George Gilder on Silicon Israel

In the Summer 2009 City Journal there is a must read article about Israeli Jews and investment in technological innovation.

“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. At any one time, genius is embodied in just a few score thousand people, a creative minority that accounts for most human accomplishment and wealth. Cities and nations rise and thrive when they welcome entrepreneurial and technical genius; when they overtax, criminalize, or ostracize it, they wither.

During the twentieth century, an astounding proportion of geniuses have been Jewish, and the fate of nations from Russia westward has largely reflected how they have treated their Jews. When Jews lived in Vienna and Budapest early in the century, these cities of the Hapsburg Empire were world centers of intellectual activity and economic growth; then the Nazis came to power, the Jews fled or were killed, and 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 have faced 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?”

It would seem like a no-brainer that Israel should have gone to the top with all those talented, creative Jews, but no, in the early years of that tiny nation they repeated all the mistakes of 20th century European socialism--high taxation to redistribute wealth, a welfare state mentality, communal experiments in which both the family and private property were put at risk, public ownership of major companies, and huge bureaucratic barriers. Yes, it was, in my opinion on a smaller scale, our own Rahm Emanuel and David Axelrod experiment with Barack Obama fronting the show. But all that has changed now, says Gilder. In the last 25 years there was an flood of Soviet Jews, disdainful of socialism, who had honed their minds in math and science, and an influx of Americans bringing Silicon Valley know-how with them.

“Mix the leadership of these dynamic capitalists with a million restive and insurgent Soviets, and the reaction was economically incandescent. . . Today, immigrants from the former Soviet Union constitute fully half of Israel’s high-tech workers.” [And having been there in March I think the rest are in the diamond retail industry.]

This is a critically important article on capitalism and the economy for you to read. Don’t miss it.