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THE WALL STREET JOURNAL.
Tuesday, March 3, 2015 | A11
OPINION
T
he Democratic Party is on
the cusp of abandoning the
state of Israel. That’s a
shame, though less for Israel than
it is for the Democrats.
The Democrats’ historic support for the Jewish state has
always been what’s best about the
party. The understanding not only
that Jews are entitled to a state,
but also that a liberal democracy
is entitled to defend itself—robustly and sometimes pre-emptively—against
illiberal enemies,
is why the party
of Harry Truman,
Scoop Jackson
GLOBAL
and Daniel PatVIEW
rick Moynihan
By Bret
commands hisStephens
toric respect.
But that party
is evaporating. A 2014 Pew survey
found that just 39% of liberal Democrats are more sympathetic to Israel than they are to the Palestinians. That compares with 77% of
conservative Republicans. During
last summer’s war in Gaza, Pew
found liberals about as likely to
blame Israel as they were to blame
Hamas for the violence.
That means the GOP is now the
engine, the Democrats at best a
wheel, in U.S. support for Israel.
The Obama administration is the
kill switch. Over the weekend, a
defensive White House put out a
statement noting the various ways
it has supported Israel. It highlighted the 1985 U.S.-Israel freetrade agreement and a military
assistance package concluded in
2007. When Barack Obama must
cite the accomplishments of Ronald
Reagan and George W. Bush as evidence of his pro-Israel bona fides,
you know there is a problem.
True, there is also the administration’s financial support for the
Associated press
Israel and the Democrats
National Security Adviser Susan Rice speaking on U.S. foreign policy at
the Brookings Institution in Washington, D.C., Feb. 6.
Iron Dome missile-defense system, along with votes at the U.N.’s
General Assembly opposing the
usual anti-Israel resolutions. The
administration and its congressional lemmings are nothing if not
heroic when it comes to easy
votes.
But this week Democrats don’t
have the luxury of an easy vote.
Will they boycott the Israeli prime
minister’s speech? Will they insist
the administration put any deal it
reaches with Iran to a vote in
Congress? Will they support a
fresh round of sanctions, vehemently opposed by the president,
if no deal is reached?
The administration is now trying to dodge all this by waging an
unprecedented campaign of personal vilification against Benjamin
Netanyahu (of a sort they would
never dream of waging against,
say, Turkey’s Recep Tayyip Erdogan), accusing him of seeking
political gain for himself in the
U.S. at Mr. Obama’s expense.
Yet the calendar chiefly dictating the timing of Mr. Netanyahu’s
speech was set by John Kerry, not
John Boehner, when the secretary
of state decided that the U.S. and
Iran would have to conclude a
framework deal by the end of this
month. Mr. Netanyahu is only
guilty of wanting to speak to Congress before it is handed a diplomatic fait accompli that amounts
to a serial betrayal of every promise Mr. Obama ever made to Israel.
Among those betrayals:
In June 2010 the administration pushed, and the U.N. Security
Council adopted, Resolution 1929,
which “demands” that “Iran halt
all enrichment activities.” But now
the administration will endorse
Iran’s “right” to an industrial-scale
enrichment capability—a right,
incidentally, that the administration denies to South Korea.
Resolution 1929 also states that
Iran is “prohibited from undertaking any activity related to ballistic
missiles.” But Iran continues to
manufacture and test ballistic missiles, the Supreme Leader Ali
Khamenei demands they be mass
produced, and Iran’s top nuclear
negotiator is adamant that “we
are not ready to discuss this mat-
BOOKSHELF | By Sam Sacks
ter with any foreigner.” All of
which gives the lie to weak State
Department protestations that a
deal will halt the ballistic missile
program.
In December 2013, Mr. Obama
personally assured a pro-Israel
audience in Washington that,
when it came to diplomacy, “no
deal is better than a bad deal.”
Now unnamed administration
officials are selling the line that
“the alternative to not having a
deal is losing inspections, and an
Iran ever-closer to having the fissile material to manufacture a
weapon.” In other words, virtually
any deal is better than no deal.
In March 2012, Mr. Obama insisted “my policy is not containment, my policy is to prevent
them from getting a nuclear
weapon.” He has said as much on
some 20 other occasions. But the
deal being contemplated now,
with a sunset provision that will
ultimately give Iran the right to
enrich in whatever quantities and
to whatever levels it wants, is neither prevention nor containment.
It’s facilitation.
All of this is dreadful policy for
Washington. But it is a sellout of
Jerusalem, one that can’t be rectified by some additional military
funding or the usual token measures by which Democrats atavistically affirm their support for Israel.
Chuck Schumer and other liberal
fence-sitters will have their reputations and consciences stained
forever if they let this one pass.
