OK, you say, "nonviolence and real democracy... what does that really mean?" Well, for starters, it means more of Abdul Ghaffar Khan's Islamic philosophy, and a lot less of Arafat's philosophy in action. Alas, a look at recent polls of Palestinians and the bestseller status of Hitler's Mein Kampf in the Palestinian territories (London Telegraph, March 20, 2002) do not bode well.

As I've said, choices matter. The Palestinians have chosen poorly, both morally and in a literal sense. Right now, the CIA World Factbook lists the West Bank's per capita purchasing power at $1,200, and Gaza just $1,000.

Implications: Homicide for Hire

These figures kind of put the $25,000 Saddam Hussein offers the families of suicide bombers in perspective. To which one must also add programs from the Saudis and Islamic "charities," which inflate that award and subsidize other things like housing, food, etc. Let's say the resulting financial rewards are about 30x annual per capita purchasing power.

To make this same offer in America would require $36,200 x 30 = $1,086,000. That's right, over one million dollars.

Next time you hear the media talking about these rewards, remember that this is how much Arafat and his Arab backers offer the families of their suicide bombers. At least in equivalent American terms. Since the distribution of wealth in Arafat's domains is unequal just as it is everywhere else, contemplate the incentive that million-dollar payoff might represent to, say, a welfare recipient in south side Chicago. Or a trailer park resident in Oklahoma.

Arafat and his Arab backers are running a lottery, with suicide-murder as the ticket. "Sick" does not even begin to describe it.

Implications: Economic Cost

Now, let's begin to look at what this strategy of hatred and terrorism is costing the Palestinians. I'm not an economics sharpie like fellow blogger Jane Galt, but I can offer some figures and some thoughts.

Israel's per capita purchasing power equivalent lists at $19,800. That may seem like a shocking differential compared to $1,000 in Gaza, but isn't it interesting to note that even with all that oil, Saudi Arabia's figure is only $10,500. Neighbouring OPEC member Syria comes in at $3,200, Egypt sits at $3,600, and poor Yemen (Saudi Arabia's southern neighbour) is even worse off than the Palestinians at $820.

We hear a lot about the Arab street's sense of "humiliation" these days. $10,500. if I was a Saudi, I'd be humiliated too.

Fortunately for the Palestinians, their economic model is not Saudi Arabia. Indeed, in economic mindset terms the closest analogy to the Palestinians is... the Jews. Entrepreneurs, stress on education, willingness to back each other in business, a migrant's willingness to look and trade across borders. These traits helped the PLO build SAMED (trans. "The Palestine Martyrs Work Society") into a huge organization by 1982, and Palestinian control of Lebanon's industrial base was almost as much of a flash-point in Lebanon as Palestinian gunmen, the $100 million British Bank of the Middle East robbery, et. al.
[SOURCE RECOMMENDATION: "The Financing of Terror", James Adams. New York: Simon and Schuster c.1986]

Back to Israel. When an economy is based on investment and value-added rather than resource extraction, then barring extraordinary barriers it tends to transfer some of that wealth to its neighbours. Especially if those neighbours have a similar economic approach.

Imagine for a moment that Arafat and the Palestinians had adopted non-violence even as late as 1993. The economic transfers, investment, and advantage of being able to serve as "grey traders" between Israel and the Arab world would have been extremely significant. It's not unreasonable to imagine a Palestinian state today with per capita purchasing power higher than Syria's or Egypt's. In other words, about 3-4 times what it is now - and growing fast.

The Democracy Factor

As China demonstrates, real democracy is not required for this kind of growth if it starts from a low base. But real accountability is required in order to improve living standards beyond a certain point. Otherwise public services are a mess, corruption thrives, and a lot of economic output goes to privatized security and other services instead of into productive pursuits. This can all happen in democracies, too, but over time your odds against are much better in a democratic system.

As Frank Herbert puts it: "It is not that power corrupts, but that it is magnetic to the corruptible." It's hard enough to pry those leeches loose with democracy, a free press, et. al. at our disposal. Without them, it's damn-near impossible.

Alas, Arafat and his PLO cronies have remained absolutely true to form. As in Lebanon, anything not nailed down is theirs. Anything that can be pried loose or transferred through connections is not nailed down. The sad truth is that even a peaceful Palestinian state run by Yasser Arafat would probably still be a pest-hole... just a richer pest-hole than its current incarnation. Arafat being who he is, even in that happy "1993 peace" scenario we'd probably be looking at a Robert Mugabe (Zimbabwe) clone by now.

Bottom line: for the sake of the Palestinians, Arafat has to go. Preferably to Allah, not Morocco. Why this is so goes far beyond economics, however, and is the subject of my next posting...