Day: July 28, 2025

With a few weeks of perspective, what can we say about the brief conflict between Iran and Israel?

It doesn’t matter that much that Iran’s nuclear program was not “obliterated,” as the Trump administration claimed. No one believes it was. The world’s leaders and media have long since factored in Trump’s hyperbole and learned to put a steep discount on such words. That’s a telling commentary on American diplomacy under Trump. But it matters less for Israel and Iran than one might think.

Having bombed Iran once, Israel has definitively demonstrated its willingness to do so again. Trump is more mercurial, but he has at least demonstrated how easily he can be maneuvered into complying with a fait accompli once the Israelis move first. The physical infrastructure of Iran’s program is damaged, not destroyed, and could be repaired. But it could be bombed again.

Which means that more lasting damage has been done to Iran’s appearance of regional strength, to the perception that it would become a nuclear power in due course, and that its enemies and rivals lacked the will to stop it. Those mirages have evaporated for good. The Persian emperor has no clothes.

But he’s unlikely to be graceful about it. Though an armistice was patched together, a de facto state of war exists and will continue to exist for the foreseeable future. Iran has been waging a hot and cold war against Israel, the United States, and its Arab neighbors for forty-five years, motivated by its theocratic, revolutionary ideology. What Trump wants to call the Twelve Day War is more accurately seen by Tel Aviv and Tehran alike as a twelve-day campaign in a much longer conflict.

But it is a conflict which Israel, for now, is winning. Having demonstrated unmatched military success and superpower backing, Israel is poised as a regional hegemon. What kind of hegemon it will be remains to be seen. It could act with magnanimity to seek reproachment and peace with the Palestinians and its neighbors, and at least a cold peace with Iran. But neither Israel nor its neighbors seems likely to move that way. The only safe prediction about the Middle East is that it will continue to be plagued by violence, instability, and privation for years to come.

Iran’s Fifty-Year Conflict

Most observers have probably forgotten, or never knew, the details of the longer conflict. They are worth remembering because, despite Americans’ renowned historical amnesia, the rest of the world understands that history matters.

That history includes Iran’s role in the 1983 Beirut bombings, the 1988 tanker war, the 1996 Khobar Towers bombing, support for Shia militias throughout the Iraq war, and the 2006 Lebanon War. It includes Iran’s ten-year war against Iraq in the 1980s, an attempt to sponsor a coup in Bahrain in 1981, decades of treating Syria and Lebanon like colonies, and its sponsorship of Houthi rebels in Yemen.

It includes a troublingly recurrent dribble of reports that Iran had or has some sort of relationship with al-Qaida. And it includes a list of Iran’s half-baked but destabilizing plots: Iran tried to assassinate the Saudi ambassador to the US—on US soil—in 2011. It plotted to assassinate former US national security advisor John Bolton in 2021 and 2022. Iran has caused diplomatic incidents with Denmark, Albania, Belgium, and the Netherlands over various failed attacks across Europe. 

Why does Iran do this? Because ideology matters. Despite a century of so-called “realists” telling us that only power matters, most observers intuitively understand that if a state professes a religious duty to seek your death, you are not safe—ask Salman Rushdie. Iran’s ideology is barbaric, inhumane, and at war with the basic tenets of human civilization. Most governments in the world accept the principle of national sovereignty, territorial inviolability, and the legitimacy of the international system. Iran joins a very small group of nations that blatantly, repeatedly, and violently reject those principles.

Israel’s Response

Which is why Israel treated the October 7, 2023, attack as the last straw. When militants from Hamas—yet another Iranian proxy—stormed into Israeli territory and murdered 1,200 people, Israel chose to calibrate its response not to that attack alone, but to a half-century of Iranian aggression and to a century-long campaign by its enemies worldwide to deny its legitimacy and subvert its existence.

Israel was also responding to a long string of ineffective counterattacks. Reagan did nothing in response to the Beirut bombings in 1983; Clinton did nothing in response to Khobar Towers in 1996. Bush fought back against Iranian proxies in Iraq—and lost. Israel fought to a draw in Lebanon in 2006.

