The Israel Test
By George Gilder
(Richard Vigilante Books, 296 pages, $27.95)
This latest book from one of the planet’s intellectual titans of
the past generation is one of his most important. Given George
Gilder’s astonishing range and foresight — including family
structure, welfare, the practical and moral case for enterprise
capitalist wealth creation, the transformation of the computer and
telecommunications industries — this is saying a lot.
What Gilder sets out to do in his poetic prose is show how
Israel’s accelerating migration over the past twenty years from a
socialist to a capitalist economy has transformed the Jewish state
from an economic basket case to a powerhouse player in the world
economy. Gilder then applies the implications of this metamorphosis
to the prospects for finding a way to settle the Arab-Israeli
conflict.
Israel has become such a huge driving force in computing and
telecommunications that Gilder intellectually riffs off the “Intel
Inside” logo that sits on the exterior case of countless millions
of personal computers, and says that today’s Internet and computers
should be labeled “Israel Inside.” Now Israel is making major moves
in biotechnology, including drugs for plants used in agriculture.
Symbolic of the more agile Israeli economy, one CEO noted: “The
process is faster for drugs because the plants don’t have
lawyers.”
Calling Israel the central front in the war dividing two global
camps, Gilder begins his book by framing the divide:
The prime issue is not a global war of civilizations between the
West and Islam or a split between Arabs and Jews….The real issue is
between the rule of law and the rule of leveler egalitarianism,
between creative excellence and covetous “fairness,” between
admiration of achievement versus envy and resentment of it….
The test can be summarized by a few questions: What is your
attitude toward people who excel you in the creation of wealth or
in other accomplishment? Do you aspire to that excellence, or do
you seethe at it? Do you admire and celebrate exceptional
achievement, or do you impugn it and seek to tear it down?
The Palestinians, needless to say, epitomize the wrong side of
these juxtapositions, while Israel and America generally are on the
right side. But now America must look toward Israel, whose Prime
Minister exemplifies the right side of these divides, whereas the
newly elected American President is on the wrong side — despite
his having been richly rewarded by the society he now wishes to
turn away from its historical celebration of private capitalist
enterprise.
Gilder notes the politically incorrect fact that Jews
contributed to scientific progress (and artistic achievement) in
vast disproportion to their minuscule number. As for Arab militancy
its roots, he explains, lie in the noxious totalitarian ideologies
of Marxist socialism and Nazism. Ironically, Marx’s socialism also
animated the early generations of Israelis. Thus Israel was for its
first four decades an economic mess.
Gilder spotlights the legendary mathematician John von Neumann
as first among the genius Jews who transformed mathematics,
physics, game theory, information theory and many other
disciplines; von Neumann was the intellectual godfather of the
modern computer as it evolved over six decades. Nazi persecution
drove von Neumann and a legion of great Jewish scientists out of
the lands of Eastern Europe and from Germany. Gilder captures the
result perfectly: the great mathematician David Hilbert, a von
Neumannn mentor at Göttingen University in Germany, was asked in
1934 by Hitler’s education minister, “How is mathematics in
Göttingen, now that it has been freed of the Jewish influence?”
Replied Hilbert: “Mathematics at Göttingen? There really is none
anymore.” Von Neumann, Einstein and many other Jews combined with
Jews like J. Robert Oppenheimer in the West to win the race for the
atomic bomb, and thus end World War II; many then were central to
the West winning the Cold War. After the Berlin Wall fell, a huge
wave of Russian Jewry took immense scientific talent and
entrepreneurial energy out of Russia and into Israel, laying the
foundation of Israel’s rise to world economic ascendancy.
The prime Israeli architect of economic prosperity was Benjamin
Netanyahu, who learned his economics during his education in the
States and was an early supply-side tax cutter. His shining moment
came in Ariel Sharon’s term as prime minister. Israel’s economy was
still 60 percent government controlled. The Palestinian suicide
bombing campaign of 2000-2002 scared off foreign investors and
caused an added risk premium to be priced into Israeli bonds.
Needing a guarantor, Sharon’s Finance Minister, Netanyahu
approached the Bush administration. President Bush and his Treasury
Secretary, John Snow, agreed to have the Treasury guarantee
Israel’s bonds, which would reduce the risk premium and make
affordable financing possible for Israel, on one condition, to
which Netanyahu eagerly assented: implement broad financial and
economic deregulation. The upshot was that within a few years the
government share of Israel’s economy plummeted by two-thirds to 20
percent, and Israeli economic growth went into racing gear.
