http://www.jewishjournal.com/opinion/article/7_things_you_need_to_know_about_this_economy_and_the_jews_20090226/
February 26, 2009
7 Things You Need to Know About This Economy and the Jews
By Jonathan Sarna
The Jewish community grew wealthy, along with the nation as a whole, in the post-Reagan era. Arguably, more Jewish wealth was created in those good years than in all of American Jewish history put together. And since much of that wealth was created by investors and venture capitalists, it is no surprise that they brought a venture capital mindset into the American Jewish nonprofit sector, promoting innovation and experimentation.
We also now know that the burgeoning number of Jews in hedge funds created a dangerous sense of overconfidence. We came to believe that smart Jews could make money whatever the markets did—up or down. Most of us could not understand how they made money, but thank God if we were lucky they would let us—for a price—share in the wealth. We could expect 10 percent returns almost guaranteed. That, in the end, paved the way for the way not only for the great market crash, but also for Bernard Madoff.
This is not the first time that the American Jewish community has confronted an unexpected and severe downturn. Something similar happened 80 years ago, in 1929. The following is the Dec. 29, 1929 diary entry from Reconstrctionist Judaism founder Rabbi Mordecai Kaplan, as published in “Communings of the Spirit” (Wayne State University Press, 2001):
“When I preached on the First Day of Succot concerning the need of using religion as a means of fortifying ourselves against the insecurity and precariousness of modern life, I little realized that I, as well as the people I spoke to, would soon have occasion to put their religion to the test. It was only two or three days after that [that] the big crash in Wall Street took place. Some of my friends and relatives lost heavily. Brous who was about to be married to my niece Harriet Baron, lost about $300,000 [roughly $3.6 million in today’s money]. Not having dealt on margin there is a possibility of my recovering some of the money that was invested for me. In the meantime, the value of my investments shrank from about $85,000 to $45,000 [a drop from about $1 million to $540,000 in today’s terms.] I had hoped that in the course of a few years, by saving and investing in stocks that would rise in value, I would save up sufficiently to be able to give up all institutional connections and strike out boldly upon some program of spiritual reformation of Jewish life. Although that dream has now vanished I dare not complain. There are thousands of people who are in dire straits as a result of the crash and would consider themselves the happiest in the world if they were economically even half [as well] off as I am.“
Kaplan’s economic woes did not end there. Even though, he later writes, “we invested in bank stock which we had been assured was the safest of all stocks,“ he like 1 in 5 New York Jews lost money when the Jewish-owned Bank of the United States closed its doors on December 11, 1930. Kaplan lost the equivalent of about $25,000 in today’s money.
I recount this history not because I think that we are about to return to depths of Great Depression—nobody I know seriously believes that we are headed back to 25 percebt unemployment—but because I think that we need to look back to Great Depression for some lessons that may still be relevant to our day.
Two negative lessons:1. The Great Depression saw a widespread abandonment of Jewish education. In New York City, between 1928 and 1935, the number of students enrolled in Jewish schools dropped by 22 percent. In just six months, from December 1930-June 1931, enrollment in Chicago’s Jewish schools dropped 16 percent. We paid a big price for those declines. Those young Jews never made up what they lost. We need to be careful to avoid a repeat of that pattern.
2. In the early years of Great Depression, American Jewry turned inward and paid little heed to what was going on abroad, particularly in Germany. As the American Jewish Year Book gently put it in 1931, “the Jews of the United States did not during the past years watch the situation of their overseas co-religionists with the same concentration as in the preceding 12 months.“ We were, as a result, less prepared as a community than we should have been for the terrible impact of world events.
On the positive side, Jews turned primarily to one another during the 1930s, relying on ties of faith and kinship to carry them through the hard times. Traditions of self-help and mutual aid overcame religious, ideological and generational differences within the American Jewish community. American Jews assumed responsibility for helping their own. There is much that we can learn from this today. We have a huge opportunity to remind Jews of the benefit of the idea that all Jews are family, that we help one another in need. We desperately need to relearn some of our traditional communitarian values, some of them forgotten, in a few circles, during the years of plenty. America traditionally glorifies lone rangers and cowboys. We Jews, though, believe in community. The benefits of community—of mutual responsibility—become very clear when times are tough.
A second positive trend in the 1930s was the impact of New Deal programs and government centralization on Jews. More than anybody realized at the time, the Depression set the stage for the five-day week and for growing government responsibility for social services. Together, these transformed postwar Jewish life in myriad ways. The New Deal also provided a model for growing centralization in Jewish life at the national and local levels.
Ronald Reagan, of course, reversed course at the national level when he became president in 1981. He argued that big government was the problem and not the solution. It was, he complained, inefficient, bureaucratic, slow, wasteful and unable to innovate. Under him, we began a project of decentralization: cutting taxes and shifting power away from Washington. The American Jewish community, as if in step, likewise shifted course away from central control by the United Jewish Appeal and the Large City Budgeting Council (which were also deemed inefficient, bureaucratic, slow, wasteful and unable to innovate), and we moved toward more local control. Most importantly for the Jewish Funder’s Network, we also moved in the Reagan years toward our own version of privatization, which resulted in the growth of private Jewish foundations.
To give you a sense of how rapid that change has been, let me remind you that prior to Ronald Reagan’s presidency, which began in 1981, not one of the following Jewish foundations existed: Wexner, AVI CHAI, CRB, Schusterman or Steinhardt. Back when I was studying the American Jewish community with Marshall Sklare, and reading Daniel Elazar, foundations were not on our radar screens.
