The American Israel Public Affairs Committee is “the most important organization affecting America’s relationship with Israel.” At least, the New York Times once described it as such. AIPAC proudly shares the accolade with anyone who peruses its website, and few if any sources seem to disagree. AIPAC claims to have achieved that status through the dogged pursuit of a simple strategy: cultivating bipartisan support for the declared agenda of Israel’s elected government.In 2006, Harvard’s Stephen Walt and the University of Chicago’s John Mearsheimer complained loudly about the powerful “Israel lobby.” Their screed, soon expanded into a best-selling book, deployed massively shoddy scholarship to combine two stereotypical conspiracy theories. The first and far more pernicious stereotype drew upon a long history of anti-Semitic tropes seeing a cadre of Jews pulling the strings of global power. The second stereotype, popular among Americans who bear no particular animus toward Jews, casts Washington lobbyists as a cabal directing legislative, executive, and occasionally judicial power to the detriment of the nation at large. The Israel Lobby spun these two strands together into the mother of all conspiracies: a large, amorphous, collection of Jews manipulating congresses and presidents to serve the interests of Israel rather than those of the United States. At the epicenter of these puppetmasters and serving as their public face sat AIPAC—possessing a “stranglehold on the U.S. Congress” due to its “ability to reward legislators and congressional candidates who support its agenda, and to punish those who challenge it.”In 2008, J Street, the brainchild of activist Jeremy Ben Ami with funding from the anti-Israel philanthropist George Soros, pushed the argument even further. In J Street’s view, AIPAC was doing more than directing policy in a manner contrary to American interests; AIPAC was directing policy in a manner contrary to Israeli interests. In J Street’s world, it is not a cabal of Jews per se pulling the strings of power; it is a cabal of extremist, right-wing, Likudnik, or neoconservative Jews who are leading the world astray. J Street thus cultivates left-wing support from politicians rarely before viewed as sympathetic to Israel in opposition to most actions, positions, and plans of Israel’s elected government. President Barack Obama embraced J Street, elevating the new organization to a position of prominence by welcoming its views as representative of the broad American Jewish community—an elevation that the broad community has explicitly rejected—and often using J Street to demonstrate his Jewish support.In the summer of 2015, AIPAC found itself opposing both Obama and J Street. Though late to the game, AIPAC eventually agreed with those (like the Israeli government and all major Israeli opposition parties) who saw the Iran deal as an existential threat to the Jewish State. AIPAC raised tens of millions of dollars by claiming to work towards securing the bipartisan support of those it had long touted as friends of Israel. AIPAC’s leaders announced high-profile meetings with senator after senator, availing itself of the access it had accumulated through its years in Washington. Many of AIPAC’s Democratic friends issued lengthy statements decrying the deal’s deficiencies and emphasizing the dangers that it posed to the United States, to Israel, and to the world—fully in line with the public’s overwhelmingly unfavorable view of the deal. Yet when it came to legislative action, even senators considered among AIPAC’s staunchest allies, like Maryland’s Barbara Mikulski, Delaware’s Chris Coons, and New Jersey’s Cory Booker, failed to back the organization.Yet this recent, high-profile failure appears to have had minimal impact on AIPAC’s self-image or strategy. Far from distancing itself from any of the fair-weather “friends” who had disappointed it, AIPAC announced that it would not let this single vote sour any of its relationships. Within days, AIPAC resumed raising funds for its old friends and has yet to suggest that any candidate’s position on the Iran deal should matter in the 2016 elections. At AIPAC’s 2016 Policy Conference, the organization welcomed numerous Democratic supporters of the Iran deal as friends of AIPAC and friends of Israel—reserving its criticism for Donald Trump–ignoring what every other lobby seems to know: While it is nice to have friends on both sides of the aisle, a reputation for rewarding friends and punishing enemies is a necessity for exercising political power.So, how did the fierce beast of The Israel Lobby become a paper tiger? Was AIPAC’s power overhyped by friend and foe alike? And what does the massive and very public embarrassment of the organization’s Iran deal defeat mean for the future of pro-Israel activism in the United States?The answers lie far outside normal political considerations, in the microeconomic discipline of Industrial Organization. Because notwithstanding its obvious quirks, lobbying is an industry like any other—and in the parlance of Industrial Organization, AIPAC is a comfortable, entrenched, incumbent monopolist. And though monopolists are big, powerful, and dominant in their heyday, they are notoriously poor at noticing when the conditions that powered their rise shift, to render their dominance hollow. AIPAC has reached that point.