Turning of the Tide

As Obama departs Israel, the white house has put out a press release declaring Israel has apologized to Turkey (for the mistakes made in the Marmara incident), that financial compensation (by Israel) to the families of those killed is forthcoming, that Turkey is once and for all dropping the accutsational rhetoric, the litigation of Israeli servicemen, restorating diplomats and that relationships between Israel and Turkey are re-normalised.

Huge bang for buck for Obama. Obama has more important things to do, the vast majority of which are inside America's borders. He has neither time nor spare resources to spend on fixing an Israeli-Palestinian conflict that neither the Israelis nor the Palestinians seem serious about wanting to solve.
A rich, highly-publicized, PR-laden visit to Israel, where 10 minutes before jumping on the plane he whips out a sledgehammer and hits the Israel-Turkey relathions machine in -exactly- the right spot, gets the machine to roar back to life, departs with a smile, ticking off a big-ticket achievement for his resume and not needing to worry about this area of the world again (and its associated lobbies) for the rest of his term.

Masterfully done.

Huge win for Turkey's Erdogan, in the eyes of both his voters (Turks) and his clients (Liberal Muslims the world over). You see, Erdogan is in business, and the world's Muslims are his market.
He is in the business of selling to them a new brand of liberal Islam that competes with the Iranian Shiite, Saudi Wahabi and Egypt's Salafist conservative dinosaurs.
His product's proposition? A proven version of political Islam largely compatible with western values, boasting a functional economy, sitting on a solid platform of a material (and vocal) NATO contributor as well as rich trade ties with both the Middle East and the West.
He's selling a vision every arab-spring revolutionary (note: both the secular freedom fighters of Syria and Lybia or the possibly to-be fanatic fruitloops of the radical Al-Nusra brigades) want to buy.


He's doing very good, thank you for asking.
And he's just handed his PR department a "hard-earned" win in an arm-wrestling match with Israel.

Oh, he's happy all right.

And... Israel.
This is a win for Israel for a long list of obvious technocratic reasons.
It restores business and trade, probably starting with the reinstatement of some parked defense contracts. Money talks.

It restores diplomatic ties and improves support for Israel's position in the world (both West and Muslim), as with "Turkey's cooperation on improving the situation with Palestinians" comes a silent approval-by-default of what Israel does there, except where explicitly stated otherwise. That in turn impacts trade with other places in the world. Money talks.

It lays the ground for trust to start building up, (and tourism business to start coming back
and so forth. So money talks.)

Despite the pride, Israelis seem to intuitively understand this. Ynet - Israel's main tabloid where sensationalism, an entire industry of paid talkbacks and hoards of emotionally-swayed readers are famous for running high on the national stiffy scale - even this readership qualified the decision with a 55% support rate.

All that is true.

But there's a bigger picture here. A seismic happening underwater, whose first visible effect is the apology we're witnessing.

Understanding it is understanding that Bibi Netanyahu - Israel's Prime Minister - is not (and has never been) the bus driver. Bibi Netanyahu is merely the bus. In Israel's minoritocratic (e.g. perpetual hung parliament) political system, policy is made by the coalition partners, not by the main party glueing them together.

In the years past, this policy was driven by the person who had a foreign-policy-oriented political gun to Bibi's head - Avigdor Lieberman, a hawkish (at times, to the point of fascism) major coalition partner representing the hard-line soviet-immigrant seventh of the Israeli voting public.

Two things happened in these elections - he merged his entire party into Bibi's just before (securing a personal position for himself in the current parliament), and his voters (quite literally, all of them) walked out. His material contribution (in parliament seats) to the Likkud ended up being zero growth (albeit, perhaps, no shrinkage).

Lieberman's nationalistic stiffy is still in full swing, rest assured, quoted in the media saying the whole apology to the Turks is a mistake.
But Lieberman is now completely irrelevant.

The new coalition partners - the new influencers and drivers of policy - all sing a very, very different policy song. We can evidence it in this apology and will be in decisions to come - 

Hatnua - Livni's party, with Livni herself tasked with leading the Palestinian negotiations, has been the most pragmatic, sensible and well-meaning voice in normalising relations with all of Israel's neighbours (in a realistic, security-minded, non-unicorns kind of way).