Let’s look at where we are today and where we are likely to go from here.At the moment, following billions of dollars in losses to Jewish endowments and a significant decline in annual gift giving, different sectors of the American Jewish community are busy explaining to all who will listen why their particular area of the Jewish economy has to be preserved at all costs. Human services (obviously a priority in tough times); Jewish education (as necessary as oxygen); Jewish camping (shapes Jewish memories and lifelong associations); innovative Jewish start-ups (they are the most efficient sector of the Jewish economy and in many ways the most creative); Birthright Israel (perhaps the most successful program we have established in decades & critical to preserving American Jews’ ties to Israel). And so on and so forth—more or less every program is too good to give up. In a way, the community is like my university: everyone understands that we need to cut back in hard times. The faculty simply insists that: nothing be cut from crucial areas like the arts, the humanities, the sciences, the social sciences and the co-curriculars. Everything else is on the table!
The problem in the American Jewish community at large is that, aside from killing off CAJE: The Coalition for the Advancement of Jewish Education and the American Jewish Congress, nobody has put forth serious ideas about how to cut the Jewish communal budget by one-third. That, however, might well be what we need to do. Foundations, even not taking into account the Madoff losses, are about one-third poorer than they were this time last year. If the downturn stretches into 2010, annual campaigns may be down by one-third as well.
Inevitably in downturns, the weaker organizations are the first to fall. As Warren Buffett observed in his usual colorful way, “you don’t know who is swimming naked until the tide goes out.“ My own guess is that, at the very least, many of the Hebrew colleges, many of the bureaus of Jewish education, several of the Jewish museums and some other shakier Jewish organizations will not survive this downturn.
Orthodox Jewish organizations are apparently in the worst shape. Orthodox Jews have been disproportionately involved in banking and the stock market, and were also disproportionately hurt by Madoff ($2 billion, by one account, were lost by members of a single Orthodox synagogue). They also are heavy users of our most expensive Jewish institutions (synagogues and schools). I have felt for a long time—and for numerous reasons—that Orthodoxy’s rise had run its course. My sense is that the downturn will confirm this. I do not expect to see same kind of Orthodox growth moving forward as we have seen since 1960s, and my guess, sadly, is that some significant Orthodox institutions will not survive.
Seven trends to watch:1. We have seen several Jewish organizations that either have or are close to being merged into non-Jewish organizations (Philadelphia Jewish Archives Center and Temple University; Baltimore Hebrew College and Townson State; rumors regarding Center for Jewish History and NYU; and Northeastern and Hebrew College). Some Jewish day schools are also talking of sharing secular classes and facilities with non-Jewish private or parochial schools. None of this could have happened in the 1930s, when anti-Semitism was so rampant. But today we are confident—maybe too confident—that we can make deals with non-Jewish organizations without fear of losing an essential part of ourselves.
2. Effort to re-engage small donors. Historically, American Jewish philanthropy was in the hands of a small number of wealthy elite Jews up to World War I. For years, Jacob Schiff held veto power in many aspects of philanthropy and communal policy. But then the catastrophe of war and the great desire of immigrants to aid relatives left behind led to mass philanthropy. For the next 60 years or so, philanthropy was not only a way to raise money but also a form of Jewish identification. Then, over the past 20 years, business-minded consultants persuaded federation heads to focus on big givers, for the sake of efficiency. The cost per dollar raised was much less with wealthy donors, they observed, and with only so much time to educate donors, they thought it was a better investment in time and resources to educate wealthy ones. As a result, the donor base, dropped from 900,000 to under 500,000 over the past 20 years, according to United Jewish Communities. Fortunately, new web technology has made it much easier to engage small donors cheaply and efficiently. The Obama campaign proved this. Some of the new minyanim, like Hadar, have demonstrated this as well. The loss of some of our wealthier older donors makes effort to re-engage small donors more urgent than ever.
3. Calls for higher standards of ethics and for greater transparency. Madoff losses and nationwide dissatisfaction with executive salaries and perks are bound to have an effect on the nonprofit world. Donors will demand more openness, less reliance on “the wisdom of the rich,“ and a higher general commitment to ethical principles and to transparent investments and spending. My guess is that salaries at the top will fall at foundations, federations, day schools, etc. In the short run, this will have no effect; people are glad just to be employed. In the long run, it may deprive us of quality individuals who will prefer to work in the private sections.
4. Power will flow back to the center. The Jewish community tends to follow national trends. Now that we again have a president who believes that government is a force for good and a force for change, I expect more efforts to “rein in” the cowboys and to promote greater communal co-operation and centralized planning. Even Facebook, after all, has a leader who shapes policy. The growing power and significance of the Jewish Funders Network may be an indication of precisely this new trend.
5. New focus on sweat equity. In the absence of lots of start up money, young, creative, technologically savvy Jews will give time to causes that inspire them. We already see this among minyans. I expect that we will see it elsewhere as well. Indeed, as unemployment rises the challenge is to try to harness the time of the unemployed for the benefit of the Jewish community. Many unemployed are eager to be useful. Can we figure out ways to use them productively?
6. There is a discernable focus inward in the contemporary U.S. Jewish community, with less engagement with Israel (especially among non-Orthodox). Notice how few of the Jewish start-ups are Israel related; few Slingshot organizations are Israel related either. Even the war in Gaza did not lead to mass fundraising for Israel—a first. As Birthright takes fewer young people to Israel, we find ourselves back in the bad old days of the intifada when so many young Jews learned about Israel primarily from watching CNN.
7. At same time, downturns in the United States generally promote aliyah (immigration to Israel). I expect an uptick in aliyah especially among the Orthodox and those who have already spent time in Israel, but did not think they could take risk of making aliyah. As prospects darken in United States, some will look to Israel—Nefesh B’Nefesh makes this easier (and it has just received unexpected new funding).
