This week, Queens College resembled a normal college campus for the first time this entire semester. There was not just one, but two exciting events that took place. With perfect weather as an added bonus, the Quad was finally filled with happy students. The first event, on Monday, was Springfest. While it was not bacchanalian in nature like those of other colleges, Queens College’s Springfest was filled with innocent revelry. My eyes lit up when I saw that we could even get a Mr. Softee ice cream cone for free! Clearly, some students thought that the benefits of getting ice cream on that cloudless day outweighed the cost of waiting on a line that rivaled one outside Best Buy at 5 AM on Black Friday. I must admit that I shamelessly cut the line. I was expecting some form of condemnation, knowing how conspicuous I am, but no one said anything! #Yousnoozeyoulose
The second event, and probably the last major event of the semester, was Israelfest. A celebration of Israeli culture, there was Israeli food, pottery making, a cutout of Israeli model Bar Rafaeli, and let’s not forget that camel that is more photogenic than I will ever be. Since this is my last blog of the semester, I thought that it would be appropriate to connect this post to this last event. Though still a fledgling country at 66 years old, Israeli is a key player in the American economy.
The United States has a certain portion of its yearly fiscal budget allocated to foreign aid. Israel is the second largest recipient of such aid, receiving $3 billion. An argument that often arises during times of a sluggish economy is that America would be better off if it cut foreign aid. The rationale is that with the extra money, America could spend more locally; in short, it should put itself first, before helping others. While such logic make sense intuitively, it does not reflect the nature of aid or the actual flow of foreign aid funds. In fact, Israel spends 75% of aid in America. The size of the state of New Jersey, Israel does not have the capability to build many things it needs for its military, such as airplanes. The aid is instead used to pay American workers to construct them. As a result, America benefits from the increased employment and the steady stream of money.
Not only does this allow for a stronger business rapport between the two countries, but also it helps maintain and reinforce their political alliance. Israel is the only stable democracy in the Middle East. Indeed, there is much political quarrelling there-but is that not a sign of any normal, healthy government? Considering the unpredictable state in Egypt, the civil war in Syria, and the recent surge in suicide bombings in Iraq, it is in America’s best interest to align itself with Israel.
An important way to align with another country is by conducting trade, which allows for efficiency. In economics, there are two important terms used in the context of trade. Absolute advantage is a party’s ability to produce more of a good using the same amount of resources; comparative advantage is a party’s ability to produce goods or services at a lower opportunity cost. Simply put, absolute advantage results in producing more stuff, and comparative advantage results in producing more stuff by having to give up less (for example, time). An important point to note is that a party can have an absolute advantage for multiple goods, but only have a comparative advantage for one good. When countries only produce goods for which they have a comparative advantage, and then trade with one another, both parties are better off, as they end up with more goods. In the case with Israel and America, the latter clearly has the absolute advantage when it comes to production because it is larger and has more resources. Yet, it does not always have a comparative advantage, and as a result, it benefits by trading with Israel.
Israel has been producing and inventing many products that benefit America both economically and in everyday life. Specifically, its strong suit is in the field of technology and biotechnology. Recently, an oral pill was created, which could be used in lieu of daily injections for people with diabetes. Imagine how much easier life will be for people who no longer have to suffer by pricking themselves on a daily basis! Israel has also made waves in the business world through its innovation. Google acquired Waze, a GPS app, for $1.15 billion. The company is still run in Israel, but the fact that a behemoth such as Google was willing to fork over such a hefty sum for a company with only 100 employees speaks volumes about the incredible potential of Israeli startups.
Despite the plethora of positive consequences from conducting business with Israel, there is still a great deal of controversy. While I will not get into the politics here, a major threat to the future of Israel’s economy is the BDS movement. Proponents of BDS, which stands for boycott, divest, and sanctions, want to cripple the Israeli economy for a variety of political reasons. A major shortcoming of this movement, though, is that breaking ties with Israel, while indeed harming the targeted country, would also damage America’s economy. Economists largely agree that sanctions against countries cause major economic inefficiencies, as they prevent the benefits of trade from being realized. Indeed, the United States uses many basic things that originate from Israel; if the BDS movement were to be implemented in its totality, the American economy would plunge, and its citizens would not have access to many items that they utilize on a daily basis.
Most recently, a company that has been in the limelight as a result of the BDS movement was Sodastream. Sodastream has seen tremendous growth over the past few years; its products fly off the shelves in Walmart, and its spokesperson is Scarlett Johansson. Since its headquarters are in Maaleh Adumim, a city in the West Bank that is a source of contention between Israelis and Palestinians, proponents of the BDS movement have specifically targeted this company. It is important to note that both Palestinians and Israelis work side by side in the plant, both receiving equal pay and fair treatment. Perhaps BDS advocates in America should stop and think before pointing fingers, when so many American companies are guilty of outsourcing to countries where workers are paid a pittance and are forced to work in cramped, decrepit conditions…
Israel is a dynamic country that is making tremendous advances. Their business and technology sector, situated in Tel Aviv, is thriving and has a great deal of interactions with many American companies. With its unique culture and unparalleled drive, Israel is a force to be reckoned with in the business world.
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