The Israel Test

The Israel Test
By George Gilder

What is your attitude toward people who excel you in the creation of wealth or in other accomplishment? Do you aspire to their excellence, or do you seethe at it? Do you admire and celebrate exceptional achievement, or do you impugn it and seek to tear it down? This in a nut shell is the Israel Test. In summary, some people admire success; some people envy it. The enviers hate Israel. I found while reading the book that those who fail the Israel test do so not with just Jews or Israelis but with all those who excel beyond their capabilities. It is rather the many people who collectively despise the minds of the few that this book is about. For it is the critical thinking mind that produces the fertile ground to advance mankind and the multitudes that envy the wealth they so justifiably earned.

But it is really more than that and this book peels back the layers of the onion and provides a cross-sectional view effect and cause. Specifically he describes accomplishments of Jews and then concludes with their causes. In the process he takes a critical view on leftward leaning thinkers like Barak Obama as they are never a cause for success in the form of a nurturing perspective, however they may be the cause from a survival or self defense perspective. In the mind of Gilder, Barak Obama and Mahmoud Ahmadinejad albeit one Sunni and the other Shea, find themselves of like minds. Notice both men advance their agendas, by attacking their opponent to distract from the flaws of their own agenda. With this thought in mind you can imagine the “pearl in store” for Israel and America and really appreciate what it is that is at stake should they lose their momentum.

The book does an amazing bit of enlightenment to readers not familiar with accomplishments of Jews in America, Jews in Israel, and then Jews of the world. Ironically, while the book is about Jewish contributions to the world and therefore their necessity in the world, it is just as much about the foundation of capitalism within a democracy that allows for a people to move mankind forward. There is always a nagging question on the readers mind, surely excellence cannot be the sole domain of Jews can it? Without a capitalistic economy on a free democracy, the world would be stuck in a time warp of pre-industrial revolution era. Where Islam had been until oil brought a new dynamic on world order. Gilder takes a high horse posture in his presentation of Jewish accomplishment to set the reader up for the test, to answer the opening questions of this review.

On capitalism Gilder writes, “What makes capitalism succeed is not chiefly it's structure of incentives but it's use of knowledge and experience... Under capitalism knowledge grows apace with wealth. Democracy without capitalism has no content, since no power centers outside the state can form and sustain themselves. Without capitalism and free trade, self determination is a pretext for constant civil war, as each shard of nationality is sharpened into a sword implanted in it's own holy specified agenda, presumably defended by the United States or the United Nations. The critical test for democracy is it's ability to free human energies and intellect on the frontiers of human accomplishment.” To test to see if there is something evidently in the human mind, even when carefully honed at Oxford or at Sorbonne, that hesitates to believe in capitalism?

The actual trial on Israel , a Test on mankind as Gilder calls it, of which is taking ample space above the fold on the front pages of world newspapers does not completely hold Israeli’s without flaw. But he demonstrates that not only could Jewish people make adjustments to their own mistakes they were able to for the first time in the history of Palestinian people provide for an improvement in their standard of living. Gilder provides statistics of the land prior to the State of Israel and then specifically illustrates that in the time post the 1967 Six Day War and prior to the 1987 intifada, Palestinians saw significant, 40% year over year, gains in their living standard as they worked side by side with Jews. The trial is not about a fight over a small piece of land, but rather the Muslim’s refusal to work for and acknowledge a Jew for his accomplishments. In this the Muslims fail the Test. At a higher level “The Test “is about all mans’ willingness to work for and in the graciousness of those few people that make the standard of life for all better.

Gilder at times may appear to come across as an “in your face Jew”. However he is everything but and you learn that what is in your face is likely your own denial that the facts. So what is in your face is not Gilder but your own subconscious as Guilder enlightens you with ample cause and effect to demonstrate the world’s dependence on our passing the Israel Test. Where Israel is at the apex of a test for man kind is the culmination of Jewish success second only to the United States against a world of Islamic hatred for them. In this gauntlet under the umbrella of the United States as US citizens Jewish entrepreneurial prowess was given birth in a new and modern world. They then made their pilgrimage to Israel and continued under the protection of Western powers to found a democracy underwritten by capitalism and perpetuated entrepreneurial contributions enhance the living conditions of mankind.

