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Tag Archives: economy

Market Demand Must Be Regulated

Society values pro basketball players who provide entertainment far more than trash collectors who perform a vital service. We may need garbage collectors more than professional athletes, but it’s easy to find people who can pick up trash, while elite athletes are scarce by definition.  In this case market supply and demand is a distortion of actual value.  We are ok with athletes being paid millions of dollars to play a game because we suppose demand is sacrosanct, almost a godly force we dare not question.  After all, we get paid what we’re worth, right?
Yet it’s illegal to buy cocaine or hire a hitman when there is undoubtedly demand for drugs and contract killing.   Alcohol and liquor sales are heavily taxed to try to curb demand.  Or what about medical treatments?  When a patient is in danger of death, the value of the next treatment is theoretically infinite.  So shouldn’t that next round of chemotherapy always cost everything the patient has left according to pure demand?  The state already can and does regulate demand—it’s not off limits.
So why then do we let a football player or a movie star walk away with millions of dollars when its obvious there’s no way their contribution however important can be that large?  When someone becomes a millionaire by throwing a ball around or playing make-believe on camera, the character and morale of the entire society is undermined.
What is the garbage man to think when society values a single movie star more than him dozens of times over?  His task is so important, society can’t do without him for even a week.  If movie studios were all shut down, it might be unpleasant news but people would get on with life.
So why not put a strict cap on the income of entertainers and their promoters?  They provide services that people want and seem to generally do more good than harm by helping to create a thriving culture, so it would make sense to allow them to earn a good living, but becoming multi-millionaires would be out of the question. Entertainment is wonderful to have but it is a luxury, not a mainstay.

Obviously, a big budget movie gets made and its star actors paid millions because hundreds of millions of people are willing to pay for movie tickets.  So I could see someone arguing that because demand exists, it should be allowed.  But this is not enough.  Otherwise we should also be willing to argue for the legalization of contract killing and robbery.  The pattern I see is that demand is allowed to express itself so long as it does more good than harm to society.  So now we have to decide if it is good for a society to pour billions of dollars of its wealth into a handful of entertainers.  Surely there’s a limit on the worth of entertainment when there’s other things that need to be done.
As individuals, we value recreational time playing video games, watching movies, or blogging.  Yet we have a time and money budget for our own entertainment.  Similarly, a society ought to have a wealth budget for its luxuries.  It may sound restrictive to limit what a pro athlete or day trader makes, yet we already accept sin taxes that curb and punish demand for cigarettes and booze.  Sin taxes already carry the implicit recognition that we are not rational economic agents.  We routinely make bad decisions.  So we’re given a push in the “right” direction by the state.  We can buy that bottle of vodka or pack of cigarettes, but we have to be willing to pay an extra fee that serves as both a disincentive and an indemnity to society.  By the same principle we could cap the price for event and movie tickets or the acceptable budget cities can spend on stadiums to prevent or at least limit the misappropriation of society’s very finite wealth.
It would also be interesting to examine financial “products” and examine which of them return equivalent or greater value to society and which are a net drain or even cause damage.

Limiting the size of luxury industries brings up a big issue though—what about all the people that would lose their jobs in movie studios, stadiums, and concert halls?  We ask this because we lose perspective of the big picture.  We go to work to provide value to others and then get compensated in proportion to our contributions.  Is it a net good to work at a stadium that cost the city’s tax payers billions of dollars to spend billions more on a luxury activity?  If there’s nothing more productive to do with someone, why shouldn’t society just give them a guaranteed minimum income until there’s something more useful to do?  Society comes out way ahead by just skipping the multi-billion dollar excuse to write a paycheck.  No activity at all is far more valuable than useless activity.  Just staying at home with some basic income, there is a small chance they may have the initiative to use their leisure time wisely and genuinely contribute to the good of the group.

We’ve been taught to think in a way that’s a distortion of Keynesian views.  Keynes suggested hiring people to do useless tasks as one way to stimulate a depressed economy.  Naturally, his prescription for emergency situations became the new normal, where making money is a good thing even if we’re building “useless pyramids” or paying people to dig a hole just to fill it in again.  The trouble is this becomes a philosophy of economic nihilism in which human activity is divorced from purpose and meaning.   People just want money and as long as no one is murdered outright, the means don’t matter much.  Strangely, it sounds almost heretical now to suggest that markets and the accumulation of wealth ought to serve a purpose—to benefit the group in which we participate—that money awarded for unproductive or under-productive activity damages the integrity of society.