Unconventional methods fared no better. The Stuxnet computer virus probably set back Iran’s nuclear program in 2011—but only temporarily. Israel allegedly sponsored the targeted killings of Iranian nuclear scientists in the 2010s, again to unsatisfying effect. Decades of sanctions and diplomacy only resulted in a deal—the Joint Comprehensive Plan of Action, in 2015—with ineffective enforcement mechanisms.

Trump took the most drastic—even rash—step when he exacted a small measure of revenge with a drone bomb that killed Qassem Soleimani, head of the Islamic Revolutionary Guard Corps’s Quds Force, in January 2020. But for what? The strike was like the 1943 bombing raid that killed Admiral Isoroku Yamamoto, architect of Pearl Harbor, minus the war that overthrew his government. It was a one-off with no strategic effect.

That accounts for the present war’s brutality and length. Israel had no patience for another one-off reprisal strike, another round of diplomacy, or an ineffective campaign that only kicked the can down the road. Israel wanted a definitive war. It is probably bloodier than any Israeli conflict since the Yom Kippur War of 1973. And Palestinian civilians have paid the price.

The Nuclear Question

In 2016, I argued that Iran was functionally a nuclear power, a “near-nuclear” state whose “acquisition of nuclear weapons is virtually assured.” Because of that, Iran didn’t actually have to cross the nuclear threshold. Regional security dynamics have “already adjusted to treat Iran as a nuclear power.” The US had little choice but to sponsor an Israeli- and Saudi-led regional order to contain Iranian influence, I concluded, which meant “a militarized crisis with Israel is possible and even likely.”

I was wrong about Iran’s “virtually assured” acquisition of nuclear weapons because I was right about the militarized crisis with Israel. What I did not foresee was that Israel would successfully use the looming crisis with Iran to destroy Iran’s proxies, Hamas and Hezbollah. Those had been the major obstacles to direct action against Iran’s nuclear facilities. Having removed the implicit threat of terrorist retaliation, Israel and the United States were free to go after Iran’s nuclear program with impunity.

In doing so, Israel was following a long-standing doctrine that it will not allow hostile states in its neighborhood to possess nuclear weapons, having bombed Iraq’s nuclear reactor at Osirik in 1981 and Syria’s at al-Kibar in 2007. Note that the three different bombings occurred under three different prime ministers in three different decades from two different political parties: the strike on Iran was not solely a function of Benjamin Netanyahu’s leadership or political agenda, and Israel’s nonproliferation policy will long outlast him.

To Israel belongs the credit for keeping the Middle East nuclear-free—except, of course, for Israel’s own rumored program. Hypocrisy is the price of hegemony. And Israel is the regional hegemon: that much should be clear from the past eighteen months of warfare—if not the past seventy-five years. When a nation can, with impunity, wage war on essentially any of its neighbors at will; use their airspace at will; impose its nonproliferation doctrine on an entire region; assassinate entire terrorist networks; leverage the foreign policy of the world’s sole superpower; and still be the most prosperous and flourishing society in the entire region from Gibraltar to the Kyber Pass, that’s hegemony.

The New Hegemony

What sort of hegemony will it be? That seems less clear, as it depends on the future of Netanyahu’s government and its stance towards the Palestinians, its neighbors, and the future.

The biggest unanswered question of the war is: what next? What is Israel fighting for? It is clear what the war is against: Hamas, perpetual terrorism, Iranian hegemony, and Iran’s nuclear program. But war—effective war, successful war, just war—uses violence to build a better peace. What is the peace that Israel is fighting for?

Netanyahu does not seem to have an answer, and therein lies the problem and the likely seeds of forever war. One could imagine an Israeli Prime Minister seizing the moment to act with magnanimity and courage, as Menachim Begin did when he signed the Camp David Accords, or Yitzhak Rabin did when he signed the Oslo Accords. They could envision peace between Israel and its neighbors that included a place for the Palestinians. Netanyahu is not that prime minister. He is likely to be remembered more for military ambition (and intelligence failure) than diplomatic courage.

Of course, Begin and Rabin had credible interlocutors with whom to negotiate. There is no Palestinian leadership, the Iranian government seems in no rush to talk, and the Arab states are not lining up to join the Abraham Accords. That is their choice—but it means they are standing idle while the era of Israeli military hegemony begins.

