… than they are of the U.S. Congress. That’s the conclusion that I draw from two Wall Street Journal articles: “Crisis Spurs Migration to Israel” and “Building Peace Without Obama’s Interference”. Despite the threat of a devastating nuclear attack from Iran, which would presumably reduce the value of any investment to zero, the Israeli economy has lower unemployment than the U.S. and strong economic growth. The West Bank Palestinian economy is doing even better, with a Chinese-style growth rate estimated between 7 and 11 percent. What does it say about the regulatory and tax environment here in the U.S. that an investor would rather build a factory in a war zone?
Separately, the WSJ has an interesting opinion piece explaining why low interest rates may be hurting U.S. companies’ ability to get capital:
“the Fed is still promising near-zero interest rates for an extended period and buying over $3 billion per day of expensive mortgage securities as part of a $1.25 trillion purchase plan. Capital is being rationed not on price but on availability and connections. The government gets the most, foreigners second, Wall Street and big companies third, with not much left over.”
I took a week-long trip to Isreal last January (yes, during the conflict in Gaza). We flew into and out of Tel Aviv, and I spent the week in Jerusalem. My whole family thought that this was a terrible decision, and that I was heading into a war-zone for a conference on Climate Change. I even had somebody at the mall travel store tell me he didn’t think my trip was worth the risk of being nuked by Iran.
Of course, when I got to Israel, the place was peaceful and beautiful. I spent the week exploring Jerusalem, walking all over the city (new and old), and I never felt in danger. Believe it or not, for a “war zone,” Israel is quite pleasant. Their crime rates are lower than in the US, the people are healthy, happy, well educated and very motivated to tackle big problems.
If I were to start a company in Israel, I think it would have more to do with the people, the government provided health-care (lower costs), the tropical paradise of the location, and the strength of the dollar against the shekel, than with the regulatory and tax environment here in the US.
Ayn Rand nailed what is happening with the Fed: she called it “the aristocracy of pull”. Something that was also seen in Communist Russia, where it was called “blat” – if you had blat you could get things done or purchase items that others could not.