It behooves us to be humble as we try to imagine the future. As Mark Twain famously observed, “The art of prophecy is very difficult, especially with respect to the future.“ Nobody in the wake of the great 1929 crash ever imagined that just 20 years later 6 million Jews would lie dead in the Shoah; the State of Israel would come into existence; American Jewry would move from the cities to the suburbs, anti-Semitism would drastically decline; and Jewish education would become a growing communal priority. I do not have high confidence that we can predict the future today any more clearly.
But this much I am prepared to predict: the economic downturn will end, the stock market will turn around, Jews will begin to make money again, and Jewish funders will regain their confidence and search for new ways to make our community better and stronger.
Let’s hope that this happens soon.
Jonathan Sarna is professor of American Jewish history at Brandeis University and director of its Hornstein Jewish Professional Leadership Program. This column was adapted from a speech he gave at a recent Jewish Funders Network event. Reprinted with the author’s permission.
Sunday, March 01, 2009
Tuesday, April 17, 2007
Internet oriented south park episode
A recent episode of south park called "the snuke" draws heavily on contemporary internet culture, the interconnectedness of the web and its information networks as well as how common, widespread and readily available information has become. Every character in the episode, including Cartman, Kyle as well as members of various government institutions such as the CIA and Homeland Security make use of everyday information web sites to advance their investigations, which include Google Search, Google Maps, MySpace, Craigslist, MapQuest, YouTube, Realtor.com, WebCrawler, eBay, PayPal, AOL, AIM, Ask Jeeves, JDate, Blogs, Drudge Report, and eHarmony. Kyle uses the most up-to-date web sources, like Google and MySpace; government officials, by contrast, use outmoded sources, like AOL message boards and Ask Jeeves.
I recomend you watch it. It is less raunchy than usual south park's, and it is very entertaining.
I recomend you watch it. It is less raunchy than usual south park's, and it is very entertaining.
Monday, February 26, 2007
Boom and Bust
Boom and Bust Israel's politics may be a mess, but the economy remains surprisingly strong. by Duncan Currie 02/21/2007 12:00:00 AM
JerusalemLAST MAY, just two months before Israel found itself embroiled in a war with Hezbollah, the world's most successful investor, Warren Buffett, purchased an 80 percent share in Iscar Metalworking, an Israeli toolmaker, for some $4 billion. Prior to closing the deal, Buffett had never visited the Iscar headquarters. Nor had he ever visited Israel. But that didn't deter him. "We are investing $4 billion in an amazing band of people from Israel," he told an Israeli financial newspaper. "If your readers know a company that resembles Iscar, even a little, have them call me immediately. I want to buy. Let them call me collect."
Then in late July, as war raged in Lebanon and Hezbollah rained rockets down on northern Israel, the Silicon Valley giant SanDisk, which purports to be "the world's largest supplier of flash memory data storage products," announced its purchase of an Israeli company for stock then valued at nearly $1.6 billion. Just a few days earlier, Hewlett-Packard had publicized its agreement to buy out the scandal-plagued firm Mercury Interactive for roughly $4.5 billion. In November HP announced that the former Mercury office in Yehud, Israel, would become its biggest research and development center in the world.
The SanDisk and HP deals were hardly anomalies. Despite war and domestic political turmoil, 2006 proved a banner year for Israel's high-tech boom. Consider the numbers on merger and acquisition activity. According to the Israel Venture Capital Research Center, "M&A activity involving Israeli companies that were either acquired or merged totaled $10.58 billion in 2006 in 76 deals. The total dollar volume was significantly higher than in previous years and was a third of the $35.8 billion for Israeli high-tech M&A deals since 2000." The IVC Research Center also reports that "in 2006, 20 Israeli companies raised $693 million through initial public offerings on U.S., European, Asian, and Israeli stock exchanges."
Indeed, though it garners relatively scant attention given the Palestinian problem and the broader Middle Eastern conflict, Israel's economy, stock market, and high-tech sector are all roaring. On January 15th the Bank of Israel announced that foreign investment in Israel had soared from $9.9 billion in 2005 to a record high of $21.1 billion in 2006. (In 2004 the figure stood at $7.2 billion.) Foreign direct investment jumped from $5.6 billion in 2005 to $13.2 billion in 2006.
Updated Bank of Israel figures on GDP growth, released in late December, estimated 4.8 percent growth in 2006 and 4.6 percent growth in 2007. (GDP growth was 5.2 percent in 2005.) Both numbers were larger than previous forecasts. "The Israeli economy is in good shape, and I am trying not to exaggerate," Bank of Israel governor Stanley Fischer told the Herzliya conference last month.
The Israeli political system, by contrast, remains mired in despondency and malaise. Prime Minister Ehud Olmert is bogged down in a bank scandal. The president is facing rape charges. The finance minister is under suspicion in an embezzlement case. A former justice minister has been convicted of sexual misconduct. The army chief of staff resigned last month, and the defense minister is resisting calls for his own departure. Meanwhile the Iranians are hurrying to build nukes, and the lingering fallout from last summer's war with Hezbollah has many Israelis questioning the future of Zionism. All of this contributes to what Rabbi Daniel Gordis of the Mandel Foundation calls a "national funk."
YET IN A COUNTRY WHERE optimism often falls victim to harsh realities, Jonathan Medved seems positively ebullient--and with good reason. Medved (whose brother Michael achieved fame in the U.S. as a conservative talk-radio host and film critic) is one of Israel's most successful venture capitalists. Speaking to a visiting delegation of journalists sponsored by the pro-Israel American Israel Education Foundation (which supports the American Israel Public Affairs Committee), he boasts that the Israeli high-tech sector is "second only to Silicon Valley" when it comes to company creation and innovation. Israel now has several dozen firms listed on Nasdaq, placing it among the global leaders. "It's hard to find an American tech company who doesn't have a facility here or an activity here," says Medved, noting that such software behemoths as Intel, Cisco, and Microsoft all do huge amounts of business in Israel.
