Silicon Israel

George Gilder

How market capitalism saved the Jewish state

Summer 2009

The most precious resource in the world economy is human genius, which we may define as the ability to devise significant inventions that enhance survival and prosperity. During the twentieth century, an astounding proportion of geniuses have been Jewish, and the fate of nations has largely reflected how they have treated their Jews. When Jews lived in Vienna and Budapest at the turn of the 20th century these cities of the Habsburg Empire were world centers of intellectual activity and economic growth;  when the Jews fled or were killed, growth and culture disappeared with them. When Jews came to New York and Los Angeles, those cities towered over the global economy and culture. When Jews escaped Europe for Los Alamos and, more recently, for Silicon Valley, the world's economy and military balance shifted decisively.

Thus many nations face a crucial moral test: Will they admire, reward, and emulate a minority that has achieved towering accomplishments? Or will they writhe in resentment and plot its destruction? The test has assumed a global face today, when a large proportion of the world's genius resides in Israel. Israel has become a center of innovation, second in absolute achievement only to the United States, and on a per-capita basis dwarfing the contributions of all other nations, America included.

How Israel is treated by the rest of the world thus represents a crucial test for civilization. Will we pass it?

Beyond the primarily economic and civilization aspects, Netanyahu has a vision that Israel, 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, 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 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.

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