Israeli innovation

George Gilder chronicles Israel’s journey from a socialist economy to a center of technological innovation from the mid-1980s until today.  I think that it sometimes indulges in triumphalism, but it was great to learn about a development that I didn’t know anything about.  Gilder also connects this to the Israeli-Palestinian peace process, arguing the economic development is part of Netanyahu’s plan for a more stable Middle East:

During a trip to Israel in 2008, Fruchter, Amir Eyal, and Guy Koren of EZchip took me out to dinner in Caesarea. The restaurant was on the Mediterranean beach. Above the beach stood the ruins of Roman temples and terraces, theaters and arches, all surfaced with golden sandstone and carefully refurbished and illuminated. Shops and restaurants were decorously arrayed along the beach. The rush of water on the sand, the scent of fish in the air, the glow of sunset, and the lights on the Roman stone all lent the area a magical feeling of peace and prosperity.

I thought of Gaza, under 100 miles to the south, with similar beaches and balmy weather, and similar possibilities of human advance. Could the Gazans join the Israelis to create a Riviera on their exquisite beaches, their glowing sands? To do so, they would have to leave behind a world of zero-sum chimeras and fantasies of jihadist revenge. And they would discover that their greatest ally is a man long portrayed as their most feared enemy, a man who, having led for decades the fight to liberate Israeli Jews from self-destructive socialist resentment, now offers to bring all of Palestine and perhaps all of Arabia on the same journey.

Netanyahu’s vision is an Israel that, as a global financial center, could transform the economics of the Middle East. Israel could become a Hong Kong of the desert. Just as Hong Kong ultimately reshaped the Chinese economy in its own image when Deng Xiaoping mimicked its free economy, Israel could become a force for economic liberation in the Middle East, reaching out to Palestinians and other Arabs with the blandishments of commercial opportunity. After all, it has long been Israeli enterprise that has attracted Arabs to Palestine. Between 1967, when Israel took over the West Bank and Gaza Strip, and 1987, when the first intifada erupted, those two territories were one of the fastest-growing economies on earth. GDP surged 30 percent a year for a decade, the Arab population nearly tripled, six new universities were launched, and Arab longevity jumped from 43 years to 74.

Netanyahu has long believed that the peace process as we know it is irrelevant, focused on a handful of issues that breed anger and perpetuate conflict. Meanwhile, true peace—and the promise of a decent life—lies waiting to be picked up by those Palestinians and Israelis who are willing, and now increasingly able, to invest in creation over destruction.

Like almost anything I read about the Middle East (and many other topics), Gilder’s assertion reminds me how much I need to learn and the questions that I still have.  I need to learn more about the Palestinian economy and the conditions of Israeli occupation.  One question that arises is this: It would seem that economic development was not enough to satisfy the Palestinians in the 1980s, so why would that be enough now?

It’s worth mentioning that Palestinian nationalism did not start as an Islamist movement, but as a secular nationalist movement.  There still seems to be a desire for self-determination (probably existing alongside “a world of zero-sum chimeras and fantasies of jihadist revenge” that Gilder talks about) by the Palestinians that may make the promise of economic development beside the point.  From what I’ve seen, Netanyahu does not seem to be interested in a truly sovereign Palestinian state.

Gilder’s crucial point about the peace process is good, though: “Meanwhile, true peace—and the promise of a decent life—lies waiting to be picked up by those Palestinians and Israelis who are willing, and now increasingly able, to invest in creation over destruction.”

Hat tip: Michael Totten


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