This may seem surprising, considering that Israel is roughly the size of New Jersey and that, according to the most recent estimate, its population is only about 7.1 million. Then there is the obvious specter of terrorism and war: Shouldn't that discourage foreign investors and foster a noxious business climate?
Yes, and it did during the height of the Palestinian intifada from 2001 to 2003. One cannot overstate how important it was for Israel to staunch the tide of suicide bombings in its urban hubs. This helped revive the tourism industry and assure outside investors of the durability of Israel's economy. But that's not the whole story.
"High tech is less about geopolitics than it is about culture," says Medved. "California and Israel are the beacons of informality." He adds that Israelis, like Americans, are notably risk-acceptant: "In this country," risk is a "very normal thing." Israeli businessmen also benefit from the social ties forged during their years of compulsory military service, and from the international networks brought by well-educated foreign immigrants. (The army, says Medved, often provides the basis for future employment.)
Another factor fueling the high-tech boom is Israel's sophisticated "incubator" system of aiding startups through government or private funding. More broadly, the Israeli economy has undergone a makeover in recent years, transitioning from decades of socialism toward greater competition and economic freedom. The sweeping reform of Israel's capital markets, enacted in 2005, was a watershed moment, helping to break up a monopolistic banking sector. So were the tax cuts championed by former Israeli premier Benjamin Netanyahu, an advocate of Reaganite-Thatcherite economics, who served as finance minister from 2003 to 2005.
Though he claims he doesn't share his brother's conservative politics, Jonathan Medved praises the current Likud leader for lowering taxes. When Netanyahu took office as finance minister in 2003, Israel was reeling from a stubborn recession, aggravated by the Palestinian intifada. "Before last fall," the New York Times reported in June 2001, "the Israeli economy was in the best shape of its history. Now, battered by eight months of violence and bludgeoned by Nasdaq, it is slowing to a crawl." Double-digit unemployment, rampant bankruptcy filings, and a severe tourism slump were three of the most glaring symptoms.
Netanyahu's free-market, pro-growth agenda helped reverse these trends, as did the decline in Palestinian suicide bombings and the global economic recovery. The Bank of Israel also pitched in by slashing interest rates. According to figures released in late December, the average Israeli unemployment rate for 2006 was roughly 8.5 percent, and expected to fall to 8.1 percent in 2007. These numbers, while still high by American standards, are decidedly lower than the 10-11 percent unemployment Israel experienced during the peak of the intifada.
TO BE SURE, government spending still swallows a hefty chunk of GDP. The 2007 Index of Economic Freedom, compiled by the Wall Street Journal and the Heritage Foundation, ranked Israel as "the world's 37th freest economy": behind El Salvador but ahead of France. "Israel enjoys high levels of trade freedom, monetary freedom, investment freedom, and labor freedom," says the report. However it remains "weak in business freedom and freedom from government." (For example: "Starting a business takes an average of 34 days, compared to the world average of 48 days.")
Whatever an Israeli's thoughts on his own economy--and the poverty that persists among Arabs, Ethiopians, and others--he can hardly be sanguine about the Palestinian situation. Thanks to disengagement from Gaza and the construction of the West Bank security barrier, the Israeli and Palestinian economies are increasingly isolated. The latter has become a dysfunctional basket-case, partly due to the separation from Israel, partly due to the aid cutoff following Hamas's election victory in January 2006, but also as a result of Arafat's kleptocratic legacy and internecine violence between Hamas and Fatah. Gaza in particular is a simmering cauldron of unemployed young men and abundant Qassam rockets.
Israelis know they can't merely ignore this. It's true that their economy weathered the Lebanon war this past summer. It's less clear how it would handle another wave of Palestinian suicide bombings, or a nuclear Iran.
Which brings us back to the "national funk" mentioned by Rabbi Gordis. Despite having "an economy chugging along quite nicely, even in the face of everything," writes Gordis, Israelis are terribly disillusioned. The Lebanon war and its aftermath created a new feeling of vulnerability. One frequently hears complaints that the political system is "broken." "The basic mood in our society is against politicians," says Matan Vilnai, a Labour member of parliament, who wryly questions whether even Israeli founding father David Ben-Gurion could last more than "ten minutes" as prime minister today. Warren Buffett may bring gobs of investment capital, but he cannot bring Israelis what they crave most: an enduring sense of normalcy and security.
Duncan Currie is a reporter at THE WEEKLY STANDARD.
JerusalemLAST MAY, just two months before Israel found itself embroiled in a war with Hezbollah, the world's most successful investor, Warren Buffett, purchased an 80 percent share in Iscar Metalworking, an Israeli toolmaker, for some $4 billion. Prior to closing the deal, Buffett had never visited the Iscar headquarters. Nor had he ever visited Israel. But that didn't deter him. "We are investing $4 billion in an amazing band of people from Israel," he told an Israeli financial newspaper. "If your readers know a company that resembles Iscar, even a little, have them call me immediately. I want to buy. Let them call me collect."
Then in late July, as war raged in Lebanon and Hezbollah rained rockets down on northern Israel, the Silicon Valley giant SanDisk, which purports to be "the world's largest supplier of flash memory data storage products," announced its purchase of an Israeli company for stock then valued at nearly $1.6 billion. Just a few days earlier, Hewlett-Packard had publicized its agreement to buy out the scandal-plagued firm Mercury Interactive for roughly $4.5 billion. In November HP announced that the former Mercury office in Yehud, Israel, would become its biggest research and development center in the world.
