Sure, I think that the war in Gaza is a political worry spot this year. But it is not one that I expect will lead to macroeconomic issues.
In short, what I post here isn't about current events, but rather current events filtered through a macroeconomics lens.
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One macroeconomic sideshow is that some would take the quasi-Marxian position that because Israel is rich, and its neighbors are not, Israel must have somehow exploited them.
First off, as we've seen in lecture last week, and will continue to see this week, diminishing marginal productivity tells us a lot about how macroeconomies should behave. Exploitation arguments hark back to Marx, who wrote most of his stuff before diminishing marginal productivity was widely recognized. It is one of several principles associated with the "marginal revolution" in economics (from 1870 to 1890) that superseded Marx (at least amongst economists) because they offered better answers to outstanding problems. In this week's lectures we'll take that further and show how some technologies can help us explain situations like this.
Secondly, it's important to have some historical perspective. Israel was economically comparable with its neighbors 75 years ago. Since then, it has pulled away. Even if the exploitation argument is correct, it leaves a lot of loose ends in the region: 1) how did Israel pull away both from countries it is alleged to have exploited, and also those it could not have exploited, and 2) if Israel has been exploitive the whole time, how come it has only pulled away over roughly the second half of that period?
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