman is most outspoken about reforming the process of appointing High Court judges (and Attorneys-General) to more closely resemble the American system, where a democratically elected executive has a decisive say in the nomination of candidates for judicial positions, which the legislature ratifies. Right now the Israeli judiciary remains something like a closed shop, where candidates for appointment by the President are reviewed by judicial and professional nominating committees. Law-makers participate but do not have true power over the process. Judges are promoted a little like the way Tel-Aviv University Law professors are tenured. This is hardly more "democratic" than Friedman.  So why the fuss? 

Lieberman is facing likely indictment by Attorney-General (in Israel, really the chief public prosecutor, or Solicitor-General) Manny Mazuz  for laundering foreign donations through a phony consulting company run by his daughter. Some say Lieberman wants Friedman because he has somehow cut a deal with the Justice Minister to go easy on him. Friedman was indeed highly critical of the state's sexual assault case against former Justice Minister Haim Ramon; there is an appearance of conflict of interest. But the insinuation that Friedman would corrupt any criminal procedure borders on nonsense.

ACTUALLY, THE DANGER, is much worse than this,  though to simply acknowledge the truth about it will be too embarrassing for all concerned, Israeli civil rights advocates included. Friedman speaks of judicial activism, but when American legal scholars use this phrase they are implicitly suggesting that judges should stick closely to what the framers of the Constitution and Bill of Rights intended, whatever that means; or interpret these hard-to-amend laws strictly, whatever that means. The "conservative" bent suggests the sacredness of fundamental rights that we dare not encroach upon. 

But Israel has no constitution, and no Bill of Rights. It has a body of "Basic Laws," some of which require a super majority to be amended or repealed, mainly governing the way the government is organized. So Friedman's epithet, "activism," seems more than a little misplaced. Moreover, the newest fundamental law, the Law of Human Dignity and Liberty, which finally passed in 1994, is the closest thing Israel does have to a charter of human rights. It promises all Israelis "the right to privacy" and (touchingly) "intimacy." It can be amended by a simple majority, but otherwise no liberal-democrat would be embarrassed by it. 

Here the plot thickens. Beginning, precisely, with Chief Justice Aharon Barak, the Israeli High Court has relied on the Law of Human Dignity to intervene in all manner of disputes in order to protect basic civil rights any American would recognize: everything from guaranteeing the support of special needs students in the educational system, to the overturning the Israel Land Administration's practice of honoring (in crucial cases) old Jewish National Fund regulations prohibiting sale of land to "non-Jews." Basically, the High Court has seemed to be saying: "We don't have real liberal-democracy here, where human rights are fundamentally guaranteed; but we do have a hitherto self-perpetuation community of liberal-democratic justices, enjoying (by means of law and precedent) the ability to remain self-perpetuating. We will interfere in the legal system, wherever human rights are potentially violated."

And there is a vaguely ethnic tension here beneath the surface. The old, better educated, mostly Ashkenazi establishment, the descendants of original Labor Zionist secularism, think of the High Court as a last bastion against the post-1948 immigrant know-nothings from North Africa and, later, Russia--people for whom Western democratic values are thin, because they have not been properly educated to civil society (or properly educated at all); people too easily swayed by nationalist demagogues, rabbinic godfathers, or sensational journalism; people who, like Lieberman, think democratic rights are a kind of "moral" window-dressing, perhaps necessary to impress the world, but also an effete luxury when solidarity in war is necessary. Think of the way the Upper East Side thinks about Joe the Plumber, and vice versa.

What Friedman represents is the end to self-perpetuation. He is himself a renegade from the old establishment. But if his "reforms" become law, as well they might with 65 Knesset votes, the government will gain control over judicial appointments, and, for example, Shas leaders will start bargaining over who gets to the High Court the way they bargain over orthodox school budgets.  What civil protections Israel offers, to Arabs, to Jews, will be seriously compromised. Remember, it was the High Court that just recently overturned a Knesset committee vote to ban the Arab parties from running in the last election.

YESTERDAY, I RAN into my pal Danny Rubinstein, the veteran journalist, who pulled me into a criminal trial in a dilapidated East Jerusalem courthouse. The defendants were accused of forging antiques--you know, the famous case of a sarcophagus, purportedly belonging to the family of Jesus. I didn't know what to expect and went along just to humor him; he was born in Jerusalem and knows everybody, including one of the parties to the case, and two of the lawyers.  

But as I sat there in the courtroom, listening to the careful ways evidence was introduced, listening to the respect with which experts were cross examined, listening to the rulings of a judge who followed every syllogism, and prohibited every party from interrupting the other's sentences, I felt a calm come over me a little like what you feel in the churches of Florence. Needless to say, this is not the way the Knesset sounds--or television panel shows, for that matter. The rule of law, I know, is not just the rule of judges. But it is also that.

Wednesday, March 4, 2009

Leader Of The Opposition

Secretary Clinton is tying up our traffic with her motorcade, but is otherwise getting things going here. She might have announced, as some of us had hoped, that she was reviving the 2000 "Clinton parameters"--and has not. But she's done the next best thing, stating four positions in 24 hours, each important in themselves, but also code every Israeli understands, policy positions that directly oppose what Benjamin Netanyahu (and the rightist parties bound for his coalition) ran on.

First, Clinton said that the immediate priority is to get to a cease-fire in Gaza, and she's helped raise $4.4 billion for Gaza reconstruction. She and Obama have also reportedly received a letter from Hamas through Senator Kerry, and has been quietly encouraging talks that might lead to a "unity" Palestinian government. Clinton is, appropriately, condemning the continuing missile attacks, but has also emphasized the need to get the border open. Translation: America will not support a new attack on Gaza, ostensibly for the purpose of changing the regime there.