The survival of human societies in this world is a serious business; against other societies, against the pitiless forces of nature, and never-ending internal pressures.  The elevation of frivolous things to the heights of accomplishment makes a mockery of the social order.  A society where people worship “celebrities” over inventors, leaders, and entrepreneurs has lost its way.  Such is a disaster of mob rule where the masses are allowed to determine who is great and who is low.  When the undeserving get the best rewards, cynicism spreads and loyalty erodes until one day a nimble challenger full of confidence arises and proves more than a match for a mighty opponent crippled by rot.
The market is a form of economic democracy—every purchase is a vote.  We have an electoral college and representatives in political democracy rather than a pure popular vote.  So popular demand on the market must also be subject to controls, to curb and prevent tragedies of the commons.  There already are rules such as monopoly prevention that implicitly acknowledge the market has a mission to fulfill.  It is not there for its own sake.   These principles just have to be extended until the market is re-animated with purpose as a healthy circulatory system.

Every Purchase Is A Vote

Whenever we walk into a store we can measure how much we’re like everyone else.  Imagine a planet where everyone was you.  What then would the inside of the store look like?  All the things you like would be available in abundance, their prices driven down by economy of scale.  How close then is the existing store to the theoretical ideal that serves you best?  We can’t expect everyone to be the same in real life; without the purchases of many different people, there could be no store.  So we must be willing to sacrifice some of our individual preferences to have a market.
The influence of our own vote though is tiny so we must have some significant overlap with other people for the offerings of the store to yield us benefits.  If most customers don’t want some of the same things we want, the store is useless to us.  A man, for instance, will likely never have any need for women’s clothing stores because he lacks overlap with the targeted electorate.
Imagine for a moment the store we’ve walked into is a grocery store.  The initial overlap in needs is very high.  Everyone gets hungry, so we have a great test case.  When we look at the store shelves, we see a purer sort of democracy than has ever existed in politics.  What’s for sale is what everybody wants.
What if most people want junk food though?  The grocery store will have lots of cheap junk food and the substantial food will be scarcer and higher in price.  Perhaps it just points to the reason why there never has been a true political democracy.  The masses might well make terrible decisions.  A people cannot survive leadership without some semblance of order and quality control.  But they can survive the consequences of eating too much cookie dough ice cream, at least in the short term.

We can draw a similar analogy with book stores.  We want to read, but the store is of no value to us if the only books available are sensational slush.  In this case, the mass of other people out there has proven to be a liability to our interests because of their lack of overlap concerning the details of an item we want.  And our paltry votes don’t even make a dent.

Let us look at the bestseller lists for books too, and the top 25 in music.  Or how about the most popular television shows and movies?  In a decently ok world, most items on these lists should be among the best, right?  But what if to our horror, we consistently see works of low quality, or insipid mediocrity exalted by the collective?
If you don’t like what most people like, you are in a way living in a zombie apocalypse, surrounded by shambling throngs of people whose tastes and interests run contrary to your own in every way imaginable.  Your voice is drowned out while everyone rushes to the theaters to see the next remake of a remake.

If you or I were to conclude our nature and preferences have remarkably little overlap with most other people out there, it does not make sense to make the sacrifices required to participate in their collective pools.  Banding with the masses proves more a liability than a benefit.  It makes far more sense to find those with a higher degree of overlap even if they’re just a few and pooling one’s demand with them instead, while isolating oneself from the slavering zombie hordes.

It is on this basis of collective compatibility that would underlie a modern caste system.  In the case of economics, each cluster of preferences would occupy separate markets from food, to clothing, and entertainment.  Perhaps such distinctions already exist informally, but it takes considerable knowledge, deep affiliations, and especially sheer wealth to sort out what belongs to one’s proper sphere.
In a more formalized order, each strata has no need to waste energy on self discovery, they naturally gravitate towards their proper places and live their whole lives therein, their votes compatible with the other voters of their breed.  With a more stable hierarchy, less struggle takes place and far more gets done.