The image of a white picket fence and a house to call your own often comes to mind when discussing the American Dream, but this image is just a shallow reflection of a much deeper concept. It may be true that the dream is actualized through meaningful access to housing; however, it is ultimately about living freely and flourishing by adhering to the ideals of the American Founding, through which one pursues happiness and reaches one’s fullest potential. That dream is made possible when individuals have access to housing that is affordable, well-located, and suited to different lifestyles.

Without these preconditions, the American Dream is much harder to achieve.

Yet for decades, institutional barriers have threatened this foundation. Zoning laws, restrictive regulations, and environmental policies are just the beginning of many obstacles that drive up the cost and limit access to housing opportunities. This bureaucratic entanglement in the world of real estate is no accident. Inflated prices and restricted housing access are prime examples of the consequences of a political philosophy that fears growth and rewards obstruction.

To prevent the consequences of unchecked regulatory policies, we must change our institutional arrangements in order to strengthen private property rights. The expansion of housing opportunities will result from the protection of private property by minimizing restrictive regulations. Housing policy must, therefore, be evaluated by a deeper standard that asks whether it will help or hinder the pursuit of happiness in America.

The American Dream and Where It Happens

In pursuing the promise of the American Dream, individuals primarily seek housing that they can afford. Yet securing housing within a budget is often insufficient for reaching one’s full potential. Various living options provide individuals with communities that better align with their needs and goals.

The location of a house not only determines housing prices and the type of community, but is crucial in providing access to work opportunities. It is of little use if an affordable home is not close enough to specific job markets and transportation. Moreover, housing located near schools and fitting job opportunities better enable people to find work that aligns with their goals.

However, location is not the only thing that matters. There must also be a variety in housing options. Different housing is necessary for people of different ages and stages in their careers and financial situations. Access to housing fitting their specific situation allows them to lead fulfilling lives.

Access to appropriate housing, however, is becoming more and more difficult. For example, according to a recent Realtor.com survey cited by Fox Business, 75 percent of US adults still consider homeownership an essential component of the American Dream. However, the US homeownership rate has declined to around 65 percent as of late 2024—a clear signal that while the goal is still widely valued, many are simply unable or unwilling to attain it. The access to housing “services” is not achieved only or always by ownership, but the disparity between those who see ownership as vital and those who can actually own a home is indicative of a broader problem.

This growing space between dreams and reality is not coincidental. When regulations restrict growth—when permitting takes years and fees and prices strangle new development—the opportunity to flourish is diminished. The limitation of where people can live ultimately limits who those individuals can become.

Housing Diversity and the Anti-Industrial Ethos

However, on top of obvious natural market conditions, people are often priced out of suitable areas by restrictive zoning laws that inflate costs further. This only makes the ideal home increasingly unattainable. These roadblocks are not only the result of bureaucratic oversight but are indications of resistance to healthy growth and development. Today, people no longer embrace the idea of building more homes with enthusiasm. They act with suspicion and resistance. This resistance reflects a broader agenda that seeks to limit growth in the name of environmental protection and restrain technology. It sees development as a threat to character and calls for nature to be protected for its own sake.

In The Anti-Industrial Revolution, Ayn Rand argued that many modern intellectuals treat progress as dangerous. For them, “Technology is man’s enemy and should be restricted or abolished.” While she wrote provocatively, her insight is pertinent.

Arguably, this mentality dominates policies affecting housing today. Regardless of the meritorious aims hoped to be achieved by zoning regulations, in city after city, new housing proposals are greeted not with welcome but with protest. Growth is seen as an assault on the environment, a force that must be stopped. This cultural suspicion of building is not rooted in data—it is an aesthetic and moral reaction. It favors the static over the dynamic, the known over the possible, as embodied in the “precautionary principle” behind many regulatory decisions. This mindset animates NIMBYism, fuels procedural delay, and gives rise to a legal culture that elevates environmental review over economic need.

One of the clearest examples of legal boundaries deteriorating into extreme anti-industrialist policy is the National Environmental Policy Act (NEPA). Its original goal was to ensure that the federal government considered environmental factors when developing major projects. However, as noted in a recent article, what began as guiding principles that called for environmental consideration resulted in out-of-control green tape.

NEPA and other anti-industrial policies have a chokehold on meaningful project development, causing costly delays and hindering innovation. When environmental policy is fueled by restriction rather than guidance, the result is not greener cities but fewer homes, longer commutes, and higher living costs.