***Any exploration of a market, even an informal one, must begin with some basic terminology. For present purposes, it is useful to think of a grassroots lobbying organization’s mega-donors as playing the roles of lead investors and directors, setting the basic tenor and strategy with which the organization approaches its mission. The “customers” are small donors and volunteers, who bolster the lobby’s claim to represent voters. For the rank-and-file membership, a lobby must produce policy pronouncements, promotional materials, and mechanisms capable of ensuring that those who support its stated mission feel good about its work. A grassroots lobbyist’s fundamental “product line” is thus a steady stream of PR punctuated by occasional high-profile legislation. Finally, the “market” into which a lobby “sells” is the market for feel-good PR related to its stated mission: Potential grassroots activists consider donating money or volunteering time only to organizations whose missions resonate with their own concerns, and they will remain active only if the lobby makes them feel that their contributions serve that mission.Those informal definitions make clear that AIPAC has monopolized the market for pro-Israel lobbying in the United States. For the most part, Jewish Americans eager to demonstrate their support for Israel through the political process become involved with AIPAC. Devout Christians–by far the largest pro-Israel demographic, and in many ways Israel’s strongest supporters—typically accept the characterization of those who see Israel as a “Jewish issue” and defer to AIPAC’s lead.Like many monopolists, AIPAC works to create mechanisms for maintaining its dominance by complicating the startup life of anyone considering competing—or “barriers to competitive entry.” One ploy useful in creating such barriers instills public fear and then enlists governmental reassurance. The combination is powerful. At the monopolist’s urging, consumers begin to wonder: If the only known supplier were to disappear, who would guarantee continued supply? A regulator arises to provide the necessary assurance. To pick but one example, AT&T in its heyday convinced Americans that it and it alone was able to guarantee the stability of the telephone network; any interference with its operations would imperil national security. A thus-frightened government prohibited competitive telephony through most of the 20th century and imposed a regulated monopoly instead.AIPAC similarly encourages its members to ask: If something were to weaken AIPAC, who would fight for Israel? When challenged, AIPAC appeals to a “regulator.” The Conference of Presidents of Major American Jewish Organizations was organized in 1955 for the explicit purpose of giving the American Jewish community a unified voice on important matters of public policy. When it comes to lobbying for Israel—that is, interacting with Congress on Israel’s behalf—the Conference of Presidents has designated AIPAC as the community’s voice. Though a unified voice can confer communal benefits, it is also inherently monopolistic. It shuts down innovators whose voices might prove wiser and more persuasive. Furthermore, given the loosely coordinated nature of the American Jewish community, a unified voice is necessarily a consensus voice, typically representing some lowest common denominator. Is the Jewish community—or any community—better served by a dominant voice unwilling to rock the boat or by many voices, pushing in many directions, intent on effecting change?In typical monopolist fashion, AIPAC does more than underinvest in policy innovation: It objects to policy innovations that might imperil its monopoly.Any attempt to launch a pro-Israel lobbying group whose voice differs—and at critical junctures disagrees—with AIPAC’s must do more than raise money, develop political contacts, and lobby. It must confront an entrenched Jewish leadership that has convinced large parts of the community to equate AIPAC’s interests with those of Israel.In one particularly ham-handed attempt that would make any monopolist proud, AIPAC attacked the Zionist Organization of America (ZOA) and its longstanding President Morton Klein for attending a critical committee meeting on the Hill and allegedly acting in “an amateurish and hostile fashion.” Steve Grossman, then AIPAC’s president, complained: “This has to stop before it goes further and significant damage is really done.” Howard Kohr, then AIPAC’s Managing Director and for the past 20 years its executive director, wrote to the Conference of Presidents: “Disciplinary action must be taken against ZOA to ensure such behavior is not repeated.”Monopolists are also notoriously averse to innovation and the risks that it entails. In its place, they burnish a core product offering and invest heavily in convincing the public that they are responsible stewards of the market they monopolize. AIPAC’s annual Policy Conference—termed a “Jewish Super Bowl,” or “Zionist hootenanny”—functions as such an