by Walter Block
Ron Paul favors the elimination of foreign aid to Israel. Many Jews, even those who favor free enterprise, individual rights and peace, thus oppose the most libertarian candidate ever to run for the Republican nomination for president. This enmity goes so far as to account for his being barred from the Republican Jewish Coalition’s candidates' forum. This is no doubt that this action was taken out of fear that if Congressman Paul’s policies are put into effect, they will be harmful to Israel.
At first blush, this seems reasonable enough. The U.S. gives lots of money to the Israeli government for use by its military, and if this were totally eliminated, it is not unwarranted to think that this country would thereby be weakened.
However, I contend that there are several good and sufficient reasons to doubt this popular belief. Consider the following.
I. Relative statistics
Dr. Paul by no means would single out the single country of Israel for an elimination of foreign aid. Much to the contrary, his is a thorough-going plan that would end this pernicious program for all countries. Indeed, each and every nation on the face of the earth that had been receiving U.S. tax dollars would be told that their ride on this particular gravy train had ended. Would this hurt Israel? Of course, at least in dollar terms (see below for the argument that foreign aid actually hurts the economies of the recipient countries). But, it would also harm every other recipient as well (I am still positing, arguendo, that foreign "aid" benefits recipient countries). In order to determine whether or not Israel would be better off or not, one must make a relativistic judgment. That is, will Israel lose more or less than its enemies?
The facts for a recent year appear below. Here are the top 16 recipients of U.S. foreign aid for 2005:
1. Israel 2.58 Billion
2. Egypt 1.84 Billion
3. Afghanistan 0.98 Billion
4. Pakistan 0.70 Billion
5. Colombia 0.57 Billion
6. Sudan 0.50 Billion
7. Jordan 0.48 Billion
8. Uganda 0.25 Billion
9. Kenya 0.24 Billion
10. Ethiopia 0.19 Billion
11. South Africa 0.19 Billion
12. Peru 0.19 Billion
13. Indonesia 0.18 Billion
14. Bolivia 0.18 Billion
15. Nigeria 0.18 Billion
16. Zambia 0.18 Billion
Israel, as can be expected, is right at the top of this list. It would lose $2.58 Billion, under President Paul’s administration (I have to confess that I really like the sound of that phrase. I think I’ll repeat it: President Paul’s administration. Perhaps this sounds even better: President Ron Paul’s administration. Or maybe this: The Administration of President Ron Paul? Okay, okay, back to business, now.) However, let us add up the amounts received by only these few countries, all of them mainly populated by either Muslims and/or Arabs:
2. Egypt 1.84 Billion
3. Afghanistan 0.98 Billion
4. Pakistan 0.70 Billion
6. Sudan 0.50 Billion
7. Jordan 0.48 Billion
If we do so, we arrive at the figure of $4.5 Billion. So, yes, Israel will lose $2.58 Billion, but its enemies, both actual and potential, are out of pocket a far larger $4.5 Billion. If we sum up the amounts received by all countries which harbor anti-Semites, we reach a much higher figure. If we define this broadly enough, this might well include just about every other nation on earth. No matter what statistics we consider, Israel is relatively strengthened by the Ron Paul policy on foreign aid. It loses, but its actual and potential enemies lose more. Thus, it becomes relatively stronger. Note, also, that these figures do not include the vast amounts currently spent by the U.S. on and in Iraq and Palestine, certainly no friends of Israel.
II. Private giving
There is nothing, nothing at all, in Ron Paul’s program that would even in the slightest interfere with private foreign charitable giving. In other words, Jews in the U.S., and non-Jewish American supporters of Israel, would be just as free as at present, to donate to this country. In fact, there is every reason to suppose that these private gifts to Israel would increase, not decrease. For one thing, with the slight (foreign aid comprises only in the neighborhood of 1% of GDP) reduction in taxes this would imply (in a Ron Paul administration, such savings would be funneled into lower taxation, not into other programs; did I mention that I really like the sound of that phrase, a Ron Paul administration?) more disposable income for all. Since Jews are in higher income brackets than the average person, and we presently suffer under a progressive income tax (which, by the way, would also be ended by President Paul) the largest donors to Israel would have even more income at their disposal. Then, too, this community might be so upset at this action of President Paul (I really like the way that phrase rolls off the tongue; ah, the sheer alliteration!), unwisely so, but still, so that they would donate additional monies.
III. Foreign aid weakens the economy
If we learn anything from Peter Bauer, it is that government-to-government transfers of income do not constitute foreign "aid." Very much to the contrary, they typically amount to foreign detriment. Much of the money goes to the three Ms: monuments, Mercedes and machine guns. The first need not be in the form of a statue of the leader: it could also take the form of a mill that produces steel at a multiple of the price available on world markets. The second includes not only automobiles, but also, invariably, engorged Swiss bank accounts. And the third is usually utilized by third-world dictators to keep the citizenry in thrall. Then, too, while foreign "aid" is a small part of the donor’s economy, it accounts for a large percentage of that of the recipients’. Instead of the best and brightest of their young people aiming at careers that can help economic development (doctors, engineers, entrepreneurs), they engage in training that will help them divert some of the boodle to themselves, and their relatives and friends (civil servants, lawyers, bureaucrats).
