One of the foundations of the free market is rational choice theory. That theory assumes that private individuals generally make decisions that maximize their profits and utility and do so far better than any collective organization or bureaucracy. Rational choice theory stands or falls on the availability of information. Without the free flow of information, people are unable to make rational choices. In Israel, as the country's steady economic growth and high placement on just about every significant global economic index shows, the economic liberalization reforms enacted by former prime minister and finance minister Likud Chairman Binyamin Netanyahu have been a complete success. The Israeli economy is the envy of a Europe that suffers from stagnation and decline. Yet inside of Israel, the country's economic success is a well-kept secret. Most Israelis operate under the impression that the country is on the verge of economic ruin - that poor people are starving, that sick people are going without proper medical care. The reason that most Israelis believe that the country is teetering on the brink of an economic disaster is because the Israeli media have consistently reported an economic narrative that has absolutely no relationship with reality. So, while international investors line up to invest in the Israeli economy, Israeli citizens look to socialist politicians and pundits to save them from their capitalist nightmare of success. Just as they underplay Israel's economic success to advance their socialist economic agenda, the Israeli media distort coverage of Israel's increasingly dangerous strategic environment to increase public support for their defeatist, left-wing world view. In both endeavors, the media are supported and abetted by the legal system. Events on the northern front and in Gaza over the past few days demonstrated that Israelis are denied a free flow of accurate information regarding their national security. On Monday, Ha'aretz reported darkly, "Iran has transferred to Lebanon rockets that reach Beersheba." The report stated that the Iranians recently provided their proxy Hizbullah with Zelzal-2 rockets capable of hitting every major city in Israel. Yet while this report is true, it is neither startling nor earth-shaking for anyone who has been closely observing developments in south Lebanon over the past few years. The recent shipment of Zelzal missiles does not constitute a departure from well-formed Iranian, Syrian or Hizbullah policy patterns. The first time that a shipment of Iranian Zelzal rockets to Hizbullah was reported was in early 2003. Just as this week it took the media one day to forget about this Zelzal shipment, in 2003, the reports received almost no attention. At the time the Israeli media and the government were busy convincing the Israeli public to support the road map which was then being written by Yossi Beilin and Tony Blair. Like the 2003 report before it, the meaning of this week's report is clear. Iran today is perched on Israel's northern border. Against the backdrop of Iran's nuclear weapons program and its ballistic missiles capabilities, Iran's presence on the northern border dramatically impacts Israel's national security posture. If before the IDF's withdrawal from southern Lebanon in May 2000 Hizbullah and its state sponsor constituted a challenging, bloody tactical threat to Israel, today they are a strategic threat. In short, this week's story about the Zelzal missile shipment reveals what a terrible mistake Israel's retreat from south Lebanon was. But the Israel media - which was the engine behind the Barak government's decision to retreat from south Lebanon six years ago - have no interest in informing the public of the magnitude of its error. So rather than provide any context for Sunday's Katyusha rocket attacks on northern Israel, our media luminaries argued among themselves about irrelevancies such as whether the Iranian puppet Islamic Jihad or the Iranian puppet Hizbullah fired the rockets on Sunday morning. If the media had any interest in serving their primary function of informing the Israeli public about its current situation, they could ask why Israel is sitting back and allowing Hizbullah to acquire the means to attack all of Israel's major cities. If we know that the missiles were delivered, why didn't we blow them up at the airport or in their silos? Since the 1950s, Israel's military doctrine has dictated that the IDF is responsible for ensuring that our enemies do not acquire the means to cause us strategic damage. This was the rationale that stood behind the Sinai Campaign in 1956, the Six Day War in 1967, the strike at the Iraqi nuclear reactor at Osirak in 1981 and countless other operations throughout the years. But rather than receiving context or meaningful debate, the public is fed a diet of empty-headed drivel. Our media know-it-alls idiotically inform us that far more IDF soldiers were killed in Lebanon when the IDF was deployed in Lebanon than have been killed in Lebanon since the IDF withdrew from Lebanon. No one bothers to explain that in the future many more soldiers will likely be killed in Lebanon to neutralize the strategic threats that have emerged in that area because soldiers who prevented the Lebanese tactical challenge from becoming the current strategic threat were removed from the country six years ago. JUST AS the already forgotten report on the Zelzal missile shipment showed how ill-advised the withdrawal from southern Lebanon was, this