opiate. Attendees at this confab represent a broad cross-section of American Jewry, and speakers often include U.S. presidents and Israeli prime ministers. At the end of the day, though, the Policy Conference remains a feel-good event that galvanizes grassroots activists and rewards attendees, not a substantive accomplishment. As the 2016 Policy Conference demonstrated, politicians more than eager to spout pro-Israel platitudes to the applause of AIPAC’s members still follow the party line when it comes to legislation; the overwhelming majority of AIPAC’s Democratic congressional friends supported the Obama/Iran deal.AIPAC’s core substantive product offering is the annual (currently roughly) $3 billion in military aid that the United States provides to Israel. Because parts of this aid require annual renewal, there is always a reason to lobby Congress—on an issue on which the vast majority of Congress-people are eager to oblige. The AIPAC Briefing Book highlights the importance of foreign aid to its offerings: “AIPAC urges all members of Congress to support Israel through foreign aid, government partnerships, joint anti-terrorism efforts, and the promotion of peace through a negotiated two-state solution—a Jewish state of Israel living alongside a demilitarized Palestinian state.”Yet though the foreign aid bill is undoubtedly important, it may be more important to AIPAC than it is to Israel. Prime Minister Benjamin Netanyahu, addressing a joint session of Congress in 1996, suggested that it was time for Israel to begin to reduce its reliance on U.S. aid, an idea boasting continued support from some of Israel’s strongest backers. According to retired Ambassador Yoram Ettinger, then minister for Congressional Affairs at the Israeli embassy, irate AIPAC leaders accosted Netanyahu outside the Capitol after his speech to berate him, saying: “Israel can’t forgo foreign aid—it’s our flagship issue.” It is thus unsurprising that AIPAC, in the words of one observer, “has shown no signs of ending its efforts to push Congress to pass the annual military aid bill.” Whatever significance military aid may have to Israel, it is central to AIPAC’s self-image, reputation, and standing in the community.By eschewing policy innovation while occupying the entire field, AIPAC has imposed upon pro-Israel activism the same sclerosis that monopolists commonly impose upon the markets they dominate. In Israel’s case, that sclerosis is both misplaced and dangerous. Israel is a small state surrounded by enemies seeking her destruction and the genocide of her citizens. As a foreign government dependent on the United States, Israeli diplomacy compels conciliatory statements about American policy and leadership. American activists are under no compulsion to believe such statements. To the contrary, American supporters add maximum value when championing the tough truths that diplomacy puts beyond Israel’s reach.Yet rather than pushing to expand Israel’s political playing field, AIPAC has instead filtered Israel’s necessary diplomatic risk-aversion through the partisan and policy preferences of its own membership. To pick but one example, numerous American Jewish leaders, including prominent members of the Conference of Presidents, have recognized that American energy independence would weaken OPEC’s hold over American policy and thus serve Israel’s interests. Rather than taking a leadership role on the issue, however, AIPAC demurred, explaining: “We knew as American Jews we couldn’t touch environmental issues and have any credibility with our community. American Jews don’t want to destroy Alaska to import a few barrels less from Angola.” A political monopolist who avoids alliances for reasons unrelated to its mission necessarily weakens that mission—in AIPAC’s case, lobbying in Israel’s best interests.In classic monopolist form, AIPAC protects its market by playing to avoid losing rather than to win. A pro-Israel lobby that played to win would articulate basic, immutable principles for which it would fight—and it would count among its “friends” only those elected officials who supported these positions even when politically inconvenient. Such a lobby would pressure Israel’s neighbors to work with Israel while removing pressure on Israel to take risks that compromise its security, and it would stop pushing to reward Arab incitement and terror with a PLO-led state. Above all, a pro-Israel lobby playing to win would innovate on policy, promoting truths and ideas that run counter to conventional wisdom—even if such innovations remain minority positions for the years that lobbyists often need to assemble winning coalitions.Anti-Israel forces understand the strategic imperative of policy innovation, and they are rarely bashful about pushing ideas whose absurdity is apparent to all people of good faith. Yasser Arafat first fabricated Temple Denial from whole cloth in 2000, but within the past year the New York Times has detailed the “controversy” surrounding Jewish “claims” to the Temple Mount, and UNESCO has declared the Kotel a Muslim holy site. BDS, which grew out of the United Nations’ rabidly anti-Semitic Durbin Conference in 2001, began in earnest with a