George Gilder's new book, The Israel Test, is getting the full promotional treatment from the center-right think tanks in New York and Washington: a Manhattan Institute event at the Harvard Club this week, a panel discussion next week at the American Enterprise Institute.
And why not? Mr. Gilder emerges in the book as an ardent defender of both Israel and capitalism, and, because he is not a Jew, the arguments avoid coming off as self-serving.
To hear Mr. Gilder tell it, Israel's fate is central to that of capitalism as a whole. "Just as free economies are necessary for the survival of the human population of the planet, the survival of the Jews is vital to the triumph of free economies. …The predicament of Israel is ultimately the predicament of world capitalism," he writes.
Israel needs all the defenders it can get, so one hesitates to quibble. Mr. Gilder's account of the technology boom in Israel is fresh, fascinating, well reported, and full of both scientific and personal detail.
But for all its formidable strengths, this account also has some serious flaws. Mr. Gilder attempts to give the credit for the Israel technology boom to "market-savvy" Israeli prime minister Benjamin Netanyahu, who was in office from 1996 to 1999 and served a later stint as finance minister from 2002 to 2003, and to Mr. Netanyahu's "supply-side program of tax-rate reductions, exemptions from double-taxation for foreign investors, trade liberalization."
Yet time and again, Israeli technology leadership, even by Mr. Gilder's own account, seems to originate not with private market initiatives but with government programs. In 1979, "The Israeli Defense Forces decided to put the smartest thirty-five or fifty candidates into engineering and math programs engaged in crucial military research." In the 1980s, Intel opened a semiconductor factory in Israel with $60 million in support from the Israeli government." In 1993, the Israeli government set up a matching fund of $100 million for venture capital. Mr. Gilder also mentions the Weizmann Institute and other Israeli research universities. All of these factors predated Mr. Netanyahu's supply-side program. He also credits the arrival of scientists and engineers from the Soviet Union, which was not exactly a bastion of supply-side economics.
Other times Mr. Gilder just seems to have his facts wrong. He claims, for example, that "Although the Rothschilds were Europe's paramount banking family and in the late nineteenth century were prime supporters of Zionism, their only legacy in Israel is the founding of the modern Israeli wine industry." Actually, the Rothschild Foundation funded the construction of Israel's government headquarters building, the Knesset, and its Supreme Court. The Rothschilds also funded the establishment of Hebrew University and supported the towns of Zikhron Ya'acov, Rishon le-Zion, and Binyamina, which is named after Baron Edmond Rothschild, whose Hebrew name was Avraham Binyamin.
At times he slights Jewish accomplishment. "Before the twentieth-century's efflorescence of technological capitalism, the global influence of Jews was chiefly restricted to the Christian religion," he writes, again failing to give the Rothschilds their due, not to mention the other great Jewish banking and retailing family empires, or, for that matter, Maimonides.
Other times, he overstates it, as when he calls American Jews "the richest people on earth." The source he cites for that claim is a 1983 book by Thomas Sowell that compares the income of American Jews derived from a Jewish population survey to income of other American minority groups derived from the U.S. census. The page doesn't refer to "earth," just to America, and it doesn't refer to wealth, but to income. Besides being drawn from two different sources and being more than 25 years old, even if one accepts as valid the claim that American Jews make 172% of the average family income in America, there are other people, like the residents of Luxembourg or Qatar, who by at least some counts are richer. The most recent national survey, conducted in 2000 and 2001, put the median household income of Jews at about $50,000 a year, which is above the overall American average, but not exactly what is evoked by the phrase "the richest people on earth."
As a Jew and a human being and as a capitalist, though, the aspect of the book I found most troubling was the way that Mr. Gilder seems to view the Jews as valuable as means to the end of preserving free-market capitalism. There's an element of instrumentalism about it all. It's almost as if, if the Jews weren't so good at starting high-technology companies that go public on NASDAQ, Mr. Gilder wouldn't mind as much if the Iranians nuked the whole country.
If that sounds like an exaggeration, here is Mr. Gilder writing in this book about the murder of 6 million Jews: "Jews are crucial to the future of the race. The Holocaust was not simply an unspeakable catastrophe for the Jews. It was incomparably more destructive than other modern genocidal acts not because of the diabolical evil of the Nazis but because of the unique virtues and genius of its victims. It was an irretrievable loss and catastrophe for all humanity, depleting the entire species of intellectual resources that will be critical to survival on an ever-threatened planet. Ironically, the rest of the world suffers far more than Jews from this loss of wealth-creating entrepreneurs and inventors."
It strikes me that the deaths of elderly grandmothers, Talmud scholars, and Jews of below-average intelligence in the Holocaust were every bit as much as a catastrophe as were the deaths of "wealth-creating entrepreneurs and inventors." The Jewish siblings and children and parents of Holocaust victims may well disagree with Mr. Gilder's judgment that the rest of the world suffers "far more" than they do. That moral and ethical recognition of the value of family and of all human life is a Jewish contribution to the world as significant as any of the profits and products of the Israeli high-technology start-ups in which Mr. Gilder is an investor, and in the end one wishes that this author, for all his well-meaning and obvious intelligence, were more highly attuned to it.
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