Yesh Atid - Lapid's party, swept a sixth of the nation on a platform of sensible pragmatism that bolsters prosperity. They'd weigh in towards whatever helps the nation pay the bills and keep the lights on.

Even "Habait Hayehudi" - Benett's party that raked in all of Lieberman's hawkish voters - is a settler/liberal-entrepreneur philosophical hybrid. Even to them, entrepreneur-supporting pragmatism would counterweigh theoretical ideology enough not have gotten in the way.

The common thread to these three parties is their focus on economic prosperity rather than firmer borders as the principle method of nation-building (yes, even Benett, compared to the previous representatives of the same electorate), a method particularly popular with that younger generation forming the guts of the electorate of these three parties. It is no coincidence Obama addressed his Israel speech to them rather than a roomful of statesmen. These young people, embodied in the three newformed parties, are now quite literally the policy makers, and they share their nation-building dogma with their US counterparts - those who overpowered Romney and put Obama in office.
Obama was pumping morale into the veins of the local equivalent of his own team back home.

Bibi's new government coalition partners have emerged bearing a re-thought agenda for Israel, and if under the decades of letting his coalition partners drive his policy Bibi himself has any similar intentions of his own, his current assembly would allow him to play these out with a long overdue dose of pragmatism.

If the Israeli apology to the Turks won Erdogan and Obama a battle, Israel, as a nation locked in a struggle with its own demon, has just sounded the horn of a turned tide in an epic, generations-old war.

Wow.

A Reply to Malcolm Turnbull

I just caught this on paper print in the Fin Review today.

In Malcolm Turnbull's address to the nation for the upcoming Australia day, the following words profoundly resonated with me:

"The keys to prosperity have not changed. Our greatest assets are not under the ground, but walking on top of it."

I can't express how happy it makes me that our RIGHT WING is seeing and saying this.

Now, Malcolm, all you have to do to help tap our rich human capital and make your vision a reality is make it less painful for us Aussie entrepreneurs to spin up globally-competent high-growth businesses.

If you want a future that truly taps our national potential, it will not come from BHP Billiton or IBM. That stuff will all go to Asia.
To justify those high Aussie dollar wages, it'll come from a couple of guys in a garage (or a Melb Uni dorm), multiplied by the highest number you and I and all of us can make happen.

Undo the damage done by Howard, who advocated for small business at the expense of high-growth (read: mostly tech) entrepreneurship, and who laid out a vision where tertiary education is the privilege of the few. It should not be.

It's the small things that favored small businesses over large ones... but kicked out our best and brightest starter uppers in the crossfire. Like making it hard to crowdfund stuff. Like taxing stock options on the day they're given. Like all manner of stuff making it harder for small businesses to become big businesses.
Howard got 20 years worth - a generation - of our smartest and bravest to go to the US east coast to build their visions there instead.

Set in place BIG incentives to be the first country with an industry that tackles HARD PROBLEMS. Being first is a big ticket. It means you won't just sell locally. It means you'll sell to the entire world.

Like Denmark did with its tax incentives - making them a tiny 6-million-odd nation that sells 40% of the world's wind turbines. They put the right problem in front of their smartest people. And as a nation, they solved it before everyone else did. They now have a big-ticket item on their GDP to show for it.

Like Julia did with the carbon tax. Tell our boys that if they'll do the undoable and find ways to reduce emissions, you will help put wind in their sails, not let Gina Reinhart anchor them to the ocean floor.

The smart people are here. We have an exemplary education system. We've got the best engineers and scientists in the world. It's policy - coming from government - that can direct them to exploiting their capacity in ways that will matter on a global scale.
Help us make it happen here.

Rebrand the tall-poppy syndrome, that makes us revile those who succeed at fixing something.
The good sentiment is already there. Look at the Aussie faces glued to the telly watching our boys and girls shovel in gold at the Olympics after four years of grueling training. Look at the emotional connection, the spirit and the pride. Look at how we admire the Nick Caves, Kylies and Russels of the world - those of us who made it to Holywood.

We can and we should re-connect that sentiment to the people behind the Lyfx's, the Hitwises and the Atlassians - our self-made entrepreneurs that challenged the world and emerged victorious.

