For nearly 50 years it has been an article of faith among American conservatives that liberty and tradition are mutually reinforcing.  Not only is there no inherent conflict between the two, the argument goes, but each works to the other’s benefit.  As a corollary, religious observance, or at least cultural traits acquired through it, provides the moral basis for capitalist success.  George Gilder, Irving Kristol, Daniel Lapin, the late Frank Meyer (the original “fusionist”), Michael Novak – these and other conservative authors have advanced this now-familiar view.  A rapidly growing and incendiary divide among Israeli Jews, however, is putting this shibboleth to the test. 

Welcome to Israel’s “other” war.  It’s really a civil war in nascent form, one that pits modernity against extreme tradition.  The conflict hasn’t gotten too much attention here.  Yet if fully realized, it may well prove that country’s undoing.  And we throughout the free world will be poorer for it.    

From the beginning, even predating independence in 1948, Israel has been fighting a defensive war against the overlapping forces of Arab nationalism and Muslim fundamentalism.  The Israelis know letting their guard down could spell national suicide.  But Islamic paramilitary cults such as Hamas and Hezbollah, not to mention the more “moderate” Palestinian Authority, aren’t the only threats to Israel’s existence as a free nation.  Lately, the country has been experiencing an upswing in mindless predatory violence of a different kind – and in the name of Judaism.    

A major flashpoint occurred in early August.  A group of ultra-Orthodox Jews – here known as “Hasidic,” there known as “Haredi” – surrounded and attacked Jerusalem Mayor Nir Barkat and his entourage as they were leaving the neighborhood of Ezrat Torah.  Barkat had paid a visit to a prominent rabbi as part of an attempt at political damage control.  Apparently, local Haredi had been upset over the City’s decision to allow two public parking lots to remain open on Saturday – i.e., the Jewish sabbath – to ease a space shortage.  Dozens of ultra-Orthodox went on a rampage, attacking police, throwing rocks and vandalizing property.  At least one person e-mailed threats to Mayor Barkat and his deputy, whose visit did little to quell their blind rage.   

Now some people might bristle over calling the rioters “theocrats.”   But in fact that is exactly what they are.  These people weren’t simply content to strictly observe the Sabbath; they felt compelled to terrorize people, including public officials, who don’t.  Equally to the point, here are a few things the rioters and their supporters aren’t:  capitalists, scientists, visionaries.  If these people have anything to with the remarkable success that is the Israeli economy, it is almost purely coincidental.

I say this against the backdrop of an intriguing and popular new book by George Gilder, The Israel Test (Richard Vigilante Books).  The author, one of the Right’s leading capitalism-can’t-do-without-religion fusionists, believes anti-Semitism is a malady that springs primarily from resentment of achievement, an envy bearing striking similarities to anti-capitalism.  The people who single out capitalists for villainy, he observes, are the same sorts of people who loathe the Jewish homeland of Israel, especially now that it’s become one of the world’s most successful capitalist economies.  Whether Right or Left, people who hate free markets typically flunk this “Israel Test.”  Gilder provides ample defense for this thesis, drawing upon similarities, in word and deed, among Nazis, socialists and Islamic fundamentalists.  Yet at the same time, Gilder glosses over the reality that Israeli achievers are far removed from the extremities of Jewish piety.          

Before dealing with these extremities, it is necessary to point out that Israel in short order has become one of the world’s true economic success stories.  As recently as two decades ago, the nation was more socialist than capitalist.  True, Israeli settlers had made the desert bloom with agriculture.  And they built Tel Aviv, Jerusalem and Haifa into modern cities.  But if capitalism was advancing at all, politicians of major and minor parties, if for different reasons, made sure any movement was slow.  They got enormous help from the Histadrut, Israel’s turbo-charged version of our own AFL-CIO and by far the nation’s largest employer, which successfully blocked proposed budget cuts and State-run industry privatization.  Investment powerhouses such as Bank Leumi in reality were wards of the Israeli Labor Party.  Almost half the country lived below the poverty line.  It was foreign aid, especially from the U.S., that gave the appearance of success.       

This situation changed mainly for three reasons.  First, the collapse of the Soviet Union (and a revival of anti-Jewish fervor) triggered a migration to Israel of roughly a million Jews, who under Israel’s Law of Return, received citizenship upon request.  Resettlement costs were enormous – the U.S. government provided the Israeli government with billions of dollars of loan guarantees to handle the crush.  But eventually the arrivals adapted.  Many were in fact highly literate in engineering, mathematics, and the physical sciences.  Barred from most forms of property ownership back home, they thrived in Israel, a country that allowed at least a reasonable degree of such freedom.  Corporate and venture capital entrepreneurs such as Yigal Lichtman, Arkady Gaydamak and Michael Cherney were but a few ex-Soviet Jews who became financial titans in Israel.              

