The 2012 CIA World Factbook says, "Israeli closure policies continue to disrupt labor and trade flows, industrial capacity and basic commerce, eroding the productive capacity of the West Bank economy."
Writes Bernard Avishai, a business professor at Hebrew University, "Try growing a supermarket chain when your just-in-time logistics system has to deal with 600 roadblocks." These are just part of what Palestinian entrepreneurs have to overcome.
Israelis, and Romney, may say all this is entirely the fault of the Palestinians for not making peace. But that's a separate issue. Given the many obstacles that have been erected, blaming the Palestinian culture is a stretch. Even the most business-friendly culture can't create prosperity where governments won't let it.
Hong Kong, again, offers proof. Culturally, it was similar to the rest of China. But under communist dictator Mao Zedong, the people of China endured catastrophic famines and economic chaos -- while those in Hong Kong, blessed with a free-market framework, ascended to prosperity.
It's not just Hong Kong that has surpassed Israel. Ireland, once considerably poorer, now has a far higher per capita income. The Irish, it's fair to say, were not previously famous for their go-getting capitalist fervor.
Attributing the Palestinian stagnation to a malignant culture breeds a dangerous complacency by suggesting Israel has no capacity to help. It casts a bad light on all Palestinians, including the ambitious and hardworking. It encourages the smug assumption that some fatal flaw in Arabs or Muslims dooms their countries to failure.
It should be obvious that without economic freedom, we'll never know what they can do. Recognizing the crucial role that official policies play, however, puts the onus on the Israeli government to find ways to liberate the Palestinian economy without sacrificing security.
In assessing the dismal performance of the U.S. economy over the past three and a half years, Romney does not mind informing Americans that policy, not culture, is the problem. Why not let Israelis in on the secret?
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