coalition of radical fringe NGOs in 2005. By 2015, allegations of Israeli apartheid and genocide had come to dominate discourse among American academics and European parliamentarians.Or consider the course of the so-called “Two-State Solution,” once a policy innovation of the far left but now conventional wisdom. In 1980, Jimmy Carter—hardly an Israel advocate—opposed as destabilizing the emergence of an Arab state wedged into disputed territories that Israel had liberated in 1967. Yitzchak Rabin, martyred in 1995 for his dovish politics, never wavered from his opposition to a Palestinian state. In 1998, five years into the Oslo process, Hillary Clinton publicly implied support for an independent Palestine; her husband’s White House issued an official repudiation. Yet AIPAC now doggedly promotes “a negotiated two-state solution—a Jewish state of Israel living alongside a demilitarized Palestinian state.”The erosion of Israel’s reputation and diplomatic standing among Western governments—and in particular, among Western parties to the left of center—should provide fertile ground for policy innovation. Who objects to the canard that Israel is an occupier? Who lobbies the White House to recognize an undivided Jerusalem—within its full current municipal boundaries—as Israel’s capital? Who takes to task every politician who differentiates the anti-Israel terror of Hamas, Fatah, and Hezbollah from the world’s other instances of Islamist terror? Who challenges the calls for “balance” in confronting the terrorist mini-state of Gaza that are oddly absent from any discussion of other terrorist safe havens? Who emphasizes the connection between anti-Zionism and anti-Semitism? Who pushes American politicians to revisit the Oslo agreement—particularly following Mahmoud Abbas’s unilateral withdrawal from its terms during his 2015 speech to the U.N. General Assembly?To each of these questions, the answer is “not AIPAC.” In typical monopolist fashion, AIPAC does more than underinvest in policy innovation: It objects to policy innovations that might imperil its monopoly. That objection traps pro-Israel activism behind a lowest-common-denominator bipartisan strategy in an increasingly partisan world***In a competitive environment, fundamental market shifts create openings for small players pursuing prescient strategies to grow while bigger players pursuing reactive strategies suffer. Monopolists rarely see the signals of a market shift that competition would provide. Instead, they pursue tried-and-true strategies until a crisis lays bare the mismatch between those strategies and the new market dynamics.For decades, AIPAC has prided itself on its bipartisanship, avoided explicit public statements of partisan preference, and forged coalitions that cut across party lines. The mere viability of such a strategy, however, hinges upon the existence of sizable pro-Israel factions in both parties—and the willingness of those factions to stand together against anti-Israel voices emanating from their own sides of the aisle. The rise of J Street almost a decade ago, and the overwhelming Democratic support for Obama’s Iran deal last summer, should have signaled a shift in the market that AIPAC monopolizes. In typical monopolist fashion, however, AIPAC has given no indication of reconsidering the propriety of its strategy in today’s political terrain.Throughout the late 20th century, the political parties took clear and divergent stands on economic and cultural issues while demanding far less fidelity to a foreign policy agenda: Hawks and doves, isolationists and internationalists, pragmatists and realists, all coexisted in sizable numbers within both parties. The overwhelming majority of American Jews followed their economic and social preferences into the Democratic Party, where they found a faction that supported their pro-Israel views. Foreign-policy alliances, on issues far broader than Israel, grew across party lines in a manner that served the country well. By allowing proponents of all foreign-policy perspectives and approaches in either party, every president found bipartisan support; politicians at odds over economics or culture found common ground on foreign policy; the nation provided a reasonably unified image to those observing from abroad; Israel served as a unifying feature in American Jewish life; and AIPAC rode pro-Israel bipartisanship to a position of pride among American activist groups.Unfortunately, the parties redefined themselves for the post-9/11 world and its consequent focus on foreign policy. During the 2002 debate about ending Saddam’s rule, sizable numbers of congressional Democrats gave President George W. Bush grudging support, hedged with statements meant to reassure their supporters that they did not really trust him. Those supporters were hardly reassured. The progressive Netroots sought to push those deemed insufficiently critical of Bush’s unilateral belligerence to the periphery of the party, where they could either recant or depart. By late 2003, these progressives had become a powerful force in the Democratic Party, catapulting the emphatically antiwar Howard Dean into front-runner status before caving to the