I want to be able to tell my 9-year-old that if he is brave enough to take worthy risks, solve hard problems and build a successful business around him as a result, this country, its government and people will embrace him for it.

Why Bibi Will Not Win

I'm only half-prophesying here. And I think it matters little how the 5-way center-left block will shape up.

It's mid-day in Israel and all we know is what the polls tell us (that Bibi will win). And that the turnout has been off the charts relative to all elections in history.

This is not surprising. And what it spells out is simple.

There are two competing approaches at nation-building. One involving stronger borders. Another involving a stronger spot in a collaborative global supply chain.
Mitt Romney argued the former, a point far more favorable in the 50+ age group phasing out than in the 25-30 group phasing in. Tom Friedman makes a good case for the latter. As the older generations leave us, support for it will only increase.
In the Israeli context, a very different debate is being held around very much the same topic - how to go about building the nation.
Bibi (and Naftali Benet) say stronger borders, playing the security to what his extreme right friends want to hear to support him. The center-left block says nation-building is directly tied to the prosperity of the middle-class.

The backdrop to both the US and Israeli situation is not 'the world is where it has always been, give or take some opinion'.
It's 'the entire world is on a clear, major economic trend'. It's not about how many humans live on this rock. It's about how many of them consume and require resources - steel, aluminium, copper, clean water, energy, engineers. It's not about the increase in population, it's about the increase in the percentage of it that consumes cars, mobile phones, ipads and everything in between.

And that number has gone up by over 400% over the past 6 decades.
Supply of the raw resources required to feed this, however, has not.
Result: As more big consumers (say, yet another 300 million in China, yet another 300 million in India, more in SE asia, East Europe and more in the Middle East...) buy stuff, prices of everything, everywhere will continue to drive up in absolute terms.
More expensive steel means more expensive tractor. More expensive tractor means more expensive butter.

If you live in Tanzania, you probably won't notice. You've likely been unable to afford consuming stuff on a developed-country-resident scale, and you're even further from it today.

If you live in Australia, you probably won't notice either. Your strong local economy, cheap debt and ready access to every raw material under the sun give you a big economic shock absorber, making the global price hike a barely noticeable phenomena. The worst that could happen is that your next phone will be an Android phone rather than an iPhone.
This is why Occupy Melbourne got zero attention. It didn't sting enough for anyone to care.

And then there's the countries whose middle class lives on the cusp.

Like the USA.
Like Israel.

Countries where the steady increases in cost just made 20% of the middle class drop out of the middle class. They don't degrade themselves, mind you. They just borrow, and realise at some point that they can't make ends meet anymore.

To them, it's not giving up the iPhone. It's giving up having a phone altogether.

This is why Occupy Wall Street was big.
This is why in September 2011, Palestinians held their first ever protest not against Israel, but against their own government and the cost of living.
And this is why in Israel, 100,000 people, nearly 1.5% of the country's population, got together last year and said there's a BIG problem.

Those people have a simple message: "We are dropping out of the middle class. Help."

Superficially, Bibi has an economic agenda. He has relieved Israel of 30% of its public debt over the past term. A more prudent look at indexmundi.com shows the Israel's private debt increased by the same 30 odd billion over this term. Bibi hasn't so much covered a sizeable chunk of the national debt... as moved it from the shoulders of the whole nation to the personal accounts of the middle class. Rather than economically benefiting the nation, he simply moved the problem to where he is no longer accountable for it - which drives me to assert his nation-building is not about building economic strength. All he is left with is what it says on the box - nation-building through stronger borders.

The high turnout in this election is not coincidental. Nor is it some baby boom that happened exactly 18 years ago. It's a measure of the number of people that got kicked out the middle class, and hurt enough to give a fuck about an election they otherwise did not care enough about. Their percentile strength is double-digit, and their pain swings only one way on the political spectrum. It's the same sentiment that just got Obama his second term ticket by a landslide the polls didn't predict.

Whatever distribution the polls (accurately) predict in the broader Israeli voting public will not apply to this added group.

Their nation-building starts with them being in the middle class, and nobody on the right side of the map is handing out middle-class tickets.

They will tip the scale. And Bibi will not win.