Israel today concentrates the genius of the Jews. Obscured by the prevalent media narrative of the “war- torn” Middle East, Israel’s rarely-celebrated feats of commercial, scientific, and technological creativity climax the Jews’ twentieth-century saga of triumph over tragedy. Today tiny Israel, with its population of 7.23 million, five and one-half million Jewish, is second only the United States in technological contributions. In per capita innovation, Israel dwarfs all nations. The forces of civilization in the world continue to feed upon the intellectual wealth epitomized by Israel.
Today in the Middle East, Israeli wealth looms palpably and portentously over the middens of Arab poverty. But dwarfing Israel’s own wealth is Israel’s contribution to the world economy, stemming from Israeli creativity and entrepreneurial innovation. Israel’s technical and scientific gifts to global progress loom with similar majesty over all others’ contributions with the sole exception of the United States.
Long before the founding of Israel in 1948, Jewish pioneers in Palestine had reclaimed the land from malarial marshes, gullied hillsides, and sand dunes, and enabled it — for the first time in a millennium — to sustain a population of millions of Jews and Arabs alike. Now, over the last two decades, Israel has unleashed a miracle of creative capitalism and technology and exported its contributions around the globe. During the 1990s and early 2000s Israel removed the manacles of its confiscatory taxes, oppressive regulations, government ownership, and socialist nostalgia and established itself as a driving force of global technological leadership.
Contemplating this Israeli achievement, the minds of parochial intellects around the globe, from Jerusalem to Los Angeles, are clouded with envy and suspicion. Everywhere, from the cagey diplomats of the United Nations to the cerebral leftists at the Harvard Faculty Club, critics of Israel assert that Israelis are somehow responsible for Palestinian Arab poverty. Violence against Israel is seen as blowback from previous crimes of the Israelis. With little or no extenuation for the difficulties of a targeted defense against guerrilla attacks, suicide bombers, rockets and missiles, the world condemns the Israelis’ efforts to preserve their country against those who would destroy it. Denying to Israel the moral fruits and affirmations that Jews have so richly earned by their paramount contributions to our civilization, the critics of Israel lash out at the foundations of civilization itself — at the golden rule of capitalism, that the good fortune of others is also one’s own.
In simplest terms, amid the festering indigence and seething violence of the Middle East, the state of Israel presents a test. Efflorescent in the desert, militarily powerful, industrially preeminent, culturally cornucopian, technologically paramount, it has become a vanguard of human achievement. Believing that this position was somehow maliciously captured, rather than heroically created, many in the West still manifest a dangerous misunderstanding of both economics and life.
Assuming that wealth is distributed from above, chiefly by government, rather than generated by invention and ingenuity, Israel’s critics see the world as a finite sum of resources. They regard economic life as a potentially violent struggle of each against all for one’s “fair share.” Believing that Israel, like the United States, has seized too much of the world’s resources, they advocate vast programs of international retribution and redistribution. They imagine that the plight of the Palestinians reflects not their own Marxist angst, anti-Semitic obsessions, and recidivist violence but the actions of Israel. In their view, Israel’s wealth stems not from Jewish creativity and genius but from cadging aid from the United States or seizing valuable land and other resources from Arabs.
In the blinkered vision of economists and politicians in international organizations and elite universities, this tiny bustling country, confined in a space smaller than New Jersey, is a continuation of the history of Western colonialism and imperialism. It is as if an embattled span of a few miracle miles in the desert echoes in some way a map of the world bathed in British pink or Soviet gray. In an elaborately mounted argument, full of pedantic references to Algeria and other colonial wars, Rafael Reuveny, a former Israeli army officer, now an Indiana University professor, declares that Israel is “The Last Colonialist.” From the fruited plains of America, he actually finds it possible to write of Israel’s “vast lands.”
The irony is that Israel is an imperial influence. Its hegemony stems not from its desperate efforts to contrive a defensible country amid compulsively predatory neighbors but from the global sway of its ideas and technologies.