The SanDisk and HP deals were hardly anomalies. Despite war and domestic political turmoil, 2006 proved a banner year for Israel's high-tech boom. Consider the numbers on merger and acquisition activity. According to the Israel Venture Capital Research Center, "M&A activity involving Israeli companies that were either acquired or merged totaled $10.58 billion in 2006 in 76 deals. The total dollar volume was significantly higher than in previous years and was a third of the $35.8 billion for Israeli high-tech M&A deals since 2000." The IVC Research Center also reports that "in 2006, 20 Israeli companies raised $693 million through initial public offerings on U.S., European, Asian, and Israeli stock exchanges."
Indeed, though it garners relatively scant attention given the Palestinian problem and the broader Middle Eastern conflict, Israel's economy, stock market, and high-tech sector are all roaring. On January 15th the Bank of Israel announced that foreign investment in Israel had soared from $9.9 billion in 2005 to a record high of $21.1 billion in 2006. (In 2004 the figure stood at $7.2 billion.) Foreign direct investment jumped from $5.6 billion in 2005 to $13.2 billion in 2006.
Updated Bank of Israel figures on GDP growth, released in late December, estimated 4.8 percent growth in 2006 and 4.6 percent growth in 2007. (GDP growth was 5.2 percent in 2005.) Both numbers were larger than previous forecasts. "The Israeli economy is in good shape, and I am trying not to exaggerate," Bank of Israel governor Stanley Fischer told the Herzliya conference last month.
The Israeli political system, by contrast, remains mired in despondency and malaise. Prime Minister Ehud Olmert is bogged down in a bank scandal. The president is facing rape charges. The finance minister is under suspicion in an embezzlement case. A former justice minister has been convicted of sexual misconduct. The army chief of staff resigned last month, and the defense minister is resisting calls for his own departure. Meanwhile the Iranians are hurrying to build nukes, and the lingering fallout from last summer's war with Hezbollah has many Israelis questioning the future of Zionism. All of this contributes to what Rabbi Daniel Gordis of the Mandel Foundation calls a "national funk."
YET IN A COUNTRY WHERE optimism often falls victim to harsh realities, Jonathan Medved seems positively ebullient--and with good reason. Medved (whose brother Michael achieved fame in the U.S. as a conservative talk-radio host and film critic) is one of Israel's most successful venture capitalists. Speaking to a visiting delegation of journalists sponsored by the pro-Israel American Israel Education Foundation (which supports the American Israel Public Affairs Committee), he boasts that the Israeli high-tech sector is "second only to Silicon Valley" when it comes to company creation and innovation. Israel now has several dozen firms listed on Nasdaq, placing it among the global leaders. "It's hard to find an American tech company who doesn't have a facility here or an activity here," says Medved, noting that such software behemoths as Intel, Cisco, and Microsoft all do huge amounts of business in Israel.
This may seem surprising, considering that Israel is roughly the size of New Jersey and that, according to the most recent estimate, its population is only about 7.1 million. Then there is the obvious specter of terrorism and war: Shouldn't that discourage foreign investors and foster a noxious business climate?
Yes, and it did during the height of the Palestinian intifada from 2001 to 2003. One cannot overstate how important it was for Israel to staunch the tide of suicide bombings in its urban hubs. This helped revive the tourism industry and assure outside investors of the durability of Israel's economy. But that's not the whole story.
"High tech is less about geopolitics than it is about culture," says Medved. "California and Israel are the beacons of informality." He adds that Israelis, like Americans, are notably risk-acceptant: "In this country," risk is a "very normal thing." Israeli businessmen also benefit from the social ties forged during their years of compulsory military service, and from the international networks brought by well-educated foreign immigrants. (The army, says Medved, often provides the basis for future employment.)
Another factor fueling the high-tech boom is Israel's sophisticated "incubator" system of aiding startups through government or private funding. More broadly, the Israeli economy has undergone a makeover in recent years, transitioning from decades of socialism toward greater competition and economic freedom. The sweeping reform of Israel's capital markets, enacted in 2005, was a watershed moment, helping to break up a monopolistic banking sector. So were the tax cuts championed by former Israeli premier Benjamin Netanyahu, an advocate of Reaganite-Thatcherite economics, who served as finance minister from 2003 to 2005.
Though he claims he doesn't share his brother's conservative politics, Jonathan Medved praises the current Likud leader for lowering taxes. When Netanyahu took office as finance minister in 2003, Israel was reeling from a stubborn recession, aggravated by the Palestinian intifada. "Before last fall," the New York Times reported in June 2001, "the Israeli economy was in the best shape of its history. Now, battered by eight months of violence and bludgeoned by Nasdaq, it is slowing to a crawl." Double-digit unemployment, rampant bankruptcy filings, and a severe tourism slump were three of the most glaring symptoms.
Netanyahu's free-market, pro-growth agenda helped reverse these trends, as did the decline in Palestinian suicide bombings and the global economic recovery. The Bank of Israel also pitched in by slashing interest rates. According to figures released in late December, the average Israeli unemployment rate for 2006 was roughly 8.5 percent, and expected to fall to 8.1 percent in 2007. These numbers, while still high by American standards, are decidedly lower than the 10-11 percent unemployment Israel experienced during the peak of the intifada.
TO BE SURE, government spending still swallows a hefty chunk of GDP. The 2007 Index of Economic Freedom, compiled by the Wall Street Journal and the Heritage Foundation, ranked Israel as "the world's 37th freest economy": behind El Salvador but ahead of France. "Israel enjoys high levels of trade freedom, monetary freedom, investment freedom, and labor freedom," says the report. However it remains "weak in business freedom and freedom from government." (For example: "Starting a business takes an average of 34 days, compared to the world average of 48 days.")