establishment favorite, John Kerry—who responded to the new tenor of his party by running as both hawk and dove, a candidate who had famously voted for the war before he voted against it. When that doublespeak failed, the Netroots seized control of the DNC for Dean in January 2005.By mid-2006, when the Democrats determined that Joe Lieberman—the party’s vice presidential nominee only six years earlier—was too hawkish for their party, the progressive takeover was complete. For the first time in decades, the notoriously fractious Democrats had cohered behind a progressive worldview: The world was suffering from misguided and oppressive American imperial overreach. Reduced military engagement would make America seem less belligerent, and consequently less likely to invite attack. Reduced commercial and cultural engagement would make America appear less domineering, and consequently less likely to invite animosity. Increased reliance on multinational organizations would improve American prospects for diplomatic success. And the reinvestment of savings from these retrenchments would build a superior social welfare system.Meanwhile, the overwhelming majority of Republicans moved in the opposite direction. In the conservative worldview, American exceptionalism is real, hard-won, and critical to global stability. The Pax Americana that had begun at the end of WWII and grown following the collapse of the Soviet Union was a noble and elevated experiment. The global order that spread political rights, personal dignity, improved health and nutrition, and material prosperity around the planet was a consequence of America’s leadership. The violent dysfunctionality of the Arab/Islamic world, and the emanations of that violence, posed significant threats to that order.Unsurprisingly, those taking these divergent worldviews also see Israel very differently. To a progressive, even one with no inherent animus toward Jews, Israel mirrors the worst of America—an oppressor state occupying the territory of an indigenous people, practicing apartheid policies, demonstrating contempt for the international community, and seeking to play by a unique set of rules. To a conservative, the situation is just as clear. Israel possesses all of the right cultural norms and values, stands allied against America’s enemies, and places itself on the front lines of a civilizational battle. Israel holds itself to exceptional standards of humanity and decency despite the constant threats to its existence and widespread opprobrium. Support for Israel is thus a logical and consistent part of the conservative worldview, while an outlier among progressives.The elections of 2006 through 2010 solidified the resorting of the parties by worldview, and furthered their divergent views of Israel. Hillary Clinton’s hawkish Senate record cost her the 2008 Democratic nomination. Foreign-policy realists boasting impeccable Republican pedigrees—from James Baker and Brent Scowcroft to Colin Powell and Chuck Hagel—suddenly found warmer receptions on the left than on the right. Tony Blair, leader of the maturing European left in the 1990s, discovered that Republicans were his most receptive American audience. In 2016, Sen. Bernie Sanders galvanized young Democrats behind positions overtly hostile to Israel. Sanders was also the only presidential candidate who skipped AIPAC’s 2016 Policy Conference; his submitted comments parroted much of the standard progressive anti-Israel rhetoric—and earned widespread praise from the left, including J Street.AIPAC’s strategic bipartisanship inevitably dismays both those who view Israel through the progressive lens and those who view it through the conservative lens. In the face of the post-9/11 transformation of the American foreign policy debate, AIPAC remains rigidly dedicated to blind bipartisanship, doing little to educate or inform its members that most of them are trapped in an increasingly progressive Democratic Party boasting an increasingly powerful anti-Israel caucus. Polls show a partisan split on the issue of Israel v. Palestinians of 83R-48D, with pro-Israel Democrats now representing a minority of their party. That 35 percent gap makes Israel one of the most extreme partisan issues in the current political climate, not remotely a matter of bipartisan consensus.***J Street studied its market well before launching. Its founders understood that AIPAC could not help but alienate the large numbers of Jewish Americans who consider themselves Progressives but harbor some affinity for Israel. The rival organization built upon AIPAC’s unyielding dogma that there is no difference between the parties to insist that the anti-Israel policies gaining salience among Democrats represent the true pro-Israel positions. By redefining Zionism as something close to its opposite, J Street gives American Jews a license to remain proudly progressive and frees Democrats to be increasingly adverse while still maintaining they are pro-Israel. To J Street’s supporters, Israel’s true interests at any given point in time are precisely those that the left says they are—thereby eliminating any potential dilemmas arising from a divergence of Israel’s interests from