To mistake the globally-enriching gifts of spirit and intellect for the brutal exercise of force is the central lie of Marxist economics. Although Marx sometimes affirmed the role of the bourgeoisie in creating wealth, he believed that the entrepreneurial contribution was transitory. The crude Marxian deceit was to declare that all value ultimately derives from labor and materials. Denying the necessary role of the creative mind as expressed in capital and technology, Marx ended up vindicating the zero-sum vision of anti-Semitic envy, in which bankers, capitalists, arbitrageurs, shopkeepers, entrepreneurs, and traders are deemed to be parasitical shysters and dispensable middlemen.
As one of the world’s most profitable economies built on one of the world’s most barren territories, Israel challenges all these materialist superstitions of zero-sum economics, based on the “distribution” of natural resources and the exploitation of land and labor.
This crippling error of zero-sum economics manifests itself around the globe. It is still the chief cause of poverty. It can destroy any national economy. Perhaps some readers share it. You may believe that capitalist achievement comes at the expense of others or of the environment. You may believe that “behind every great fortune is a great crime.” You advocate the redistribution of wealth. You think we all benefit when the government “spreads the wealth around.” You imagine that free international trade is a mixed blessing, with many victims. You want to give much of Israel’s wealth to its neighbors. You think that Israel’s neighbors — and the world — would benefit more from redistribution than from Israel’s continuing prosperity and freedom. You believe that Israel is somehow too large rather than too small. You believe, fantastically, that poverty is caused by enterprise and the ownership of private property — that poverty is, ineluctably, a grievous side effect of wealth.
Anti-Semites throughout history have been obsessed with the “gaps” everywhere discernible between different groups: gaps of income, power, achievement, and status. Against the background of Arab poverty, anti- capitalists and anti-Semites alike see Israel as primarily a creator not of wealth but of gaps. With a gross domestic product of around $217 billion (2010), per capita income of some $30,000, and close to a trillion dollars of market capitalization for its companies, Israel these days is rich, they say. But look at the gap between its luxuries and Palestinian privation. Look at the gap between Jews in Israel and Arabs in Israel — sure evidence of “discrimination” and “exploitation.” Jews similarly lead all other American groups in per capita income, signifying another gap, presumably rectifiable by the United Nations.
Shaping the cliches of the gapologists is a profound misunderstanding. What makes capitalism succeed is not chiefly its structure of incentives but its use of knowledge and experience. As a system of accumulated knowledge, capitalism assigns to the entrepreneurs who have already proven their prowess as investors — who have moved down the learning curve in the investment process — the right to shape the future pattern of investments. The lessons of one generation of successful investments inform the next generation. The lessons of failure are learned rather than submerged in subsidies and gilded with claims of higher virtue and purpose. Information is accumulated rather than lost. Under capitalism, knowledge grows apace with wealth.
Disguising this edifying process in the United States are the handi-capitalists in nominally “private” institutions — from Wall Street money-shufflers and government-guaranteed mortgage hustlers to corn-state ethanol farmers and Silicon Valley solar shills — that are dependent on public handouts and mandates for their success. As explained in definitive works by the economist Daniel Doron in Israel and by the writer Jonah Goldberg in the United States, a perpetual temptation of democratic politics in Israel, the U.S., and around the globe is the use of government to reward political supporters, creating government-corporate alliances that are fascist rather than capitalist in character. In successful economies these alliances remain marginal, rather than central as they are in explicitly socialist regimes.
If governments were superior investors, the Soviet bloc would have been an economic triumph rather than an economic and environmental catastrophe. China would have thrived under Mao rather than under the current regime that claims, “To get rich is glorious.” Whether in the United States or in Israel, at Harvard or at the United Nations, an obsessive concern with gaps between rich and poor is the signature of a deep and persistent Marxism that is intrinsically hostile to the wealth-producing work of Jews in the world. At the heart of the UN’s case against Israel is the UN’s focus on gaps.
Misunderstanding the nature of capitalism, the critics turn to challenge Israeli democracy. They charge that Israel’s Jewish identity creates serious problems for its democratic values. Like former president Jimmy Carter in his book