Whatever an Israeli's thoughts on his own economy--and the poverty that persists among Arabs, Ethiopians, and others--he can hardly be sanguine about the Palestinian situation. Thanks to disengagement from Gaza and the construction of the West Bank security barrier, the Israeli and Palestinian economies are increasingly isolated. The latter has become a dysfunctional basket-case, partly due to the separation from Israel, partly due to the aid cutoff following Hamas's election victory in January 2006, but also as a result of Arafat's kleptocratic legacy and internecine violence between Hamas and Fatah. Gaza in particular is a simmering cauldron of unemployed young men and abundant Qassam rockets.
Israelis know they can't merely ignore this. It's true that their economy weathered the Lebanon war this past summer. It's less clear how it would handle another wave of Palestinian suicide bombings, or a nuclear Iran.
Which brings us back to the "national funk" mentioned by Rabbi Gordis. Despite having "an economy chugging along quite nicely, even in the face of everything," writes Gordis, Israelis are terribly disillusioned. The Lebanon war and its aftermath created a new feeling of vulnerability. One frequently hears complaints that the political system is "broken." "The basic mood in our society is against politicians," says Matan Vilnai, a Labour member of parliament, who wryly questions whether even Israeli founding father David Ben-Gurion could last more than "ten minutes" as prime minister today. Warren Buffett may bring gobs of investment capital, but he cannot bring Israelis what they crave most: an enduring sense of normalcy and security.
Duncan Currie is a reporter at THE WEEKLY STANDARD.
Sunday, February 25, 2007
Israeli Defense Minister Inspects War Moves Through Capped Binoculars
Friday , February 23, 2007
Israel's beleaguered minister of defense was blinded by criticism over photos taken of him watching military maneuvers through binoculars with the lens caps still on.
Various newspapers published photos of the in-the-dark Amir Peretz peering through the dysfunctional binoculars during an inspection of Israeli troops in the Syria-bordering Golan Heights, the BBC reported.
Israeli Army Chief of Staff Lt. Gen. Gabi Ashkenazi pointed out the war moves and explained them to Peretz, who looked through the capped device three times and nodded, according to the BBC, even though all he saw was black.
"The outlook is dark for Peretz," joked top-selling daily Yediot Aharonot.
Photographs splashed across Israel's two major newspapers on Thursday, showed Peretz, lips set in concentration, face tilted to the light and eyes glued to binoculars ... with their black lens caps still firmly on.
Alongside him, his right-hand man, Ashkenazi, kitted out in battle dress, expertly adjusts his own binoculars to watch troops going through their paces on the Israeli-occupied Golan Heights.
Peretz, a former trade union chief whose own military experience is limited to national service, has been vilified in Israel for his perceived mishandling of last year's war in Lebanon.
A vast majority of Israelis want him to resign from the defense ministry on the grounds of chronic incompetence and military inexperience.
The Associated Press contributed to this report.
Israel's beleaguered minister of defense was blinded by criticism over photos taken of him watching military maneuvers through binoculars with the lens caps still on.
Various newspapers published photos of the in-the-dark Amir Peretz peering through the dysfunctional binoculars during an inspection of Israeli troops in the Syria-bordering Golan Heights, the BBC reported.
Israeli Army Chief of Staff Lt. Gen. Gabi Ashkenazi pointed out the war moves and explained them to Peretz, who looked through the capped device three times and nodded, according to the BBC, even though all he saw was black.
"The outlook is dark for Peretz," joked top-selling daily Yediot Aharonot.
Photographs splashed across Israel's two major newspapers on Thursday, showed Peretz, lips set in concentration, face tilted to the light and eyes glued to binoculars ... with their black lens caps still firmly on.
Alongside him, his right-hand man, Ashkenazi, kitted out in battle dress, expertly adjusts his own binoculars to watch troops going through their paces on the Israeli-occupied Golan Heights.
Peretz, a former trade union chief whose own military experience is limited to national service, has been vilified in Israel for his perceived mishandling of last year's war in Lebanon.
A vast majority of Israelis want him to resign from the defense ministry on the grounds of chronic incompetence and military inexperience.
The Associated Press contributed to this report.
Friday, September 01, 2006
Sunday, August 27, 2006
Gideon Levy: Fed up with the whiney Israeli soldiers
Gideon positions the settlers as the enemy of the state. From a personal and a policy perspective. I think that it is shameful that after Israel unilaterally pulled out of Lebanon and Gaza - and we in turn receive a continuous barrage of kassams and katushas, an Israeli can still point to the settlers and say - "if it was not for you and this occupation, we would have peace." Have you lost it man?
Make sure you clarify who are our allies and who are our enemies. This is about the existence of Israel. Nothing less.
If you want to agrue policy, that is fine. Then there is room for discussion. But when you identify settlers as people that should not be protected by the IDF, you are calling a sect of our greatest citizens (educated, tax paying, soldiers) enemies. That is shameful.