If we consider grocery stores again.  There already are grocers that cater to different tastes, but they do so mostly through being more expensive.  They decisively segregate their clientele using high prices but in so doing produce a form of value signalling rather than pure optimization.
In a correctly stratified caste system, a store ought not to rely first on higher prices as an isolating mechanism but instead be able to focus on being able to provide the best possible value given the votes of the consumers of the higher castes.
We may consider pure status signalling such as paying extra for ‘organic’ produce a penalty that certain voters agree to pay in order to form a barrier.  But if such a barrier is already formalized by the agreement of voters, then there is no need to pay such penalties and all effort can be put into providing the best value possible for the voting coalition.
We can imagine similar principles applied to real estate.  Those who pay high prices to keep undesirables out of their supermarkets apply the same tactics to property ownership and school districts.  Again, the cadre of voters in an unstable hierarchy is forced to pay penalties to segregate themselves into a mutually beneficial electorate.  In a stable caste hierarchy, their neighborhoods and schools are delineated by force of their votes, leaving them free to build value rather than spend most of their wealth insulating themselves against incompatible demographics.
As it is, many people try to isolate themselves from the gales of popular mediocrity by working long hours for decades.  So hard is their task that they barely manage to reproduce, managing only to replace themselves in the best of times.  The most productive creatures effectively barely scrape by at subsistence.
Because their natural habitat is saturated by hostile tribes unless they build cost-prohibitive barriers, they are forced to spend most of their effort just trying to chisel out their desired place, which in a Correct order should be theirs by natural right.

As a final thought experiment, consider how idiotic most advertisements are on television, youtube, and in print.  This is what most people find persuasive or these ads would not exist.  Every advertisement is a glimpse into the heart of the average person.  Don’t like what you see?  Then you are participating in the wrong commercial electorate.
How would advertising change then if we dominated the commercial electorate?  Would it even exist in the same form?

See Also:  Shelters From Planned Obsolescence,
Friction of Association and Social Selectivity

A Tale of Two Debtors: Britain and France After the American Revolution

By the 1780s, France and Britain had approximately the same debt after spending huge sums fighting over the American colonies.

One recovered and the other collapsed into revolution.

The difference was their systems of finance and taxation.

While the outstanding war debts may have been the same, the interest rates were not.

Bourbon France had to pay twice as much interest on its loans as did the British. And that made all the difference.

To begin with, the English system relied far more on indirect taxes and tariffs for its income.
The French system meanwhile focused on many direct taxes that ended up discouraging economic growth.

The result was that by the time of the French Revolution, England yielded more tax revenue despite having only 1/2 the population of France.

Britain and France were set apart most of all by their systems of credit.

England had relied on the world’s 1st national bank since 1694 to efficiently raise large long term loans. At the same time, new loans kept flowing and interest rates dropped because the English parliament had the power to consistently raise enough taxes. The stability of this system drew in a steady steam of further capital from Dutch investors.

The French crown on the other hand relied on a host of middle men—tax farmers, nobles, high ranked clergy, lenders, and merchants for loans, at high rates of interest.
Without a central source to consolidate its loans, the crown found itself struggling to raise money quickly, keep track of its loans, or pay interest.

Worse, in the French system of direct tax farming, it was more profitable to farm taxes and loan out advances than it was to start businesses and engage in productive industry.
The French system encouraged parasitic plunder while stifling real economic growth that would produce more wealth in the long run.
Wealth ended up being gradually drained from the economy even as the French national debt skyrocketed with each successive war…

Paraphrased and summarized from:

The Rise and Fall of the Great Powers
Paul Kennedy, 1987
Pages 76-86

 

UK public debt from National Bank founding to modern times

 

French Debt Until the French Revolution

French Debt Until The French Revolution

Brookings Institute Talk on Russia and America

I attended a talk today at the Brookings Institution about the future of Russian-American relations.

Naturally there was considerable focus on current issues such as Syria and Snowden being given asylum, and how it might affect the upcoming G20 summit.

I didn’t wonder about it much, really.  There’s nothing in Syria that’s central to Russian interests and Snowden, while a nasty diplomatic slap in the face, does nothing to change the larger situation.

I was more interested in bigger political and economic developments and where they might be headed.

Interestingly, the experts pretty much all agreed that the present political order in Russia is dependent on Putin’s cult of personality – that without his influence there would be nothing to hold Russia’s oligarchs together.
And – there is no plan for succession should something happen to Putin tomorrow…

They addressed how Putin’s main objective with his anti-American gestures is to boost his popularity at home.   His anti-American posturing has a huge appeal to his base – Russia’s working classes.
The urban middle and upper middle class has little loyalty to Putin, often protesting him in Moscow and St. Petersburg, so it’s only natural Russia’s ruler tailors his image to the vast majority he relies on.