As for Israel, at least it will be
able to say that it gave fair warning to the Democrats of the historic betrayal in which they are
being asked by the president to
participate. In the end, everyone
is accountable to history. At
moments like this, it’s better to be
on the side of the brave.
Write to [email protected]
A Small-Cap Idea With Little to Recommend It
By Arthur Levitt
O
fficials from the Securities
and Exchange Commission
are contemplating setting up
a special exchange for small-cap
companies—those with a market
capitalization of less than $250
million. Proponents say many small
companies need access to public
markets, but not enough of them
can meet the expensive and rigorous regulatory standards involved
in listing with Nasdaq, NYSE and
other traditional exchanges.
That may be true, but the interests of small companies aren’t at
stake here. The question to ask is
how a change in listing requirements would affect the investing
public. If companies are locked out
of public markets because they
can’t meet certain listing requirements, that may be a good thing.
Perhaps they should wait, gain
some seasoning and experience,
and prepare for filing when
they’re ready.
It’s not as if emerging companies lack access to capital. Alternatives to public markets are growing in prominence, including
private equity, venture capital,
angel investors and even crowdfunding. Public markets are not
the natural end point for all companies. Most stay private forever.
The idea of a low-standards
market for small-caps isn’t new. In
1992 the American Stock Exchange
launched the Emerging Company
Marketplace to great fanfare and
with great hopes. But the ECM
never took off. It suffered some
notable scandals—an ECM-listed
maker of flame retardants was a
convicted arsonist, for example.
The companies that proved themselves on ECM simply graduated
The SEC’s plan to create
special exchanges
sounds like a solution
in search of a problem.
to the regular exchange, thereby
tainting ECM as a minor league
market, mostly for unsuccessful
enterprises. It closed in 1995.
Small-cap, low-standards market efforts in Canada and the U.K.
have had mixed-to-poor success.
The U.K.’s Alternative Investment
Market only recently began to
recover losses from the 2007-08
financial crisis.
This experience explains why
small-cap companies should meet
the same standards as any other
company. Public markets enforce a
level of rigor on management and
increase investor expectations.
The higher standards are appropriate, given the stakes: Public
investors expect to evaluate companies that have been tested and
gone through the process.
Are ordinary investors locked
out of investing opportunities as a
result? In many cases, yes. But
investing in early-stage companies
by definition involves significant
risk. Most public investors are
unable to perform the due diligence
required to evaluate whether a new
company’s technology is going to
succeed, whether management has
a proven record of navigating
competitive challenges, or whether
the financial results presented by
management contain any hidden
flaws. This only happens in highly
liquid, well-researched and thoroughly vetted public company listings—and even then, there are no
guarantees.
The exemptions are still being
worked out: Some might relate to
“tick sizes,” which determine the
minimum fraction a stock is permitted to move in price (many
argue that a wider tick size would
attract more liquidity). Still another would broaden the types of
individuals allowed to invest in certain types of small companies. The
merit of these ideas is subject to
debate. But they should not be
applied in one market and not
another. Why should we create separate markets under two different
sets of rules?
The proposal for a special market for small-cap companies may
in the end be a solution in search
of a problem. If small, early-stage
companies are struggling to meet
the standards set by public markets, that could be an indication
that we’ve set the regulatory burden at an appropriate level.
Not every company should be a
public company; most shouldn’t.
Consider the counsel of Michael
Dell, who has lately argued that it’s
better to be a private company.
Many corporate executives would
gladly be free from the focus on
quarterly performance goals so
they can focus on innovation and
investment back into the business
until growth is assured.
Consider, too, that many companies seek to go public specifically
to monetize the investment of
founders and early-stage investors.
This motive is perfectly legitimate,
but it’s all the more reason to make
sure public investors are protected
by rigorous listing standards.
If regulators believe that the
requirements of public listing are
so great that they choke off the
ability of the investing public to
contribute to the nation’s prosperity, that’s another matter. But as
history has shown, reducing those
standards tends to do only one
thing: create an opportunity for
companies to go public without the
necessary experience. The failures
that result do no one any favors.
Mr. Levitt was the chairman of
the Securities and Exchange Commission from 1993-2001.
Bringing a Business Approach to Doing Good
A job is better than a
handout. Here’s the
‘social enterprise’ way
to put people to work.
and improved. Over the past 18
years, REDF-invested enterprises
have placed more than 9,500 Californians in jobs. REDF is not
alone—today, social enterprises
hire and provide hope for hundreds of thousands.