------------
Haaretz
Last update - 09:59 27/08/2006
Fed up with the whiners
By Gideon Levy"The candle kids" grew up and became the "protest movement" of this war. The confused youth who sat crying with their guitars and candles in the city square in Tel Aviv after Rabin's assassination are now sitting in the Rose Garden opposite the Prime Minister's Office, no less confused, and seemingly protesting against the war - of course only after it ended. Just as it was impossible to know what the candle kids wanted, it is difficult to understand what the reservists and the bereaved families want. Most of their complaints should be directed at themselves: Where were you until now? If it is only the demand that some officials go home, it's a waste of their time and ours. Clones of those who are deposed will replace them very quickly and nothing will change. Olmert, Peretz and Halutz will go home, and Netanyahu, Mofaz and Barak will come to power. For the first time after many terrible years in which we killed and were killed for no reason, there are question marks hanging over the public discourse. That change should be welcomed. But those who examine the content of the new protest should not hold out great hopes. The arguments of the protesters come down to two main issues, both of them as narrow as the world of the reservist: the IDF wasn't prepared for the war, and the war was cut short. On the first matter, many are responsible, and the second issue doesn't warrant protest. Much weightier and deeper questions hover in the air about why we even went to this war, how it could have been avoided, why is war our only language, what are the limits of power that can be used and where are we going now. The new protest movement is not raising those questions. Even if this wave of protests succeeds, a commission of inquiry is established and two or three people even pay with their seats, nothing will change. Just as the protests of 1973 did not bring about the desired change, except for a few people removed from office, the protests of 2006 won't bring real change. Whining after the war is not a national agenda, and certainly not if it runs for its life from any of the main questions. If it is just the "orange" disengagement protesters in disguise, it even foretells new dangers. Above all, the petition signers and sit-in protesters in the Rose Garden should ask themselves where they were until now. Except for the "oranges" among them, most voted Kadima, maybe Likud or Labor, many of them served in reserves in the occupied territories, dealt with their personal affairs and kept quiet. For years they took direct or indirect part in worthless national projects, from building the wall to the settlement enterprise and deepening the occupation. With their own eyes they saw how the IDF was turned into an occupying police force, bullying the weak but untrained to deal with the strong. They protected settlers, saw the suffering caused by the occupation, were witness to or participated in abuse of Palestinians. The responsibility for the IDF's lack of preparation, therefore, is theirs, partly because of what they did and partly because of their silence. They cannot claim now that they were surprised by the IDF's failure to execute: they were there when the army changed its face. They knew all these years that checking IDs at roadblocks, invading bedrooms, chasing children in alleys and demolishing thousands of houses is no preparation for war. They were supposed to understand that the occupation army's activities in the territories inspires great hatred of us, that Israel's rejectionists policies endanger it more than anything else and that the real test of the army is not in the casbahs. Even the home front's lack of readiness should not have surprised them: a country that abuses its weak at times of quiet will do so in times of war, as well. What is so new and surprising about all this? The other matter, the halt in the fighting, certainly does not warrant protest, but actually a compliment. Instead of asking why the war broke out, the protesters are asking why it ended. If there is anything that the war's command deserves credit for it is its hesitation in the final stages of the war. It is a shame they did not hesitate sooner. And if we had continued the war, where exactly would we have ended up? It was the resolve, hubris and haste of the war's leadership in the first stages that were the original sin against which the protest should be directed. Above all, it is depressing to find out that none of the protesters are raising moral questions. A protest movement that says nothing about the terrible destruction we wreaked in Lebanon, how we killed hundreds of innocent civilians and turned tens of thousands into impoverished refugees is by definition not a moral movement. Even after it has been proved that the excessive force was not effective, no protest has been directed at it. How long will we only focus on ourselves and our distress? Is it too much to ask for the protesters, who are supposedly the cadres of the avant garde, to look for a moment at what we did to another nation? Why is it that after Sabra and Chatilla massacres, which were not even directly our handiwork, masses of people took to the streets and now nobody peeps about the destruction we sowed in Lebanon with our own hands, and for nothing? With such protest movements, Israel does not need the silent sheep that has so characterized it in recent years. We should be fed up with such whiners. Maybe they are brave soldiers on the battlefield, but on the fields of protest they are nothing more than cowardly soldiers.
Make sure you clarify who are our allies and who are our enemies. This is about the existence of Israel. Nothing less.
If you want to agrue policy, that is fine. Then there is room for discussion. But when you identify settlers as people that should not be protected by the IDF, you are calling a sect of our greatest citizens (educated, tax paying, soldiers) enemies. That is shameful.
------------
Haaretz
Last update - 09:59 27/08/2006
Fed up with the whiners
By Gideon Levy"The candle kids" grew up and became the "protest movement" of this war. The confused youth who sat crying with their guitars and candles in the city square in Tel Aviv after Rabin's assassination are now sitting in the Rose Garden opposite the Prime Minister's Office, no less confused, and seemingly protesting against the war - of course only after it ended. Just as it was impossible to know what the candle kids wanted, it is difficult to understand what the reservists and the bereaved families want. Most of their complaints should be directed at themselves: Where were you until now? If it is only the demand that some officials go home, it's a waste of their time and ours. Clones of those who are deposed will replace them very quickly and nothing will change. Olmert, Peretz and Halutz will go home, and Netanyahu, Mofaz and Barak will come to power. For the first time after many terrible years in which we killed and were killed for no reason, there are question marks hanging over the public discourse. That change should be welcomed. But those who examine the content of the new protest should not hold out great hopes. The arguments of the protesters come down to two main issues, both of them as narrow as the world of the reservist: the IDF wasn't prepared for the war, and the war was cut short. On the first matter, many are responsible, and the second issue doesn't warrant protest. Much weightier and deeper questions hover in the air about why we even went to this war, how it could have been avoided, why is war our only language, what are the limits of power that can be used and where are we going now. The new protest movement is not raising those questions. Even if this wave of protests succeeds, a commission of inquiry is established and two or three people even pay with their seats, nothing will change. Just as the protests of 1973 did not bring about the desired change, except for a few people removed from