They did this on a small piece of unproductive land that laid fallow under Islamic rule for 1,500 years. Could this test be applied else where? Will time allow India to demonstrate the same prowess? Absolutely and the reason for this is India like many western powers that have found success, are based in the freedoms within democratic law that allow the engines of capitalism to produce the advancement required to meet the needs of a modern world. I bring India in to the equation so that you can read the book and when challenged by the word Jew simply substitute Indian. This is not to slight either peoples, but rather to help you over come the “Jew in your face” reaction and afford a little objectivity as the facts settle in. When you read Gilders final chapter on his own Israel Test, you will appreciate that it is not an insult to awaken to a need for recognition and acceptance of the hand that feeds you, whether it be America, Israeli, Chinese, Japanese, or Indian. Gilder’s Israel Test is just that wake up call.
 
My notes:
Page 26 after the Arabs refused all offers of land for peace in the wake of the 1967 war, the Isralies inherited it by default. Under Israeli management, economic growth in the West Bank and Gaza surged for some twenty years? And the number of Arabs grew for roughly one million to almost three million in some 261 new towns while the number of Jews in territories rose merely 250,000, settled on land not exceeding 2% of the area of the West Bank. As the Israelis spurred development, Arabs thronged in to participate in it. Between 1967 and the first intifada in 1987, Arab settlers moving in from Jordan and other countries out numbered Israeli settlers by a factor of ten.

Page 27 Hostility toward Jews stems not from any alleged legal violation or untoward violence but from there exceptional virtues. This is the essence of anti-Semitism.

Page 46. In the 19th century Jews purchased land in Palestine a barren land under Arab rule with a poor economy they built an economy that attracted Arab and Jew alike. Arab population surged to 1.35 million the Jews grew to 650 thousand. The peace-process brought millions of dollars in foreign aid which shifted Palestinians from entrepreneurs to codependent ghetto violent male gangs and welfare queens.

Page 59. The concept of economic autarky is the chief cause of the poverty in the world. No one can be rich alone. Wealth is an effect of sharing and collaboration between an elite of capitalists and the insurgent new business rising around them. It is an effect of willingness of the young and less educated or less talented to work for the educated and able. It is a product of apprenticeship and learning followed by entrepreneurial rivalry. The success of the Israeli economy is not an imbalance that crates invidious gaps, it is a gap that summons new energies and new wealth.

All capitalist advance generates imbalances and disequilibrium. Growth is an effect of the disequilibrating activities of entrepreneurs, the creative destruction unleashed by rate feats of excellence.

Page 75 by delving down deep in the atom we rise up to a level of mathematical abstraction only glimpsed in the previous experimental science of the visible world.

But we do not, as Von Neumann supremely understood, rise all the way up. As Kurt Godel demonstrated in early twentieth century, and Von Neumann’s Goedel's first interpreter and greatest prophet, repeatedly showed, the symbolic logic driving both math an science - the computer and the quantum - is ultimately axiomatic. It cannot prove itself in it's own term but must rely on a set of assumptions outside the system.

Wealth springs from the minds of men, and, above all from the minds of a relatively few men who operate at the nexus of word and world - on the boarders of math and manufacturer - in the realm of the algorithm.

Page 81 Mathematics ultimately would repose on a foundation of faith. The universe rests on a logical coherence that cannot be proven but to which men must commit if they are to create

Page 104 until 1957 Israel was a high wage, secure job economy. It's economy was not producing. The absence of competition was a result in part of virtually complete protection from foreign competition afforded by import and exchange controls

Page 106 in the mid 1980's Yitzhak Shamir followed Reagan’s example and shortly after the USSR folded and allowed millions of scientist Jews to flee ti Israel. Being anti communist and intellectual gave Israel the engine to jolt them to scientific achievement at first rate based on entrepreneurial capitalism. Their brain power drew in capital which produced technological advancement at pace with the United States.

Page 109. The same forces of freedom unleashed on Israel in the 1990's could well dictate that fortunes will disappear within a few generations. It is a rigid rule of capitalism lm that over funded banks, are disasters waiting to happen, while small sums in the hands of a few exceptional men can yield equally unexpected riches.