Starting in 2011, the federal
government’s Social Innovation
Fund chose REDF to expand the
model and study whether it works
and is worth the investment. To
that end, REDF commissioned the
research firm Mathematica Policy
Research to conduct a rigorous,
first-of-its-kind study. Just released, the Mathematica Jobs
Study evaluated seven social enterprises in California, including
Chrysalis, which has several business lines including street cleaning, facilities management and
front-desk staffing, and Hope
Composite
A
s co-founder of Kohlberg
Kravis Roberts & Co. (KKR),
I use data to understand
untapped potential in a business.
Similarly, data can be used to help
unlock potential in communities
across the U.S. Despite declining
unemployment, millions of Americans who could be put to work are
trapped outside the labor market.
Yet, as with an underperforming
company, there are effective and
proven strategies that can help
them realize their potential.
Stigmas and limited skills that
would prepare them for jobs
plague many of these potential
workers on the margins of society, including homeless people;
young adults disconnected from
work and school; and those formerly incarcerated, or suffering
from addiction, mental illness or
other disabilities. Some are single
adults or veterans; others are parents with children.
However, striking new evidence shows that a business
model called social enterprise can
provide these people with training, support and work. Social
enterprises leverage a business
approach to address a social mission, making improvements in
human and environmental wellbeing, rather than maximizing
profits for external stakeholders.
These businesses earn and reinvest their revenue to provide
more people with jobs that build
skills and a career path. Socialenterprise businesses represent
several industries, including con-
struction, maintenance, landscaping, manufacturing and electronic-waste recycling, among
others, providing both jobs and
training in these fields.
I founded the Roberts Enterprise Development Fund (REDF) in
1997 to fund not-for-profit endeavors that would provide training
and entry-level jobs for the chronically unemployed. The organization stuck with it, learned, adapted
Builders, a general-contracting
company.
One year after accepting a
social-enterprise job, the study
reported, workers were more
likely to have stable employment
either in a social enterprise or
with another employer, and had
greater economic self-sufficiency
and more life stability. Before employment, a quarter of the people
in the study had never had a job,
and 85% were homeless or lived in
unstable housing, such as shelters,
hotels, or with friends or family.
One year later, 62% were working;
on average their monthly work
income increased by 268%, their
income from government benefits
was reduced to 24% from 71%.
Also, the number of people owning
or renting a home throughout the
year tripled.
The Mathematica study also
shows that social enterprise delivers a positive return on investment for society. For every
$100,000 invested, the return is
$223,000, including savings to taxpayers with reduced public benefits and avoided incarceration, and
social-enterprise business revenues and workers’ incomes.
At KKR, when we identify a
strategy that works, we try to
share it across our portfolio and
industries. At REDF, we have a
similar goal, but before we try to
expand the power of social enterprise to help the long-term unemployed, we first need to ensure
that workers are really better off
in accepting entry-level jobs. The
Mathematica study found that, on
average, workers were poorer by
$165 after one year. This was in
part because wages didn’t rise
quickly enough to cover increased
housing and other costs. Employers can help these new workers
by making sure that they receive
training for greater opportunity
and upward mobility.
But we must also ensure that
government policies don’t unintentionally undermine work. When
someone who has been out of
work starts a job, he loses housing
and other benefits, regardless of
wages. A job should help relieve financial hardships, not create new
ones; the “benefits cliff” is a major
disincentive to gainful employment. One possible solution:
Expand the earned-income tax
credit that provides tax relief for
low-income working parents of
minor children, making it available to individuals who don’t have
children. This type of change
would provide an important incentive to work, and can be made
federally or by individual states.
When more people contribute
their talents to the economy, everyone wins. More capital is
needed to help fuel this effort, and
to that end I urge my colleagues in
the business community to partner with these social enterprises
through their supply chain and
hiring practices to make them and
the people they employ as successful as possible.
Mr. Roberts is co-founder and
co-CEO of Kohlberg Kravis Roberts & Co. (KKR), and chairman of
the Roberts Enterprise Development Fund board of directors.
The Buried Giant
By Kazuo Ishiguro
(Knopf, 317 pages, $26.95)
I
f you’ve been listening to the buzz about Kazuo
Ishiguro’s “The Buried Giant,” you might believe that
the book is a radical departure for the Japanese-born
British novelist, a risky venture into literary fields unknown. This is partly because of its half-mythical setting—it takes place in sixth-century Britain, shortly after
the reign of King Arthur, when invading Saxons have
settled among the Britons and divided the land into a
warring patchwork of pagan and Christian states—and
more because of its elements of fantasy. Roaming these
pages are ogres, pixies, sprites and a feared she-dragon
named Querig.