office, the protests of 2006 won't bring real change. Whining after the war is not a national agenda, and certainly not if it runs for its life from any of the main questions. If it is just the "orange" disengagement protesters in disguise, it even foretells new dangers. Above all, the petition signers and sit-in protesters in the Rose Garden should ask themselves where they were until now. Except for the "oranges" among them, most voted Kadima, maybe Likud or Labor, many of them served in reserves in the occupied territories, dealt with their personal affairs and kept quiet. For years they took direct or indirect part in worthless national projects, from building the wall to the settlement enterprise and deepening the occupation. With their own eyes they saw how the IDF was turned into an occupying police force, bullying the weak but untrained to deal with the strong. They protected settlers, saw the suffering caused by the occupation, were witness to or participated in abuse of Palestinians. The responsibility for the IDF's lack of preparation, therefore, is theirs, partly because of what they did and partly because of their silence. They cannot claim now that they were surprised by the IDF's failure to execute: they were there when the army changed its face. They knew all these years that checking IDs at roadblocks, invading bedrooms, chasing children in alleys and demolishing thousands of houses is no preparation for war. They were supposed to understand that the occupation army's activities in the territories inspires great hatred of us, that Israel's rejectionists policies endanger it more than anything else and that the real test of the army is not in the casbahs. Even the home front's lack of readiness should not have surprised them: a country that abuses its weak at times of quiet will do so in times of war, as well. What is so new and surprising about all this? The other matter, the halt in the fighting, certainly does not warrant protest, but actually a compliment. Instead of asking why the war broke out, the protesters are asking why it ended. If there is anything that the war's command deserves credit for it is its hesitation in the final stages of the war. It is a shame they did not hesitate sooner. And if we had continued the war, where exactly would we have ended up? It was the resolve, hubris and haste of the war's leadership in the first stages that were the original sin against which the protest should be directed. Above all, it is depressing to find out that none of the protesters are raising moral questions. A protest movement that says nothing about the terrible destruction we wreaked in Lebanon, how we killed hundreds of innocent civilians and turned tens of thousands into impoverished refugees is by definition not a moral movement. Even after it has been proved that the excessive force was not effective, no protest has been directed at it. How long will we only focus on ourselves and our distress? Is it too much to ask for the protesters, who are supposedly the cadres of the avant garde, to look for a moment at what we did to another nation? Why is it that after Sabra and Chatilla massacres, which were not even directly our handiwork, masses of people took to the streets and now nobody peeps about the destruction we sowed in Lebanon with our own hands, and for nothing? With such protest movements, Israel does not need the silent sheep that has so characterized it in recent years. We should be fed up with such whiners. Maybe they are brave soldiers on the battlefield, but on the fields of protest they are nothing more than cowardly soldiers.
Friday, August 11, 2006
Olmert cannot remain in the prime minister's office
Olmert cannot remain in the prime minister's office
By Ari ShavitEhud Olmert may decide to accept the French proposal for a cease-fire and unconditional surrender to Hezbollah. That is his privilege. Olmert is a prime minister whom journalists invented, journalists protected, and whose rule journalists preserved. Now the journalists are saying run away. That's legitimate. Unwise, but legitimate. However, one thing should be clear: If Olmert runs away now from the war he initiated, he will not be able to remain prime minister for even one more day. Chutzpah has its limits. You cannot lead an entire nation to war promising victory, produce humiliating defeat and remain in power. You cannot bury 120 Israelis in cemeteries, keep a million Israelis in shelters for a month, wear down deterrent power, bring the next war very close, and then say - oops, I made a mistake. That was not the intention. Pass me a cigar, please. There is no mistake Ehud Olmert did not make this past month. He went to war hastily, without properly gauging the outcome. He blindly followed the military without asking the necessary questions. He mistakenly gambled on air operations, was strangely late with the ground operation, and failed to implement the army's original plan, much more daring and sophisticated than that which was implemented. And after arrogantly and hastily bursting into war, Olmert managed it hesitantly, unfocused and limp. He neglected the home front and abandoned the residents of the north. He also failed shamefully on the diplomatic front. Still, if Olmert had come to his senses as Golda Meir did during the Yom Kippur War, if he had become a leader, established a war cabinet and called the nation to a supreme effort that would change the face of the battle, a penetrating discussion of his failures could be postponed. But in blinking first over the past 24 hours, he has become an incorrigible political personality. Therefore, the day Nasrallah comes out of his bunker and declares victory to the whole world, Olmert must not be in the prime minister's office. Post-war battered and bleeding Israel needs a new start and a new leader. It needs a real prime minister.
By Ari ShavitEhud Olmert may decide to accept the French proposal for a cease-fire and unconditional surrender to Hezbollah. That is his privilege. Olmert is a prime minister whom journalists invented, journalists protected, and whose rule journalists preserved. Now the journalists are saying run away. That's legitimate. Unwise, but legitimate. However, one thing should be clear: If Olmert runs away now from the war he initiated, he will not be able to remain prime minister for even one more day. Chutzpah has its limits. You cannot lead an entire nation to war promising victory, produce humiliating defeat and remain in power. You cannot bury 120 Israelis in cemeteries, keep a million Israelis in shelters for a month, wear down deterrent power, bring the next war very close, and then say - oops, I made a mistake. That was not the intention. Pass me a cigar, please. There is no mistake Ehud Olmert did not make this past month. He went to war hastily, without properly gauging the outcome. He blindly followed the military without asking the necessary questions. He mistakenly gambled on air operations, was strangely late with the ground operation, and failed to implement the army's original plan, much more daring and sophisticated than that which was implemented. And after arrogantly and hastily bursting into war, Olmert managed it hesitantly, unfocused and limp. He neglected the home front and abandoned the residents of the north. He also failed shamefully on the diplomatic front. Still, if Olmert had come to his senses as Golda Meir did during the Yom Kippur War, if he had become a leader, established a war cabinet and called the nation to a supreme effort that would change the face of the battle, a penetrating discussion of his failures could be postponed. But in blinking first over the past 24 hours, he has become an incorrigible political personality. Therefore, the day Nasrallah comes out of his bunker and declares victory to the whole world, Olmert must not be in the prime minister's office. Post-war battered and bleeding Israel needs a new start and a new leader. It needs a real prime minister.
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