Public Choice and Political Failure

Cultural opposition does not entirely explain the issues in our housing system. To understand the deeper failures in housing, we must also look to the incentives that drive decision-making on every level.

Public choice theory analyzes political behavior and the incentives that drive self-interest. The theory begins from a simple premise: people are people, whether they work in the private or public sector. Their behavior is shaped not by moral superiority or institutional label, but by rules and rewards. Zoning commissions and planning boards, accordingly, are not populated by angels, but respond to external pressure from organized homeowner groups, vocal opponents of change, and entrenched interests with something to lose. 

With housing, this explains why zoning commissions are often driven by vocal homeowners who resist development to protect their property values, while those who would benefit from more housing—young renters and future residents—are unorganized and underrepresented. The result is a system of prevention and delay rather than abundance and opportunity.

To paraphrase James Buchanan, these problems are structural, not just personal. Restoring a housing environment fit for the American Dream requires more than replacing officials. It requires reforming the rules that shape their decisions. Land use governance must be redesigned to reduce barriers and protect the freedom to build from politically powerful opposition. We must evaluate political outcomes by examining rules, incentives, and structures—not merely intentions. The structure of land use decision-making rewards delay, empowers obstruction, and penalizes innovation. Thus, high prices and long waits are predictable outcomes. The system is working as it was (inadvertently) designed.

This system of incentives does not just slow housing development—it actively limits the types of housing before they can even be built. For example, many cities ban the construction of duplexes or require minimum lot sizes through zoning. These rules force builders to focus on homes that are large and expensive instead of more affordable ones. Furthermore, the artificial boundaries of urban areas restrict where development can occur and, in turn, raise prices within those limits.

By preventing diverse housing options such as apartments or duplexes, communities shut out housing that would provide young people and those with less means stability and room to grow. Here, the system does not offer what people need. Supply is far from demand, not because the market cannot reach equilibrium, but because restrictive policy prevents it.

This systemic issue is not only economic but human. The restrictions that cause high prices, long commutes, and other limitations directly undermine the promise of the American Dream.
For example, New York City recently eliminated rental brokerage fees and is on track to broaden rent freezes, allegedly to protect renters, as reported by the Wall Street Journal. These regulations quickly backfired. Landlords raised rents by hundreds of dollars, often outweighing initial savings. As the WSJ article put it, the Fairness in Apartment Rental Expenses Act (FARE) “lit a fire under pre-existing rent growth,” forcing prices higher in an already strained market.

New York’s current housing market shows how price controls and procedural barriers sustain the crisis, shift costs, and create roadblocks. When incentives are skewed, well-meaning policy often backfires. The very renters these polices claim to be helping are the people who pay the price.

The Housing Question and the American Dream

Everything we have argued so far should not be interpreted as claiming that some of the interests protected by zoning and environmental regulations are illegitimate or not worth protection.

Our argument is that there is a better way of balancing competing claims and making them harmonious by private covenants and case-by-case decisions. Renewed respect for property rights is preferable to bringing in the coercive power of the state to situations that cannot possibly be assessed ex ante by legislators or assumed to be taken by impartial and not interested regulators.

If legislators and regulators can be pressured by one or other group, there is no reason to believe that justice will be done. The most politically savvy group will win, as countless cases in which zoning rules are “adjusted” to attend to special interests demonstrate. What is given by coercion may be taken by coercion, with all the deleterious consequences in terms of growth that uncertainty causes. That is the lesson of zoning practice, not one of protection of individual rights.

Ultimately, the American Dream should be discussed in moral or cultural terms; behind every dream, however, lies a material structure that makes it possible. Housing is not just shelter—it is the infrastructure of human flourishing.

Today, the Dream is not threatened by market forces but by policy failures and ideological resistance. Many fear growth, distrust builders, and reward delay. This logic must be reversed. Growth should no longer be treated as a vice but as a public good. Preserving the American Dream requires us to challenge the cultural suspicion of abundance by reforming zoning and streamlining permitting. Most importantly, it requires us to recognize that housing is not merely a special interest but a human need essential to freedom and flourishing.

Any opinions expressed are the author’s and do not necessarily reflect those of Liberty Fund.