While Syria is, relatively speaking, a sideshow, the fate of former Soviet republics is not.  Since the collapse of the Soviet Union, among Russia’s first concerns is to bring countries like Ukraine closer to Moscow and prevent them from aligning with Western Europe.

If we look at the numbers, though, it seems to me Russia’s agenda is doomed to fail.

Russia’s entire economy is worth 1.8 trillion.  This is enough to make it one of the world’s bigger economies, but to put Russia’s imperial goals in perspective, Italy’s economy is considerably bigger at 2.2 trillion with 1/3rd the population.

Let’s pretend we are Ukraine for a moment:

Which would we align with:  A 1.8 trillion Russia or a 17 trillion European Union?!

Not to mention, Russia’s economy to this day is based heavily on commodities like natural gas rather than skills or tech.
Indeed, one subject to arise during the question and answer session with the experts was brain drain from Russia…

With no Soviet Union any more that can keep their best talent captive, skilled Russians are increasingly ditching their home country for places like Silicon Valley.  And Russia itself with its feudal oligarchs and powerful crime lords tends to be very unfriendly to commerce.
So long as Russian small businessmen are parasitized by protection rackets and foreign investors are confronted with corruption, their economy is not likely to become truly “modern” any time soon.

A main theme of the talk was to ask what Putin really wants and how to get Russia to work more closely with US objectives.  Even the experts seemed to regard Putin as a mystic, inscrutable, Eastern Czar.
If we look at the numbers, though, it seems clear why the US can’t seem to get Russia to budge.

Relatively speaking, the US really is not that important to Russian interests so it simply doesn’t have that much leverage.
The vast majority of Russia’s foreign trade is with the European Union and with China in a distant second place.   Commerce with the US takes a comparatively puny 4th or 5th place with just a few percent of the total.  Also, the US is just about on the other side of the planet from Russia’s major cities while China and Europe are much more immediate neighbors.
It really shouldn’t come as a surprise that US requests take a back seat compared to more immediate concerns.  What decisive advantage does America offer in exchange for Putin’s cooperation?  Putin is a pragmatist, so clearly what he’s being offered isn’t worth as much as he gets from slighting the US to boost his domestic approval ratings.

The economic reality on the ground is that Russia is already just a big commodity provider for the EU, and thus in every meaningful sense, already part of Europe.
If we look at the facts, Russia as a modern great power, is pure fantasy.

During the talk, there was mention of a new, more Western generation of Russians just waiting for the older oligarchs to die off.  Such a generation is bound to reconcile Russia’s political reality with the economic reality.
Instead of trying to keep states like Ukraine from being sucked into Europe, Russia will itself be sucked into the Euro zone.

Even if Russia somehow remains an aloof oligarchic kleptocracy, it will still be useful for its resources as a lesser partner of Europe.

Graph Russia Trade Partners

Does the Decline Make Statistical Sense? Does the American Way Make Financial Sense?

The American economy is worth 15 trillion, still over twice as big in absolute terms as a distant 2nd place, China a desperately poor nation with a huge population…
But is that wealth proportionally useful compared to other places?
If we consider GDP by purchasing power parity, China with many times more people still has only 75% as much relative wealth as the US.

The US national debt has passed 100% of GDP but the US remains one of the worlds most reliable debtors: 2% of GDP, 7-8% of Federal Revenue more than pays off all the
interest each year.  The federal government spends 4x as much each on social programs and the military!
The American debt burden would not impress struggling European powers during the Napoleonic wars.
Nations like Japan are far worse off with close to 150% GNP in national debt or Greece at 200%. Germany isn’t that much better off at 85%

The net US trade deficit is by far the largest in the world at about 450 billion, but another 30-40 billion a year of exports could plug the gap and the difference still pales in comparison next to the massive size of the US economy.

The numbers tell us that the US is a monster, yet those of us who live there are experiencing relentless and accelerating decline.  How do we explain this against awe inspiring numbers?
After all even a US in relative decline is still surpassed only by the entire EU.

Here’s some reflections on reconciling the reality on the ground with the statistics?

Virgin Bride: Unbuyable

Wife: Average income just an entry ticket to the arena

Girlfriend: Average income just an entry ticket.

