the automobile from scratch. I had marveled at Gavriel Iddan’s company Given Imaging, with its digestible camera in a capsule for endoscopies and colonoscopies, but had been disappointed with its limitations when I myself needed a colonoscopy.
What I learned in Jerusalem, however, was that Israel was not only a site for research, outsourcing and the occasional conceptual coup, but also the emerging world leader, outside the United States, in launching new companies and technologies. This tiny embattled country, smaller than most American states, is outperforming European and Asian Goliaths ten to 100 times larger. In a watershed moment for the country, in 2007 Israel surpassed Canada as the home of the most foreign companies on the technology-heavy NASDAQ index; it is now launching far more high-tech companies per year than any country in Europe.
To take but one example among many, Israel is a prime source not only of free-space optics but also of another form of hidden light: ultra-wideband. This technology features wireless transmissions that are not, like cell-phone signals, millions of hertz wide at relatively high power, but billions of hertz wide — gigahertz — at power too low to be detected by ordinary antennas. The technology is typically used for mundane purposes, such as connecting personal computers and televisions wirelessly. Israeli companies Amimon and Wisair pioneered this feat. But a firm called Camero, in Netanya, Israel, has invented an ingenious ultra-wideband device that enables counterterrorist fighters and police to see through walls and identify armed men and other threats within. An easily portable box about the size and weight of a laptop computer, Camero’s Xaver 800 could suffuse an urban battlefield with hidden light that would penetrate walls and bunkers and be detectable only by its users. Such inventions are changing the balance of power in urban guerrilla warfare, to the advantage of the civilized and the dismay of the barbarians.
As I investigated companies such as Camero, it became clear to me that Israel had achieved a broader miracle of hidden light illuminating the American and world economies. As late as the mid-1980s, Israel was a basket case, with inflation rates spiking from 400 percent to nearly 1,000 percent by early 1985. As recently as 1990, Israel was a relatively insignificant technology force, aside from a few military initiatives and its perennially inventive agriculture. Yet in little more than a decade, the country had become an engine of global technology progress. Still more important, Israel’s technology leadership has made it our most vital ally against a global movement of jihadist terror. How did it make such an astonishing leap?
With the history of twentieth-century science largely a saga of Jewish accomplishment, technological leadership might have seemed foreordained after World War II for the rising Jewish nation. Yet for all the incandescence of deserts in bloom, the miracle did not occur quickly, and Jews outside Israel far outperformed Jews within Israel.
In the country’s early years, its research activities were predominantly public, devoted to defense, and paltry by any standard. As late as 1965, the ratio of research-and-development spending in Israel to its gross domestic product was under 1 percent, nearly the lowest in the entire Organisation for Economic Co-operation and Development, behind only Italy. Just one-tenth of 1 percent of Israel’s employees were engineers, placing it far behind the United States and even Sweden. Michael Porter’s definitive 1990 tome
All this came despite the presence of the Technion University, one of the world’s supreme institutions of practical science and the chief contribution of Israel’s founders to its eventual preeminence in technology. Located atop a hill overlooking Haifa, the institute sprawls over its spectacular site with a massive maze of concrete institutional architecture as formidable as MIT’s: labs, auditoriums, nuclear facilities, giant telescopes, and research monoliths, mostly named for American Jewish philanthropists. But nearly 80 years passed after the Technion’s opening in 1924, with Jews around the world forging the science of the age in an intellectual efflorescence unparalleled in human history, without any exceptional contributions coming from Israel.
For much of Israel’s short history, the country has been in the grips of reactionary forces, upholding a philosophy of socialist redistribution that could only impede its progress. In 1957, a team of American economic consultants found that Israel’s “high labor costs… reflected the high degree of job security… [and] the absence of adequate incentive to or rewards for superior efficiency or performance.” This was partly a result, they added, of “virtually complete protection from foreign competition.” Two years later, A. J. Meyer of the Harvard Center for Middle Eastern Studies noted “uncertainty in the minds of many [Israeli] industrial producers that theirs is the ‘good’ occupation or that society really gives them credit — financially and in status — for their efforts.” He also cited “welfare state concepts [that] often dictate that incompetent workers stay on payrolls.”
