Israel has only recently become a technological and economic powerhouse. It got there after a protracted dalliance with socialism that gave Israel high unemployment, anemic growth, and inflation rates that reached 1,000 percent in early 1985. Three catalysts changed everything: 1) the influx of 1 million vehemently anti-socialist immigrants from the former Soviet Union; 2) the addition of a far smaller but still consequential cohort of American Jewish immigrants who had business experience and expertise; and 3) economic reforms urged by Natan Sharansky and Bibi Netanyahu. The results, Gilder writes, were "incandescent." He cites a 2008 Deloitte & Touche survey showing that in six key areas -- telecom, microchips, software, biopharmaceuticals, medical devices, and clean energy -- "Israel ranked second only to the United States in technological innovation." Israel's high-tech research and development puts it at the center of the information revolution. Intel's microchips, Gilder notes, might as well be tagged "Israel Inside."
But what has this to do with the Palestinians? In addition to his guided tour through Israel's equivalent of Silicon Valley, Gilder also provides a taut and clarifying economic and political history of the modern Middle East. The economic piece is key, because Israelis have created prosperity wherever they have touched ground in that otherwise listless part of the globe. And Arabs have responded by flooding into areas they previously disdained after Israelis made them habitable, even desirable. It was so in the Yishuv (the new Jewish settlements in the Holy Land starting in the 1880s). And after Israel reluctantly took control of the West Bank and Gaza in 1967, the economy in the territories became one of the most dynamic on earth, posting 30 percent annual growth. The Arab population, along with per capita income, tripled.
Arabs are and have always been in a position to share in the wealth created by Israel -- and to create their own. But they have flunked the "Israel Test" by choosing envy and hatred. It's a test the outcome of which, Gilder persuasively argues, will determine our own future as well. Gilder has always been right. Read the book.