Second, Clinton's announced that American diplomats were going to proceed to Damascus, and she's emphasized the need to create a regional alliance to counter a possible Iranian threat. Not coincidentally, while she's been in Jerusalem, President Obama's letter to Russia's Medvedev (suggesting a shelving of missile defense in return for help on Iranian nukes) was leaked. Translation: America will deal with Iran diplomatically and will not tolerate any preemptive military strike by Israel.

Third, Clinton contradicted Netanyahu's idea that an economic peace could lay the ground for a political settlement some time in the future, emphasizing (correctly,) that there can be no economic take-off in Palestine without a political settlement--also that Abbas' Palestinian Authority, weakened as it is, is peace's "partner." Translation: America will not tolerate delay in pursuing a two-state solution; that the inertia of the status quo, in effect, plays right into the hands of Hamas, on the one hand, and the settlers, on the other.

Fourth, and perhaps most daring, Clinton announced American opposition to planned house demolitions in Jerusalem as contravening Senator Mitchell's Roadmap--demolitions (as I've written about before) in Silwan. Translation: America regards East Jerusalem as part of a future Palestinian state, and further Israeli efforts at prejudicing Arab residency in Jerusalem as incendiary.

CLINTON'S MEETING WITH Tzipi Livni was, in contrast, all smiles and winks. Livni's Kadima is not the party of peace, exactly, but it is the party of America--of continuing globalization--of preventing Israel's political isolation. In Tel-Aviv, centrist Kadima and the parties to its left defeated the rightists by a margin of about 60 to 40 percent. In Jerusalem, the rightist parties defeated the center by a margin of about 80 to 20 percent. This is the fight; the rest is commentary.

Incidentally--and apropos commentary--the word "rightist" in this post (and in almost every other analysis of the situation) can be a little misleading. Some of my friends in America asked me if it does not feel like 2004, when Bush was narrowly reelected. A better (though hardly perfect) comparison would be to America electing in 1964--after the Kennedy assassination, as the Cold War and Vietnam intensified, and before the country was chastened by the civil rights movement--a government led by Richard Nixon, with a cabinet of George Wallace, Curtis LeMay, Billy Graham, and, strangely, Cardinal Spellman. Oh, and there is no Warren Court because there is no real Bill of Rights, the subject of a future post.

Anyway, Israel is a city-state, not a super-power. And the leader of Netanyahu's opposition is now in Washington.

Tuesday, March 3, 2009

See Under: Misconceptions

From today's Jerusalem Post, a column by Michael Bar-Zohar, explaining why peace with Palestinians is impossible, that is, ruminating on why a growing (though narrow) majority of Palestinians now support missiles and terror attacks:

"These figures illustrate a major aspect of between Israel and the Palestinians and, on a wider scope, of the West and the Arab world: a tragedy of misconceptions, a confrontation of two societies that do not understand each other and naively believe that people on the other side have the same way of thinking and reasoning as them...

"The mistake of casting our own image on the opponent was repeated during the Second Lebanon War in 2006. Israel believed that by destroying major parts of Lebanon's infrastructure - roads, bridges, power stations - it would make the Lebanese people turn against the Hizbullah that had ignited the conflict. That could be true in Israel or in America, where public opinion weighs heavily on the political scales, but not in Lebanon. In Gaza, too, the massive destruction by the IDF didn't convince the Gazans that Hamas caused the disaster; on the contrary, their support for Hamas and its operations even grew."

Alternatively, See Under: Blitz.

Monday, March 2, 2009

Connect The Dots# 9: Halfway

1. A story from today's New York Times envisioning the direction of the "Wintel" platform, a personal computer that will actually be an intelligent personal assistant. The computer, "a nuanced attempt to recreate the finer aspects of a relationship that can develop between an executive and an assistant over the course of many years," will among other things help you judge your attire and diagnose the treatment of "non-acute" symptoms.

2. A story from today's New York Times suggesting that foward-looking baby strollers may not be best for a child's development, since it radically diminishes face-to-face contact between babies and their mothers, fathers and care-givers.

3. A throw-away line from an article I wrote about George Orwell's newspeak in 1983 which, unprompted, migrated (at last count) to over 1300 websites: "The danger from computers is not that they will eventually get as smart as men, but we will meanwhile agree to meet them halfway."

Extra credit: Might one non-acute symptom be the inability to envision an approving smile while trying to decide what to wear?

Disclaimer: I know I could not have known about 1300 websites without meeting Google halfway, so don't bother rubbing it in.  I also should have written "people" instead of "men," but I meant "mankind" (which I hope does not only dig the hole deeper).

Sunday, March 1, 2009

Bettering The Instruction

If you need something for your workout, you could do worse than watch this 50 minute debate between David Frum and Gershom Gorenberg. There is something slightly pathetic, hence irresistible, about an American neoconservative, clinging to the militant simplifications that got him so far, so fast, and seeing in his eyes the vague recognition that his formulations have been dangerously hollow. But the real point of watching is Gershom's deft use of Frum's stabs to instruct him, and us, on complexities Frum can barely fathom. I once knew Frum--before he chose to become notorious--and thought him smart and decent. Now his wishful thinking seems somewhere in the league of Sydney Webb. And if you are asking, Who is Sydney Webb?, you are getting a piece of my point.