But the book
is really just another installment
in Mr. Ishiguro’s
continuing exploration of quintessentially British
subjects. His most
famous work, “The
Remains of the
Day” (1989), is a
backward glance at
the customs of the
English manor
house. “When We
Were Orphans”
(2000) features an
early-20th-century
private eye with a
marked, if ironic, resemblance to Sherlock
Holmes. “Never Let Me Go”
(2005) revises the boarding-school
milieu recognizable from Brontë, Dickens
and Anthony Powell, albeit with a striking dystopian
wrinkle. Is it so surprising that he would be drawn to
adapt the mighty national legend of King Arthur and his
Knights of the Round Table?
And, indeed, this charming, finely told pastiche is as
comfortable as a bedtime story. It centers on an elderly
Briton couple, Axl and Beatrice, who set out from their
small village to find their son. The journey is especially
hazardous as it is not at all clear that they know where
they are going. A “mist of forgetfulness” has fallen over
the land, causing a kind of collective amnesia in its
peaceful but stupefied inhabitants. The couple seem to
be guided in their quest by little more than nagging instinct and dim remembrance.
Along the route they encounter others on quests of
their own. The fierce Saxon warrior Master Wistan has
been tasked with slaying the she-dragon; accompanying
him is a teenage boy who is possessed by visions of his
vanished mother. Then there is the famed knight Sir Gawain, beloved nephew of the late King Arthur and now a
doddering old man in armor. Gawain has better recollection of the past than the others, and it is through him
Like T.H. White before him, Ishiguro sees
the central theme of the Arthurian myths
as the search for an antidote for war.
that Mr. Ishiguro invokes the history of Camelot and
Merlin and of bloody warfare: “We need not quarrel,
Master Axl,” Gawain says as they pass through an underground mausoleum. “Here are skulls of men, I won’t
deny it. There an arm, there a leg, but just bones now.
An old burial ground. And so it may be. I dare say, sir,
our whole country is this way. A fine green valley. A
pleasant copse in the springtime. Dig its soil, and not far
beneath the daisies and buttercups come the dead. And I
don’t talk, sir, only of those who received Christian
burial. Beneath our soil lie the remains of old slaughter.”
The dangers of unearthing that slaughter are at the
heart of “The Buried Giant.” Mr. Ishiguro has drawn selectively from the various Arthurian chronicles and poems in fleshing out his tale—his Gawain is an amusing
inversion of the dashing ladies’ man of legend, and the
marriage of Axl and Beatrice alludes to that of Arthur
and Guinevere. But the closest source for the novel is
T.H. White’s “The Once and Future King” series and in
particular its sad, beautiful final volume, “The Book of
Merlyn.” Written in the midst of World War II and depicting an aged king trying vainly to stem the tide of
bloodshed, the book reflected White’s conviction that
“the central theme of Morte d’Arthur is to find an antidote to war.”
It gradually becomes clear that all the characters in
“The Buried Giant” are connected, knowingly or unknowingly, with a mission of dire political importance. The
fragile peace that has held since the end of Arthur’s rule
is threatened, and a renewed clash of civilizations between the Britons and the invading Saxons looms. Axl
and Beatrice’s adventures, taking them to a monastery
of wicked monks, a dungeon stalked by a ferocious beast
and finally the mountain fastness of the she-dragon,
grow in urgency yet never sacrifice the mood of quiet,
elegiac pessimism that has always characterized Mr.
Ishiguro’s writing—and that makes his novels strangely
both melancholic and soothing.
Yet the weaknesses of this novel also stem from the
author’s distant and demure prose. Mr. Ishiguro’s writing is spare in description, and we get little sense of the
supernatural monsters that haunt the countryside. Even
over the old-fashioned, chivalric dialogue he exercises
such smooth, understated control that his world leaves
little stamp on the mind. The marvelous is muted in
“The Buried Giant,” and the reader will miss the gruff,
ungainly nobility of T.H. White, to say nothing of the
profuse imagination of J.R.R. Tolkien, another obvious
inspiration here.
Mr. Ishiguro is most assured when he turns from
grander matters of state and sociology back to the intimate, tremendously affecting relationship of Axl and Beatrice. Their long, devoted marriage has been riven by
some conflict that, though the details are now forgotten,
is related to their missing son and the reason for their
journey, and the book sensitively asks whether restoring
the mislaid past, with its sorrows and its joys, will
strengthen or endanger the love that has sustained them
in perilous times. Its indelible image is not of dragons or
ogres but of the pair “on a mountain road, large grey
skies above them, she walking several steps before him.
. . . There they went, an elderly couple, heads bowed,
five, six paces apart.” For all its fantastical trappings,
“The Buried Giant” is a simple and powerful tale of love,
aging and loss—no radical departure for this splendid
writer but another excellent novel all the same.
Mr. Sacks writes the fiction chronicle in the Weekend
Journal.
P2JW062000-0-A01100-1--------XA
By George R. Roberts
Quintessentially
British
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