By Lawrence Krause
ENCINITAS, California — It would no doubt require a leap of faith but suppose there was a political leader of Gaza who was only interested in the well-being of the residents of Gaza. He might recognize that Gaza has the potential of being a very prosperous place. The model is Singapore which at the end of World War II was only marginally in better shape than Gaza today.
What would it take to turn Gaza into the gem of the Middle East? It would require a directional shift by its leaders away from developments outside of Gaza to focusing entirely on internal affairs. It would mean a willingness to be creative and to experiment with new and untested economic and social polices. Its goal would be to remake Gaza into something entirely different. That is what Lee Kuan Yew did in Singapore.
The first challenge would be to create an economic base. The people must have a way to make a living. Traditional fishing and transshipment is obviously insufficient. Business firms that create jobs must be attracted to Gaza. That could be done by eliminating all business and income taxes and business regulations. Many firms would be willing to make Gaza their headquarters under these conditions. Singapore did this by building factories in advance of need to entice firms to occupy them.
Of course governments need resources and they could be attained by levying land taxes. Land is the scarcest resource in Gaza and is a natural thing to tax. Furthermore land cannot be moved to another country to avoid taxation. The 19th century economist Henry George worked out the theory of depending on land taxes.
When economic activity speeds up, the value of land changes rapidly. Hence the appropriate amount of tax for each plot must be assessed and reset frequently. The appropriate tax based on economic value might be due and collected weekly. Land whose taxes are in arrears by two months might be automatically confiscated by the state. All transactions of the state could be made electronically. There need not be a central bank or a Gaza currency.
What priorities should be established for state expenditures? That can only be determined locally. Education, health and housing come quickly to mind. Cyber security would probably be high on the list.
In the case of Singapore, when the British colonizers reestablished themselves, they began to spend resources on education and health, but not housing which was horrendous. Recognizing this, Lee Kuan Yew made housing the centerpiece of his social program. The government built multistory apartment blocks. These became the ingredients of social organization.
Gaza is now considered a very dangerous place. It must become a law abiding haven to succeed. Hence weapons of any kind must be made illegal. Anyone having a weapon, owning a weapon, or threatening with a weapon (even a fake one) should be subject to immediate deportation. Only the civil police organized by the state could be armed and only with tasers.
The streets of Singapore at the end of World War II were controlled by gangs. Each block had its own family gang. Communists dominated street politics. The British colonizers threw up their hands and turned it over to local people. Lee Quan Yew cleaned it up, and without jury trials.
Gaza could be undone by its own success. If it became clear that Gaza was recovering, it would be overrun by immigrants from the region. Immigration would have to be drastically curtailed. Residency in Gaza would have to become a privilege. Certified residency cards would have to be issued by the state. Residency could be established by having a fixed address in a structure upon which the land taxes have been paid, Even visitors would have to have a hotel reservation or the like before they would be permitted entry, and they would be issued temporary residency cards for their stay.
Would neighboring countries permit a prosperous Gaza to stay independent? They shun Gaza today. Independence would probably require external support—possibly an agreement between Saudi Arabia and Iran to that effect. A Nobel Peace prize would be won by the diplomat who negotiated such a treaty.
Of course a lengthy transition period would be required to implement all these changes. Foreign aid would be essential to finance it. Gaza should be willing to accept assistance from any country or entity as long as no goal-weakening strings were attached.
In truth, the myriad of current peace plans that are now in circulation for the Middle East are little more realistic than this one. At least here, the plight of the nearly two million people now trapped in Gaza are addressed directly.
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Krause is a professor emeritus of international economics at UC San Diego. He received his doctorate from Harvard, taught at Johns Hopkins and Yale, researched and published under the aegis of the Brookings Institution in Washington, DC, and also served on President Lyndon B. Johnson’s Council of Economic Advisers.