those of the Democratic Party’s progressive wing. Furthermore, by providing consistent visible Jewish support for President Obama’s foreign-policy agenda, J Street has already conferred value upon both its members and the Democratic politicians who need their support.The Obama policy agenda that enabled J Street’s rise caught AIPAC sleeping. For the first six-plus Obama years, nearly every policy or pronouncement touching upon Israel produced a predictable sequence: J Street emerged as an early, enthusiastic supporter, lauding the president’s boldness and urging him to move in an even more progressive direction. AIPAC noted both positives and negatives in the president’s moves, studied their implications from all angles, and eventually announced cautious, grudging support. As late as December 2013, amid widespread alarm triggered at the Obama Administration’s dealings with Iran, AIPAC called a special meeting of the Conference of Presidents to demand that Jewish groups stop criticizing the president. AIPAC Executive Director Howard Kohr declared at that meeting that AIPAC and Obama share the “same goals” and have only “a difference of strategy”—an assertion that AIPAC ought now regret.Finally, in year seven, Israel’s government took an unprecedented step to preempt AIPAC. In 2014, AIPAC had been willing to support the president’s call to end sanctions on Iran as a step toward easing negotiations. When it came to assessing the package that the Obama team negotiated in 2015, however, Israel’s prime minister delivered a bold and controversial speech to Congress that forced AIPAC’s hand. AIPAC had little choice but to agree publicly with the Israeli consensus that the deal represented an existential threat. For the first time in many years, AIPAC appeared to launch a full-throated campaign to defeat a Democratic administration priority—though it simultaneously offered counter-productive (if not overtly cynical) reassurances that it would exact no price from “friends” who supported the deal.In 2016, AIPAC continues to monopolize the field of activists eager to provide policy support for Israel, while J Street provides a useful outlet for those unwilling to abandon progressive policy priorities while maintaining or manipulating a pro-Israel self-image. Another clearly visible market niche, however, remains unfilled: activists adopting the conservative worldview unsatisfied with the compromises inherent in bipartisan policy formulationsThe arrival of a partisan pro-Israel group to AIPAC’s right will dethrone the Israel monopolist but not destroy it. AIPAC has invested decades in developing a powerful brand, exceptional connections, a demonstrated ability to work across the aisle, and unrivaled lists of donors and grassroots supporters. Furthermore, AIPAC’s flagship product—the foreign aid bill—is likely to become increasingly important as fallout from the Iran deal triggers a regional arms race. Whether broadly appropriate or not, to the degree that AIPAC can retain its bipartisan relationships, it can help ensure continued military aid to Israel regardless of the configuration of power in Washington.In addition, though few cast it in such terms, AIPAC plays two other critical roles: It serves as a Jewish pride organization and as a safe space for Truman Democrats. Its annual Policy Conference provides Jewish pro-Israel activists with a brief respite from pervasive anti-Semitism and anti-Zionism. And AIPAC’s membership may represent the largest remaining group of hawkish Democrats—voters who reject progressive foreign policy even as they support other parts of the progressive agenda. By providing a forum for such voters, AIPAC fills a niche critical to American national security—as well as to the State of Israel. Voters who place primacy on the ascendance of progressive cultural mores and/or economic distribution, while still favoring a strong national defense, deserve a forum in which they can speak comfortably. AIPAC appears to be the only prominent organization filling that need. Without such a forum, Democratic approaches to this traditionally bipartisan belief will range from cavalier to disdainful—much to the detriment of national security.The pro-Israel community should push AIPAC to reposition itself with a clear eye on contemporary reality. AIPAC can best serve the pro-Israel cause by redeploying its formidable assets to help pro-Israel, national-security-conscious Democrats defeat the anti-Israel progressives ascendant in their party—certainly the most effective way to ensure continued bipartisan support for Israel. New organizations promoting policy innovation and adaptive political strategies must also enter the pro-Israel market, however, to address challenges, push policies, and forge alliances on behalf of Israel that run counter to AIPAC’s strategic approach and the preferences of its members. AIPAC’s directors and customers—i.e., the Jewish community’s leading philanthropists and the grassroots activists who genuinely want to protect Israel and the U.S.-Israel relationship—should accept nothing less.***Like this article? Sign up for our Daily Digest to get Tablet Magazine’s new content in your inbox each morning.