In Israel, the main negative implication of U.S. largesse has been promotion of socialism. Had our country not been financially supporting a heavily unionized and socialized economy in Israel, these policies would likely have never been as large as they were, and would have diminished much sooner. There are strong empirical illustrations attesting to the correlation between size of government and economic regulations, on the one hand, and attenuation of the economy on the other (Gwartney, James, Robert Lawson and Walter Block. 1996. Economic Freedom of the World, 1975–1995, Vancouver, B.C. Canada: the Fraser Institute. For a non-empirical treatment of this phenomenon, see Smith, Adam. [1776] 1979. An Inquiry into the Nature and Causes of the Wealth of Nations
, Indianapolis, IN: Liberty Fund).
That is, without U.S. "aid" to Israel, the economy of the latter would have been stronger. But a richer country is usually a safer country. One of the effects of Dr. Paul’s policy, then, would be the strengthening of the Israeli economy.
IV. The U.S. handcuffs Israeli policy
Because of its monetary transfers to Israel, the U.S. is in a position to dictate policy to its client state. Sometimes, perhaps, maybe, this is in the best interests of the nation of Israel. At least, it does not constitute a logical contradiction to entertain such a notion. But there are numerous cases where the U.S. has obviously handcuffed the Israelis, not to the benefit of the latter, at least as the Israelis saw their own best interest.
Perhaps the most famous example of this phenomenon is when Eisenhower forced the British, French and Israelis to pull back from their invasion of Suez in 1956.
According to one historian: "President Eisenhower of the United States pressured Britain, France and Israel into agreeing to a cease-fire and eventual withdrawal from Egypt." Forget about the rights and wrongs of the matter; they do not concern us. My point is that it is extremely difficult to interpret this little episode as being in the best interests of the security of the state of Israel, at least insofar as the leaders of that country saw their own best interests in this regard.
A more recent case in point took place when Condoleezza Rice forced the Israelis to postpone the bombing of a possible nuclear facility in Syria. This was done in the context when the Israelis certainly saw quick action as being in their national interest. According to a news report:
"A mysterious Israeli military strike on a suspected nuclear site in Syria last month was opposed by Condoleezza Rice, the American secretary of state, because she feared it would destabilise the region, according to a report this weekend.
"Rice persuaded the Israelis to delay their operation…"
Say what you will about these two events, which are only the tip of a very large iceberg, it cannot be denied that they constitute a serious drawback to the safety of Israel, at least in terms of how the Israelis themselves see their own best interest. Needless to say, this sort of interference would come to a complete, abrupt and utter halt under a Ron Paul presidency.
V. Guarantor
Forget about the money, at least for a moment. The U.S. also provides Israel with a guarantee: any country trying to overrun Israel will have to deal with the armed might of the U.S. Iran, the member of the "evil axis" du jour, had better watch out.
But just how good are U.S. guarantees? As but one example you can ask the Vietnamese who supported the U.S. incursion into their country all about that.
Would an Israel completely untied to the apron strings of the U.S. be able to take care of itself? There seems little doubt that not only would Israel be able to defend itself, it would be more able to do so without the U.S. continually orchestrating matters in a paternalistic manner.
How about in the face of nuclear-armed Iran? An Israel able to operate on its own, without a by your leave from Uncle Sam, might be better able to prevent just such an occurrence. If not, that nation has its own nuclear weapons at its disposal. If the U.S. and the U.S.S.R. could endure decades of cold war, with only Mutual Assured Destruction keeping the "peace," it may well be that Israel and its Arab neighbors will have to go through the same process. At the very least, this present tossing of missiles from Gaza over to Israel would have to come to an end; it would be far too dangerous in a Middle Eastern MAD. Without the U.S. in the neighborhood, the major Muslim/Arab powers such as Iran/Egypt, Syria would never tolerate such risky acts.
Having given several reasons for doubting that Ron Paul’s program would harm Israel, let us move on to a conclusion.
Perhaps, if Ron wanted to help Israel vis-à-vis its enemies, it would end government to government transfers of income to that country, and double or triple it to every other nation, particularly to its most vociferous enemies. With the poison of foreign "aid" applied to its enemies, but not to Israel, the latter might become even the more strengthened relative to them. This is an interesting speculation. But this is not part of Ron Paul’s program. For one thing, there is nothing in the Constitution allowing, let alone requiring, such a policy. (Ron really ought to give a free copy of this document to his Republican debating partners.) For another, it is highly incompatible with libertarian prohibitions against stealing.
November 3, 2007
Dr. Block [send him mail] is a professor of economics at Loyola University New Orleans, and a senior fellow of the Ludwig von Mises Institute. He is the author of Defending the Undefendable.
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