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The Jerusalem Post10 Jan ’10
Individual initiative and freedom are essential for creativity—in hi-tech as in all other spheres.
fundamentals • public policy • limiting government • media
TELECOSM 2009: Investment Israel
Last November’s Forbes-Gilder Telecosm—a distinguished annual conclave on science and technology—was devoted entirely to Israel. Telecosm is a co-venture of George Gilder—whose global best-seller Wealth and Poverty ushered the era of Reaganomics and its unprecedented economic growth—and of Steve Forbes, the author, publisher and candidate for US presidency who taught millions the virtues of markets and entrepreneurship.
Telecosm’s showcase of Israeli hi-tech followed the publication of the most recent Gilder best-seller The Israel Test. Gilder, a guru of technology and entrepreneurship, claims that attitudes toward Israel are a test case of attitudes toward civilization. Attacks on Israel express “barbarism, envy and death, [a conflict] with civilization, creativity and life.”
Israel and the US are hated “primarily because of hostility toward capitalist creativity,” Gilder adds.
Since the Middle Ages, Jews have been the pioneers in the great capitalist expansion through international trade. They also led its more recent scientific revolution and its astounding technological applications, creating vast improvement in human life. Jews were also central in creating the weapons that crushed evil regimes. In Milton Friedman’s innovative contributions to economics they helped propel 50 years of unprecedented prosperity that spread even to the most laggard economies of China and India.
Anti-Semitism expresses envy and greed, Gilder believes. It is rooted in the Marxist assumption that profit derives from exploitation and that economic creativity is therefore basically sinful. Israel is hated because it is “a leader of human civilization, technological progress and scientific advance,” Gilder concludes. On opening a computer you first read “Intel Inside,” but it should actually read, he says, “Israel inside,” because most major inventions, even of Intel, were largely made here.
IN THESE somber days, it is heartening to get such compliments, especially backed by facts. But we might be dangerously complacent if, when celebrating the extraordinary achievements of Israeli hi-tech, we ignore the serious problems facing it, some general in origin, but many—as is the case with most Israeli economic problems—self-inflicted.
Excessive government intervention caused the recent economic crisis partly by giving free scope to irresponsibility and greed. It choked start-up development even before the 2008 crisis.
“The new [Sarbanes and Oxley] laws and regulations,” a December 2008 Wall Street Journal editorial concluded, “have neither prevented frauds nor instituted fairness. But they have managed to kill the creation of new public companies in the US, cripple the venture capital business and damage entrepreneurship.”
Costing vast sums to implement the burdens they imposed on small businesses and start-ups resulted—according to the National Venture Capital Association—in just six companies going public in 2008; this compared to 269 IPOs in 1999, 272 in 1996, and 365 in 1986. Nurturing start-ups became even more difficult after the financial markets crisis dried up credit and IPOs were restricted to companies with quadruple the annual income than before.
Besides this US-generated problem, Israel has many homemade problems. Though certain improvements were made in the worse aspects of its complex, rigid and costly incorporation and tax laws, Israel is still not a welcoming environment for “garage type,” individualistic start-ups, the kind that have proven most productive. Most capital for start-ups still comes from abroad. Israel’s oligolopolistic banks usually shun small enterprises, and hi-tech was no exception. Local companies tended to make their exits far too early, so that their immense potential has seldom been fully enjoyed by Israel.
IRONICALLY, THE worse danger facing Israeli hi-tech may be the bear hug of the government. Politicians and bureaucrats—chiefly President Shimon Peres, but also some in the Treasury—are so determined to nurture innovation that they may choke it to death. Back in the 1980s, Peres, a true man of vision (who has, alas, the inclination to implement it through massive government spending—a reason the Negev and the Galilee, two regions he repeatedly tried to develop by sinking billions in taxpayer money, remain economically and socially backward), tried to establish a government superfund to plan and rationalize hi-tech investment so as to minimize risk and duplication. Luckily the plan did not materialize.
The billions it would have raised did not end up in politically connected loss-making ventures, as happened so often in subsidized industries. Instead “neglected” hi-tech entrepreneurs struggled through the normal chaos of the market’s process of trial and error. Oblivious to bureaucratic dictates, markets rewarded, as usual, some risk-taking entrepreneurs while weeding out the less talented or fortunate. On the whole, their performance was stellar and will continue to be so if left alone. Yet the lesson apparently did not sink in, and we again hear talk about massive government support and “direction” for hi-tech development.
Israelis believe that the army, a government body, was the chief catalyzer of hi-tech development. While the army’s hi-tech units were an excellent magnet for talent, providing it with purposeful objectives and a can-do attitude, this does not prove that other methods of selection could not have been more efficient. Just note that most known Israeli innovations were not done in the army or in other institutional settings, even those affiliated with our research universities.
This should not surprise those who understand that individual initiative and freedom are essential for creativity, in hi-tech as in all other spheres.
The Jerusalem Post30 Jun ’15
Israel’s last elections proved how right David Ben-Gurion was when he said that, in Israel, whoever does not believe in miracles is not a realist.
PJ Media20 Jun ’15
The security challenges facing Israel obscure other deep concerns about the viability of Israel’s economic system.
The Jerusalem Post7 Jun ’14
Unless the laggard Israeli economy is reformed soon, its problems—including its morally debilitating corruption—may threaten its future.
Israel Hayom15 May ’14
What does it say about Israeli society and the system of government when a prime minister is convicted of taking bribes?