Page127 Von Neuman was the paramount figure of the twentieth century science because he was the li k between the pioneered of quantum theory and the machines that won WWII, that prevailed in the Cold War, and the enabled the emergence of a global economy tied together and fructified by the internet. The entire saga is one fabric, woven largely by Jews.

Page 139 the Arab-Israeli conflict everywhere understood (wrongly in my view) as an impossibility embittered dispute over absurdly small patches of geography. The promise of a global network seamlessly providing near-infinite bandwidth indifferent to application is the promise, like almost every major economic advance for the past two hundred years, to render geography trivial.

Page148 Biological beings partake of the Godel proof of the limitations of symbolic logic - it's dependence on axioms that it cannot prove. Like mathematics, biological science depends on and transcends an orderly cosmos of monotheistic faith.

Page 155 Biology is a set of living algorithmic entities. Compile the biological entities into a database and apply the algorithms, and you can find the pathways to the inner logic of life.

The algorithmic thinking that fuels such ventures comes naturally to the gifted few. Without permitting the gifted and diligent to emerge, prevail, create, and ultimately rule the cpanding heights, there is no way to have a successful system based on the algorithms of a new economy.

Page 155 the Talpion system needs to be captured verbatim in the review. The system has vaulted Israel and India in engineering prowess.

Page 165. The successful allocation of capital, like the launch of a new technology, is an elegant expression if the capitalist law that mind rules and matter serves, just as squandering of capital can create havoc far beyond that wrought by any scarcity of goods.

Page 167 in the Period fro 1984 - 1990 evry significant reduction in top marginal tax rates anywhere I. The world for which we have decent data: economic growth surged, inflation fell ( down to 11 percent by 1993$, and tax receipts rose. And Netanyahu's reduction in personal tax rates continues - to a planned 39 percent by year 2015 down from 60% in 1980.

Page 173 Crucial to Netanyahu's is the power as a global financial center to transform the economics of the Middle East. Israel can become the "Hong Kong of the Desert" ultimately reshaped the Chinese economy of it's own image when Deng Xiaoping mimicked it's free economics in his free-zone program. Even the Taiwan and Communist China became turned capitalist and most of Taiwan’s investment moved to the mainland. Under Netanyahu, Israel can become a similar force in the Middle East, reaching out ti Palestinians and other Arabs.

My challenge is why can't this same approach be made in Iraq, Iran or any other country in the Middle East? Is entrepreneurial spirit lacking in Muslim people? Or do their Imams subdue it? There exists an equal comparisons by analysis available between India and The Muslim world.

Page 184 Conspicuous weakness is a prime cause of war.

Page 195. Von Neuman was always concerned with dynamic processes and saw that economic systems could not achieve equilibrium outside an environment of growth. Capitalism by nature is a positive sum game, in which every transaction theoretically can yield two or more winners. As long as the exchanges are voluntary, they will not occur unless both parties believe they will gain from them

Page 197. Newman's message is that civilization depends on long time horizons in repetitive games. In a single exchange, the rational policy is predatory. If predatory action brings success, a player is never induced to extend the time horizon. By accommodating aggression, a nation invites it. Peace requires the imposition of penalties on aggression.

A crucial element in all games is the discount rate, which determines the time value of the reward, the terms in which one can trade benefits now for the benefits over the long run. In economics this factor is quantified as the rate is quantified as the rate of interest.

Capitalism works because if it's long time horizons and low discount rates that optimize behavior. The time element is crucial to the deepening of capital and the generation of positive sum games.

The more players focus on politics rather than on economics, the more the game tends to deteriorate. Without capitalism, democracy is a zero sum game that leads to conflict and war.

Page 217 Netanyahu told Congress after 9/11 that there is no international terrorism without the support of sovereign states...Terrorist are not suspended in mid air. The train, arm, and indoctrinate their killers fro safe havens in terrorists countries.... Iran, Pakistan, Egypt, Syria, North Korea. Until the world community applies 100% of their policy to not feed them in any way from business to negotiating with them terrorism will flourish at some level.

Over all notion of land for peace is in opposition to this idea.

Page 237 with regard to Israel' s survival not only are they the canary in the coal mine, they are an integral part of the coal mine