Job Security: Unbuyable

House: At least $200,000 (realistically far more paid after interest, no one can afford that out of pocket)

Car: At least $10,000 if new. (realistically far more paid after interest, no one can afford that out of pocket)

Rent: At least $600/month, $7200/year even in cheap areas after utilities and fees.

Education: 16 years to satisfy basic prerequisites, consuming at least 6 years from age able to enter workforce. Possibly more than a decade with higher degrees. A doctor or successful lawyer may earn a lot but has to compensate for 10+ years of working part time or not at all. Filling a big black hole of years of tuition + living expenses.

Children, Family Before Age 30: The price is a life of grinding poverty.

How much just to break even?  A couple million dollars earned over a couple of decades? Even if everything goes as planned, break even by middle age?

The simple truth that stares us in the face: The “normal” lifestyle with house/apartment, car, job doesn’t make financial sense.
It entails a huge expenditures of time and energy in a desperate bid to break even.
In the past, people may have had prospect of having a family and securing their genetic futures, but now even this basic reward(readily available to many poor peoples all over the world) is elusive.

Just a glimpse at these basic expenses shows us that rent seeking, fees, tuition, royalties, interest on assets and payments is where wealth can actually be made.

Right now what keeps people going? Fear that the only alternative to the “break even track” is to live in true uncertainty of survival.

The United States remains fantastically wealthy on paper yet is the average person’s life essentially any different than the average across time and place?

Is someone in a poorer country who can hope for a genetic future in their reproductive prime, surrounded by supportive family, with an ancestral home to live in, a family trade to aspire to, in fact, better off?

Are Americans as atomized individuals a whole that’s less than the sum of its parts?
Are Americans despite their unprecedented wealth undermined by backwards and wasteful social institutions and culture?

Or is the present trend of declinism as the numbers suggest, a misguided fad?

Insights on this matter?

3 Dictators Who Weren’t Pure Evil?

1. Park Chung Hee – South Korea

park chung hee

Usual claim to fame: Kidnapping political opponent and future South Korean president Kim Dae Jung from Japan in broad daylight and taking him out for a ride on a boat.
Kim Dae Jung came within minutes of “sleeping with the fishes” and certainly would have if not for immediate US diplomatic pressure.
The Dictator Park was known for allowing torture, the creative use of electric shock was a specialty during his rule.
Above all he turned South Korea into corporate oligarchy mainly concerned with the needs of a few ‘chaebol’ mega-companies. Funny how they never seem to mention that both North and South Korea were dictatorships for decades.

Not Pure Evil?: Park despite his abuses is commonly credited with getting things done and putting the infrastructure in place that has allowed South Korea to become the economic superpower it is today.

Bonus: His daughter is now the president of South Korea.

Park Geun Hye

LINK

2. Augusto Pinochet – Chile

Augusto Pinochet

Usual claim to fame: Made thousands of political opponents “disappear.”

Not Pure Evil?: Pinochet turned around Chile’s economy overnight using his dictatorial power to simply get things done. Ever since, Chile has consistently been the most prosperous and stable country in South America.

Bonus: His look has had enduring influence.

Pinochet and M. Bison

Capcom vs. Reality

Also, the only of these 3 dictators to die from old age…in his 90s.

LINK

3. Rafael Trujillo – Dominican Republic

Rafael Trujillo
Usual claim to fame: Rose to power as a US puppet who was installed to collect debts the Dominican Republic had defaulted on. Soon he owned most of the country’s economy and was more than willing make opponents “disappear.”

Not Pure Evil?: Like the other two dictators Trujillo is credited with strengthening the economy and infrastructure of the Dominican Republic despite making the country into an oligarchic nepotocracy.
Perhaps more remarkable is Trujillo’s establishment of a system of national parks, regulation of logging and slash and burn farming.
Somehow people end up paying more attention to these kinds of regulations when there’s a ruthless dictator enforcing them…
The results of Trujillo’s policies speak for themselves.
Here’s a picture of the border of Haiti and the Dominican republic.

Border Dominican Republic and Haiti

Bonus: How many dictators could be marketed to the green and “fair trade” crowd? Couldn’t you envision him with that trademark smug smirk on the front of a bag of organic coffee?

LINK

No Longer A Superpower: Why Venice Went Into Decline

“IN the early 14th century, Venice was one of the richest cities in Europe. At the heart of its economy was the colleganza, a basic form of joint-stock company created to finance a single trade expedition. The brilliance of the colleganza was that it opened the economy to new entrants, allowing risk-taking entrepreneurs to share in the financial upside with the established businessmen who financed their merchant voyages.