week two reports revealed a no less disturbing situation in the abandoned Gaza Strip. Tuesday, as the socialist economic gurus in the media and the government argued in favor of slashing the IDF's budget in light of the withdrawal from Gaza, we were informed that the IDF returned to Gaza two months ago. Palestinian terrorists Tuesday morning videotaped Israeli forces in the ruins of the Israeli community of Dugit attacking a Palestinian terror squad as it prepared to launch a Kassam rocket on Ashkelon. On Wednesday the IDF admitted that it has been deploying commandos in Gaza to prevent rocket and missile launches for the past two months. That deployment had been kept secret to prevent the public from learning just how ill-advised last year's retreat was. The need to deploy ground forces in Gaza today proves unequivocally that the only way to defend Ashkelon and the other communities bordering Gaza from attack is by deploying IDF boots on the ground in Gaza. Just as they distorted their coverage of the Katyusha attacks on northern Israel on Sunday, to prevent the public from absorbing the significance of the IDF ground operations in Gaza, the media concentrated its coverage of the deployment of ground forces in Gaza on irrelevant side issues. All the media turned their attention to the terror propaganda film. That film regaled Israeli TV viewers with footage of poor terrorists dying of their wounds just before they had the opportunity to attack Ashkelon with their rockets. Also on Tuesday, Channel 10 reported the unsurprising fact that the new Hamas army that purportedly was raised to end the chaos on the streets of Gaza, is actually devoted to fighting Israel. Channel 10 showed its viewers a Hamas promotional video showing its terrorists graduating from basic training. The reporter made much of the fact that the terrorists were pictured receiving orders from imams rather than their Iranian-sponsored Hamas "military" commanders. It is not clear why we should care that the terrorists giving the orders are wearing gowns rather than camouflage, but one thing we should care about immensely was glossed over by Channel 10. The announcer on the propaganda film declared that Hamas's allies in the east and west are anxiously waiting for the Hamas soldiers to join them in battle. The point of that statement is unmistakable: Hamas perceives itself as part and parcel of the forces for global jihad and does not limit its sites to waging war on Israel. The fact that the same day the video was broadcast, Israel announced it had arrested a British national who admitted to membership in Hamas demonstrates that far from being a Palestinian nationalist group, Hamas is a member in good standing of the global jihad army that takes its orders from Teheran. But Channel 10 didn't think that aspect of the story held any interest for its viewers. PRIME MINISTER Olmert and his associates claim that in giving Kadima the most seats in the Knesset, the Israeli public declared its support for Olmert's plan to relinquish Judea and Samaria to Hamas. But when one assesses the quality of the information that the public receives, the only conclusion it is possible to reach is that Israel is suffering from market failure in the realm of information flow and processing. This market failure is exacerbated and maintained by constraints placed on public debate by Israel's legal establishment. Two separate events this week brought home this disturbing reality. First, on Monday, Attorney-General Menachem Mazuz announced the opening of the trial of right-wing activist Nadia Matar for the alleged crime of "insulting a public servant." Matar was indicted after she sent a letter to Yonatan Bassi, the head of the Disengagement Authority, where she compared him to the Judenrat in the Holocaust. Mazuz's decision to indict Matar for her written expression demonstrates how legal authorities have seized for themselves the power to determine the limits of public debate in a manner unheard of in other free societies. In a related incident, President Moshe Katsav pardoned the heads of the now banned Arutz 7 radio station for having committed the crime of broadcasting without the approval of the Supreme Court. The media reacted to Katsav's decision with hysteria and rage. Indeed, the media have reacted more calmly to the government's decisions to release hundreds of convicted terrorists from prison than to the president's decision to pardon Arutz 7's management team. The story of Arutz 7 is demonstrative of the legal system's willingness to twist and distort law in order to make it impossible for alternative voices to be heard by the public. In its ruling on Arutz 7 in 1998, the Supreme Court dismissed a law passed by the Knesset that gave Arutz 7 a license to broadcast. The Court argued strangely that by granting Arutz 7 the right to broadcast, the Knesset had harmed regional radio stations that would have to operate in a world in which Arutz 7 exists. When one sees how news is distorted and truth is hidden from the Israeli public; when one understands how the legal system in Israel constrains permissible speech, one sees that while the Israeli economy may be chugging along, the public consciousness of the Israeli body politic has fallen victim to a premeditated failure of the marketplaces of information and ideas. If the Israeli people wish to survive in an increasingly dangerous strategic environment, ways must be found immediately for these failures to be corrected or circumvented.