Many of Israel’s Jews, as the writer Midge Decter described them, “were coming into the country armed with their socialism and their ideologies of labor and a Jewish return to the soil.” Imagine it: urban socialists trying to reclaim their past glory and save themselves in a hostile world by returning to the soil in a desert! They created communal experiments —
They assigned close to a third of the economy to the ownership of Histadrut, a socialist workers’ organization prone to threatening nationwide strikes. Under Histadrut pressure, they instituted minimum wages that stifled employment and propelled inflation. Then they imposed more controls on wages, prices, and rents, making everything costly and scarce.
In a general enthusiasm for public ownership of the means of production and finance, the government through the 1990s owned four major banks, 200 corporations, and much of the land. Israel’s taxes rose to a confiscatory 56 percent of total earnings, close to the highest in the world, stifling even those private initiatives that managed to pass through the country’s sieves of socialism. Often explained as needed for defense against millions of bellicose Arabs, such tax rates had the contrary effect of eroding the economic base that sustains defense spending. Erecting barriers of bureaucracy, sentiment, and culture, Israeli leaders balked the entrepreneurs and inventors who gathered there, creating a country in its way nearly as inhospitable to Jewish geniuses as the European anti-Semitic regimes they had fled.
Far more welcoming of Jewish and Israeli talent in those days were American companies, particularly Intel. It was an Israeli engineer, Dov Frohman, who in 1971 invented electrically programmable read-only memory (EPROM), a chip-based permanent memory that could retain a personal computer’s core programming for “boot-up” even when the power was off. Necessary for distributed personal computers, EPROM would contribute some 80 percent of Intel’s profits over the next decade and sustain the company’s growth to become the world’s leading semiconductor company.
With the help of a company called Xicor, started by Israeli Raffi Klein, EPROM evolved into the flash memories that now dominate the industry. Today, under a series of Israeli companies from Sandisk and M-Systems (now part of Sandisk) to Sai-fun and Anobit, flash memories are a mainstay of the Israeli microchip industry. These devices lie behind many American miracles of miniaturization, from tiny and now ubiquitous “thumb drives” to Apple’s iPods and pads to Hewlett-Packard’s netbooks.
After leaving Intel in 1974 for a philanthropic sojourn teaching electrical engineering in Ghana, Frohman returned to Israel to establish an Intel design center in Haifa. This laboratory soon conceived the 8088 microprocessor, which was incorporated into the first IBM personal computer. In 1979, also in Haifa, Frohman supervised the development of Intel’s first mathematical floating-point coprocessor, which transformed the personal computer into a business-ready machine suitable for IBM’s favored market. As a guest in the country, albeit an imposing one, Intel could tap the genius of Jews while bypassing the rules, tolls, and taxes that frustrated many Israeli companies.
Following the success of the Haifa design center, Frohman wanted Intel Israel to establish a semiconductor “fab,” or fabrication center, in Jerusalem, together with the necessary chemical and engineering support services. At first he battled Intel executive Andrew Grove — himself a Hungarian Jew who became a legendary figure in Silicon Valley — over the costs of training Israelis to run the fab. But in the end Frohman managed to enlist $60 million in subsidies from the Israeli government and led the project to completion in three and a half years.
By the late 1980s, the Jerusalem fab, Intel’s first outside the United States, was producing some 75 percent of the global output of Intel’s flagship 3 8 6 microprocessor and was gearing up to produce the successor 486 as well. Frohman later persuaded Grove to open production plants in Kiryat Gat in the Negev, Israel’s desert. Meanwhile, from Intel’s Israeli design centers — by now, there were several — emerged several generations of the
