Comments of the President

Robert J. Loewenberg, president IASPS

"What do we do?" That's what people have asked me from the first day I started building the Institute for Advanced Strategic and Political Studies in 1984.

What you can see as you browse this issue of the Quarterly is that we are bragging a bit about what we do. We have done some things, really some quite extraordinary things, and we want you to know what they are.

KIEDF, For Example

And so, the cover story tells you about the loan fund we built. This unique program exists for the purpose of casting the problem of Israel's capital markets and banking monopoly system into relief, (and, too, for showing ordinary people who need start-up money, and philanthropists who believe in markets, like our great friend Tad Taube, that the government is not the sole or final source).

Policy Studies, For Example

Next, there is the distinguished Policy Studies series, the "spinal column" of the institute. Until we started this series seven years ago, all you could get from Israel or about it was academic, macroeconomic products, mostly in journals, and mostly fustian, lacking an action item at the bottom line. What they didn't lack was a government-involvement solution, and, just as often, there was some government money behind the research itself. The Policy Studies series, in which out extraordinary director of DEPR, Alvm Rabushka, produced more than thirty studies, covers subjects such as small business, child allowances, sewage treatment, industrial policy, land ownership, mortgages, agricultural policy, pensions and others. Their affect on the system has been profound. Here's two examples.

First, there has been an affect on the actual law and practice of the country. The example most people know is Policy Studies 10, entitled, "Toward Economic Growth and Independence: Establishment of Free Export Processing Zones in Israel." This now classic document is what inspired businessmen such as Robert Tishman, Sy Syms, David Yerushahmi and another almost thirty others who became shareholders in a company called Israel Export Development Company (IEDC). The story of IEDC is one of the great sagas in the history of Israel's struggle to survive its socialist legacy and to overcome it. Readers of the Quarterly know the story well. If you're a new reader, what you need to know is this

In 1994, after two years of truly heroic battle with the system, David Yerushalmi pried a law out of the Labor government—June 20,1994.

Koret Fellows Ishai Ashlag and Sharona Ehrlich on their way to U.S. Congress.

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Then the government renegged, first under the late Mr. Rabin, and finally Mr. Peres, who killed the law by permitting killer revisions. Now Mr. Meridor, the new finance minister, is taking the original line of Israel's Left, at the tine of the idea's first being introduced in 1993, (which is that he favors opening the Israeli system to markets, hut only a I at once, not by way of a zone.)

In practice this means, socialism yesterday; socialism today; socialism forever. (Remember George Wallace?) Israel free market watchers are waiting to see if Mr. Meridor, an Israeli-style (like Kosher-style) free-marketeer is only another Shohat (former finance minister of unhappy memory). At all events, the saga of Policy Studies No. 10 continues. It reminds the cutting edge of economic policy toward markets.

The second thing you need to know about the Policy Studies series is that the Institute has devised a system to solve what has been our biggest problem in the production of Policy Studies - qualified people to write them! While Israel has some economists, perhaps 140 of them, they are mostly academic types with no great interest in the Israeli economy, (promotion is based on English publications of wider interest), and whose economic is of the macroeconomic variety.

The Koret Fellows - The Institute’s Intern Program

IASPS officials with dozens of new entrepreneurs jump-started by KIEDF

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We’ve solved our problem. The Institute Koret Fellows program is a two year program of daily policy analysis and advice to a Knesset (parliament) member, and on-going seminars and research training at the Institute in Jerusalem. What we train to do is policy-based microeconomics, meaning economics that does work in the world, not dust-gathering in libraries.

So these are some of the things we do. But the policy business is not just research, even though research is the backbone.

We Also Do "Predictions"

The policy business is "prediction", but not in the way you might think.

Policy critique and analysis takes place in the middle area, between pure research, really philosophy properly so-called, and political life. The prediction I’m talking about has to do with forecasting where certain key political institutions are taking us with regard to certain vital developments.

For example, the Institute predicted that Israel’s socialist economy would weaken the country. Moreover, we said that if the aid-basis of Israeli socialism (now a prime target of the Israeli government, according to Mr. Netanyahu) continued, this weakness would produce a ruinous peace policy - meaning aid, not balance of power, would be the basis of peace. And there would be terrorism instead of peace. We said these things - in 1992!

Three Things Happened Because of What We Do

Robert J. Loewenberg (left) and Richard Perle (third from left) discuss strategy with pollster Ed Miller and philanthropist Manny Weiss.

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For four years nobody paid any attention. Then, on two banner days in July this year three things happened:

1. The new prime minister of Israel announced he would work to stop aid. In his July 10 speech before a joint session of Congress, Mr. Netanyahu made these announcements, using the language of two reports that had just been presented to him. One is called "The Jubilee Plan" (with an Introduction by Jack Kemp), and the second, the initial publication of our new, second Division for Research in Strategy and Politics, just opened in our Washington office and run by Dr. David Wurmser, is called "A Clean Break: A New Strategy for Securing the Realm" (presented to the prime minister in Israel by Ricahard Perle, July 8).
2. On this same day, July 10, The Wall Street Journal Europe., published selections from both of these Institute studies, and in addition ran a major editorial supporting the Institute’s work and its positions.
3. On the next day, July 11, The Wall Street Journal in the United States, in its main editorial "Review and Outlook," published its own editorial,

   Jack Kemp (second from right) with Alvin Rabushka (right), David Yerushalmi (second from left), and Zev Golan (left).

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   also on the Institute’s two studies, and said, after quoting from the prime minister’s speech of the previous day before Congress: "Consensus is forming among conservative intellectuals in and around the Israeli government, that reduced reliance on U.S. financial support is the necessary first step in securing Israel’s future economic and strategic independence."

   That statement, in a nutshell, is the Institute’s position, developed and crafted "in the wilderness" since the Institution’s founding in 1984.

   As for the peace, the Journal editorialized: "Why, the [Institute] paper rightly asks, wasn’t ‘peace for peace’ good enough?

   Congressman John R. Kasich with IASPS Intern Sharona Ehrlich in Washington.

   A cease-fire (such as it is) that requires constant bribes and concessions is no peace at all."

   And so the Institute’s "predictions" have been announced on a joint speech to Congress by the prime minister of Israel, and the Institute’s prescriptions are endorsed by The Wall Street Journal.

   That’s pretty much what we do, before breakfast.