Israel Hayom23 Feb ’14
What kind of education should it offer and at what cost?
The Jerusalem Post9 Jan ’14
The productivity of Israeli workers is only two-thirds that of Americans, and their salaries are much lower.
The Jerusalem Post11 Jul ’13
As he completes an exceptionally difficult 8-year tour of duty during a worldwide financial crisis, Stanley Fischer has achieved a unique status.
The Weekly Standard7 Jun ’13
When Israel finally discovered a bonanza of natural gas about five years ago everyone was happy. But then fierce arguments broke out—and rightly so.
The Weekly Standard22 Apr ’13
The economic future of Israel now rests in the hands Netanyahu, Lapid and Bennet. Will they succeed in fulfilling the most difficult and complex mission of liberating Israel’s economy?
Israel Hayom2 Jan ’13
The Israeli government could eradicate poverty by breaking the monopolies and spurring competition.
The Jerusalem Post7 Dec ’12
Our socialist and statist heritage bred our inefficient system. But foreign aid and remittances were serious enablers. The struggle against political and economic concentration could finally permit Israelis to overcome this destructive heritage.
Israel Hayom8 Nov ’12
The time to prepare the reforms is now, so that after the Israeli elections, the prime minister can immediately devote his time to moving them forward.
The Financial Times21 Jun ’12
Israel Hayom6 Jun ’12
To grapple with the impending crisis, Israel’s government must improve the nation’s competitiveness.
The Jerusalem Post7 May ’12
The Wall Street Journal3 May ’12
Reform-minded Prime Minister Benjamin Netanyahu is stymied by bureaucrats and monopoly tycoons.
Middle East Quarterly30 Mar ’12
As the high hopes for a brave new Middle East fade rapidly, Western policymakers must recognize that promoting market economics and its inevitable cultural changes are far more critical to the region’s well-being than encouraging free elections or resolving the Arab-Israeli conflict.
The Jerusalem Post17 Feb ’12
The choice is between an efficient, growth-inducing market economy or a welfare state, meaning a huge government that actually harms the poor and inhibits prosperity.
The Jerusalem Post25 Oct ’11
Aversion toward the rich has had strong roots in Zionism since its early leaders embraced Marxist practices.
Is capitalism in crisis? Of course.
The Jerusalem Post10 Aug ’11
The tent-dwellers’ revolt calls for the enforcement of ‘the will of the people’ (like all autocrats). It refuses to rely on Democracy.
The Jerusalem Post9 Aug ’11
David Lewis, the exceptional entrepreneur and philanthropist, and head of the Isrotel Group dies at 87
The Jerusalem Post20 Jul ’11
Although MKs appear concerned over rising costs, it was they who allowed this injustice to occur in the first place.
The Jerusalem Post28 Jun ’11
Who is to blame for the shameful situation in which millions of Israeli workers – who earn about half what American workers earn – have to pay double for goods?
The New Republic19 May ’11
A Middle East peace strategy that could actually work.
The Jerusalem Post15 Mar ’11
Israel needs to slash its state budget by as much as possible if it wants a chance at fighting waste and corruption.
The Jerusalem Post9 Mar ’11
Too little attention has been paid to how Egypt’s socialist past and welfare-state present shaped the current rebellion.
The Jerusalem Post7 Feb ’11
The Herzliya Conference has become an important international event, but one central issue is absent: Israel’s debilitating economic concentration.
The Jerusalem Post22 Jan ’11
It’s highly unlikely that government can ever learn to make long-term plans and execute them efficiently.
The Jerusalem Post23 Dec ’10
How can one dare compare narrow-minded religion with the all-embracing faith of universality and equality that is socialism?
The Jerusalem Post1 Dec ’10
Many of the social and economic troubles we are experiencing are due to the public’s lack of understanding of the need for economic literacy.
The Jerusalem Post17 Oct ’10
The PM’s courageous decision to tackle economic concentration was misrepresented by several of our media publications—owned of course by tycoons.
The Wall Street Journal8 Oct ’10
Economic concentration hurts the country’s viability and the chances for peace.
The Jerusalem Post4 Oct ’10
A damaging ethos of ‘welfarism’ and distributive politics has come to dominate not only academia but our cultural, military and even our business elites.
The Jerusalem Post19 Aug ’10
The reformers must know the importance of the reform’s success both for Israel and for their careers, and what damage they will incur if it fails.
The Jerusalem Post13 Jul ’10
Kagan’s admiration for Justice Aharon Barak’s philosophy may have revealed her own predilection for radical judicial activism.
The Jerusalem Post30 May ’10
We must dismantle the oligarch-owned monopolies that impoverish the Israeli consumer and choke our economy.
The Wall Street Journal18 May ’10
The OECD’s invitation to Israel is a “seal of approval” but the country still needs more reforms.
The Jerusalem Post10 Feb ’10
The world’s astonishment at Israel’s response to the Haiti disaster is insulting. What we saw there was Israel’s true face.
The Jerusalem Post14 Oct ’09
As far as Rose Friedman was concerned, public kudos did not matter that much. She persisted in being a rose, no matter what.
The Jerusalem Post22 Sep ’09
Lasting peace must grow from the bottom up, from an “economic peace process” that proves what advantages peace has to offer on a daily basis. It cannot come from signing peace agreements with radical and corrupt entities propped up by corrupting Western handouts.
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