Venice’s elites were the chief beneficiaries. Like all open economies, theirs was turbulent. Today, we think of social mobility as a good thing. But if you are on top, mobility also means competition. In 1315, when the Venetian city-state was at the height of its economic powers, the upper class acted to lock in its privileges, putting a formal stop to social mobility with the publication of the Libro d’Oro, or Book of Gold, an official register of the nobility. If you weren’t on it, you couldn’t join the ruling oligarchy.

The political shift, which had begun nearly two decades earlier, was so striking a change that the Venetians gave it a name: La Serrata, or the closure. It wasn’t long before the political Serrata became an economic one, too. Under the control of the oligarchs, Venice gradually cut off commercial opportunities for new entrants. Eventually, the colleganza was banned. The reigning elites were acting in their immediate self-interest, but in the longer term, La Serrata was the beginning of the end for them, and for Venetian prosperity more generally. By 1500, Venice’s population was smaller than it had been in 1330. In the 17th and 18th centuries, as the rest of Europe grew, the city continued to shrink.”

LINK

Southern Italy’s Hidden Economy

Many of my recent posts have been about what economic statistics tell us or don’t tell us about the reality on the ground.

Southern Italy is often portrayed as a backward region mired in corruption and sucking endless money from more prosperous parts of Italy and Europe.

I was reading a wikipedia article on organized criminals in Southern Italy and a source cited there opined that Calabria would be a “failed state” if not for the rest of Italy holding it up.

At first glance, unemployment is ridiculously high in the Mezzogiorno yet people somehow spend far more per capita than they supposedly earn.
The numbers just don’t add up.

To get a complete picture of the reality of Southern Italy and a more accurate idea of the gap between North and South, one absolutely must take the workings of the black economy into account.
This is where much of the real money is made.
And explains why organized criminals are such an embedded part of the region’s culture.
Much of their role is simply substituting for government and police: for a fee(aka taxes), they guarantee “black” commercial transactions and contracts through the threat of force.

LINK

The Problem With The Israeli Economy

Officially, Israel’s unemployment rate is about 8%. But that doesn’t include Israeli citizens who are not trying to find work, either because they feel disenfranchised, such as many Arab Israelis, or because they’ve chosen a life of state-subsidized religious study, such as many ultra-Orthodox Jews.

Nearly 27% of Arab men and 65% of ultra-Orthodox Jews don’t work, government figures show. The non-employment rate for ultra-Orthodox men has tripled since 1970, Ben-David said. Link

Since it also has been traditional for most Haredi men not to work at making a living, but to devote themselves to religious studies, the political parties, often holding the balance of power in coalition governments, also became useful for extracting financial concessions from governments wanting to stay in power.

With a birthrate several times that of other Jewish Israelis, the Haredim have an average of 8.9 children per family and constitute more than 10 per cent of the population of seven million. Link

Youth gangs from the community of Sudanese and Eritrean refugees have in recent weeks been swamping Tel Aviv beaches and stealing bathers’ belongings, according to police. Most of the thefts have occurred on Tel Aviv’s major beaches. Authorities attribute the thefts to the increase in the number of refugees who have come to the city this year, and the lack of employment opportunities for them. Police say the stolen goods and money are sufficient for a day’s existence; they expect more such incidents to occur.

Eritrean and Sudanese refugees start arriving at the beach at noon, say police, especially to the strip between Jerusalem Beach and Mezizim/Peepers’ Beach. Some try to find day-labor jobs in the morning, but some who fail allegedly try to earn their daily keep by preying on beach-goers instead. Link h/t Aurini

Most ultra-Orthodox Jews lack the skills to work in a modern economy, having studied little or no math and science beyond primary school (their curriculum focuses almost entirely on religious texts such as the Torah and Talmud). As a result, more than 60 percent live below the poverty line, compared with 12 percent among non-Haredi Jews. Most also opt out of military service, which is compulsory for other Israelis. The net effect: as the Haredi community expands, the burden of both taxation and conscription falls on fewer and fewer Israelis.

According to pollsters, Haredim are consistently hawkish on the question of territorial compromise with the Palestinians, citing God’s covenant with Abraham granting Jews the land of Israel. Already the parties that represent them wield significant political power in Israel’s coalition-based system.

Link

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