Wednesday, 23 January 2013

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 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.

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