Gilder details how from 1967 to 1992, when Israel governed the
West Bank and Gaza, Palestinians prospered as never before. In the
20 years from the 1967 War to the launching of the first
Palestinian “Intifada” (Arabic for “shaking off”), 250,000 settlers
on the West Bank and Gaza built the area’s first real modern
infrastructure, and thus attracted ten Arabs for every Jew living
there. The territories saw annual economic growth running 25
percent, far higher than socialist stagnated Israel. Arab incomes
tripled, seven universities and 2,500 factories were built, and
life expectancy jumped from 40 to 70. In an area widely viewed as
an economic backwater under Israeli rule, 92.8 percent of the Arab
population had electricity in 1986, compared to 20.5 percent in
1967. Then came the UN, the “international community” and Israel’s
“peace now” leaders, who gave the Mideast the Oslo Accords and
placed Yasser Arafat, lifelong terrorist and mass murderer, on the
throne of Arab Palestine.
The upshot: terrorism, Nazified brainwashing of children to hate
Jews, massive corruption and economic immiseration. Inundated by
foreign aid that fell into Arafat’s palm Palestinians, Gilder
writes, “became arguably the world’s most twisted welfare culture
of violence and demoralization….with leadership based entirely upon
terrorism and hatred and international grievance-mongering.”
Thus the path to peace is not the hidebound “peace process” in
which Israel makes irrevocable territorial concessions in return
for revocable Palestinian peace promises. It lies, rather, in Arabs
being freed from terrorist leaders and anti-Semitic fantasy,
instead embracing cooperation with and thus acceptance of Israel.
Modern game theory explains the divide. A short-run game rewards
predatory players, while productive players must use cooperation to
gain vastly more over time.
History suggests strongly that Gilder is right. The two most
successful Mideast peace accords were based upon Arabs moving
first: accepting Israel’s right to exist, then making peace. Israel
is, in truth, the easiest country in the world to make peace with.
All it needs is a partner for peace. But when Israel has gone first
the result has been disaster:
After the 1993 Oslo Accords, Israel traded land for lies —
broken Palestinian promises. After Israel vacated southern Lebanon
unilaterally, it got the al-Aqsa Intifada and suicide bomber
attacks. After Israel uprooted settlers in Gaza and unilaterally
vacated, the Palestinians destroyed the assets Israel let behind,
and then let loose with thousands of rockets, leading to the
2008-2009 Gaza War. Thus over the past 16 years of “peace process”
Israel’s “peace now” faction has serially traded land for lies,
land for suicide bombers and land for rockets. If they trade land
yet again, whatever they get will not be peace.
Yet the international community — the UN and most nations —
persists in the fiction that Israel’s “occupation” of the West Bank
is the reason for Palestinian terror, although terror antedates
Israel’s 1967 victory. The “L” in “PLO” stands for “liberation” of
Israel from Jewish control. Gilder also notes in a bitter irony
that alone among peoples on the planet Arabs are given a presumed
right to a territory free of Jews — the judenrein (“Jew-free”)
dream of Hitler. (Conveniently forgotten is that Jordan’s 1950
annexation of the West Bank was legally recognized only by two
nations: Britain, and Britain’s creation, Pakistan.)
After each wave of Arab aggression the international community
libels Israel as the aggressor or as a war criminal for using
excessive — “disproportionate” — force. Aid flows invariably to
the Palestinians, nearly all of it diverted from avowedly
humanitarian purposes to financing the next round of terrorism. In
national security as in economics, if you tax (penalize) something
you get less of it, while if you subsidize (reward) it you get
more. In this case, terror is rewarded, and grows.
Perhaps most important in Gilder’s masterwork is that he shows
why Israel is essential to American prosperity as well, with its
technological prowess. Israel could be the economic engine for the
entire Mideast. This is the new Israel, no longer a financial ward
of America. It is this Israel that most Americans know not of.
“Israel Inside” would be a great slogan for an ad campaign
educating Americans about the new Israel, and its supreme value to
America and the West. In lieu of an ad blitz, Gilder’s book does
the job beautifully.