Second, expanded free trade has triggered a wave of business partnerships, especially with American firms.  Microsoft, Intel, IBM, Cisco Systems and Motorola and other U.S. information technology giants each have opened facilities in Israel.  Acquisitions and mergers have been substantial, too.  U.S. chipmaker Applied Materials in 1996 paid $285 million to acquire the Israel-based Opal Inc. and Orbot Instruments, while Warren Buffett’s Berkshire Hathaway in 2007 bought Israeli metals manufacturer Iscar, its first non-U.S. acquisition, for $4 billion.  The Tel Aviv stock market is one of the world’s most successful exchanges, and in fact their listed companies lost proportionately less than other exchanges did during last year’s meltdown.  The U.S. law firm of Skadden Arps frequently advises Israeli companies on mergers & acquisitions, intellectual property and other issues.  Capitalists know a winner when they see one.

Third, the Israeli government, though in fits and starts, has instituted overdue market reforms.  While some 93 percent of all land in the country (including parcels where buildings stand) remains State-owned, successive Israeli governments gradually have moved their country away from its Labor Zionist blueprint.  The process seems to get an extra jolt whenever Likud Party leader Benjamin Netanyahu takes the stage.  He’s held, among other positions, Prime Minister (1996-99), Finance Minister (2003-05), and since this March, Prime Minister once more.  During the last decade he became a believer in markets.  In July 1996, as the new Prime Minister, he noted:  “Israel has had incremental structural reforms since 1986, and we intend to do a lot more in a compressed time.  It is privatization and liberalization and deregulation, especially the deregulation program, that will bring about the economic growth that I envision.”  He’s positioned again to put even more force into those words.            

These and other factors (e.g., thriving tourism) have triggered Israel’s emergence as a world economic, educational and cultural center.  With a population of 7.4 million, of whom three-fourths are Jewish, the nation’s GDP now exceeds US$200 billion, or about $28,000 per capita.  Tel Aviv University, the University of Haifa, and the Weizmann Institute of Science are highly prestigious universities.  Ramat Gan, part of Greater Tel Aviv, may be the world’s fastest-growing “edge city” you’ve never heard about.  The country is home to first-rate orchestras, dance companies, theater companies, and artist colonies.  And Tel Aviv contains about 4,000 examples of Bauhaus architecture, the largest such concentration anywhere. 

With much of Islamic terror now effectively walled off (to the disapproval of “world opinion”), daily life in Israel, though more expensive, has become more relaxed and fun.  Popular recording artists such as Paul McCartney, Leonard Cohen, Pet Shop Boys and Madonna, the latter a personal friend of Prime Minister Netanyahu and his wife Sarah, have played before large Israeli audiences.  An article by Willy Stern in July 27 issue of The Weekly Standard, “The Med’s Best-Kept Secret,” reveals a country with a plethora of gourmet restaurants, fashion shows, cell phones and opera.  And why shouldn’t Israelis enjoy the good life?  Long immersed in work and military service, they’ve earned it.                    

Unfortunately, many people don’t think they have.  Many, regrettably, are Haredi Jews.  With 700,000 followers, roughly a tenth of the country’s population (another 100,000 or so live in the West Bank, about a third of the 300,000 Jewish settlers there), ultra-Orthodox Jews are enraged that their country is turning into a den of heathen prosperity.  Even the country’s large modern Orthodox Jewish population repels them.  For them, there are no compromises to be made with modernity.  And these people can get rough, too, especially in the wake of Jerusalem voters last year replacing Mayor Uri Lupolianski, an Orthodox Jew, with the secular Nir Barkat.

Rioting in their large Jerusalem stronghold has become habit-forming, the parking lot brouhaha being only one case.  In another incident this summer, Haredi Jews went on the warpath after local police arrested a mentally unstable woman in their community found to be deliberately starving one of her children, and then removed her custody rights over her other four children.   Protestors hurled bricks and bottles, and blocked main thoroughfares with piles of garbage.  “We don’t have weapons, we don’t have tanks, we don’t have policemen or jails,” said group spokesman Shmuel Pappenheim.  “But we are sending in our army to save a family, to save a Jewish mother who is raising five children with love and warmth.”  He said this, mind you, while the woman’s three-year-old son was in Hadassah Hospital recovering from severe malnutrition.     Continued...