In many of these areas, Diaspora Jewry was superior. The median per capita income of American Jewry was triple that of Israel. One third of the Israeli population was below the poverty level and only one third of Israel’s adult population earned enough to pay income tax. Only 56% of Israel’s adult population (18-65) was in the work force (the lowest percentage in the developed world). Over 90% of American Jewry’s young people attended university as opposed to only 30% of Israel’s young people. The status of women in the West was significantly higher than in Israel – especially amongst Diaspora Jews. Standards of public administration and governance not to mention religious pluralism in most of the host countries of Diaspora Jewry were higher than those in Israel. It was evident that the partnership could not succeed with a super-developed Diaspora interacting with a semi-developed Israel. If the purpose of Zionism was to serve the Jewish People then it was apparent that despite its earlier monumental achievements, Israel was not up to the task in the 21st century.
The aim of the Upgrade Israel Project was to make Israel the showcase of the entire Jewish People, the practical instrument of Jewish idealism and energy. A central task of the Diaspora was to help Israel achieve this aim.
The keystone of the upgrading project was determined to be the economy. Throughout history, economic dynamism had been the foundation of scientific and cultural vitality: from the ancient Greeks to the Arab Caliphate to the European Renaissance and Enlightenment to the American Republic. The high points in Chinese and Hindu culture were also based on relative economic dynamism.
In a famous speech at the General Assembly of the United Jewish Communities in the United States in 2008, the Israeli Prime Minister put forward the notion that Israel’s central goal was to become one of the most prosperous countries in the world in terms of median per capita income by 2030. During the speech he shocked his audience by stating that he intended to notify the American government that by 2010 Israel would no longer ask for any foreign aid. Israel’s GNP at the time was 150 billion dollars a year. The two and a half billion dollars of American aid could be made up by a mere 2% economic growth in one year. He said:
Since we must sustain a 5-7% yearly growth rate over the next 20 years in order to make Israel the most prosperous country per capita in the world, and since our economy has reached the size it has, it would be immoral, undignified and illogical, to continue to come to Uncle Sam for a handout. Moreover, this aid has become a cushion enabling us Israelis to put off the economic and managerial reforms necessary to make our country as efficient in its administration as it must become in order to achieve this goal. Self evident efficiencies in our public administration alone will cover the loss of the aid.
We must say to the American people: ‘Thank you for your support and assistance in the past. And even though we no longer require your aid, the People of Israel are your abiding ally in eternal friendship and gratitude.’
The Prime Minister went on to say that he wished all Diaspora contributions to go to the Jewish Energy Project. He said this was the best way to leverage contributions and increase their effect and to significantly enhance Jewish security, economy and society.
In the subsequent question and answer period he responded to criticism for stressing economics over social and culture issues. He pointed out that to achieve this aim Israel would have to: close the social-ethnic gap, integrate the ultra-Orthodox and the Arabs into Israel’s knowledge economy and upgrade the status of women across various sectors. Social justice, he said, would be the inevitable consequence of such a policy.
In response to another objection that aid and contributions were still very helpful to the Israeli economy, even if no longer vital, he said that economics is not a zero sum quantitative enterprise. It is based on cultural values and characteristics which derive from the psychology of a society. Imagine the pride, and intellectual and physical energy resulting from Israel becoming economically Bar Mitzvah. Imagine the economic dynamism that will be an end result of this. He predicted that this step will be the economic equivalent of ‘less is more’ – less external aid, more economic dynamism. From the perspective of 2020 we see that this prediction was accurate.
How this was achieved
It became a national aim to make Israel’s civil service and public administration the most efficient in the world. “Sophisticated” commentators scoffed, calling it far-fetched. Individuals with a more historic bent and a more optimistic temperament compared it to the challenge of building the best air force in the world in the 1950’s, which given the situation of the country at the time was even more far-fetched.
The two methods proposed to achieve this were the non-altruistic welfare policy and the bounty system. The non-altruistic welfare policy was intended to obligate the “more unfortunate in our society” to become “not unfortunate”. This was best exemplified by a new approach to the severely handicapped and other home bound people. It was recognized that modern technology had provided us with ways to alter our perceptions. “There is no such thing as handicapped persons; there are only groups of citizens with different infrastructure needs” became the working slogan.
Technology and the end of physical work made this a reasonable slogan. Several decades previously it would have been ridiculous to make such a statement. Sophisticated technology and the end of physical work have done for Handicapped Liberation much the same what it did for Women’s Liberation. The knowledge economy and the availability of the Internet enabled people to work from home and make an excellent living. Most of the work done by government clerks was administrative and did not require their presence at the workplace. Consequently, it became government policy to replace retiring government workers with homebound handicapped people who could do the same job at a distance. This saved the taxpayer money in two ways: large groups of people were taken off welfare and less money was needed to maintain offices. The infrastructure built by the government for handicapped government workers was made available to the private sector. They began utilizing these previously unused human resources to their benefit and to the benefit of society at large.
Growth promoting welfare policies, using the technologies and possibilities of globalization, were applied to other social problems: single parent families; women’s’ rights and opportunities; lifelong educating and credentialing etc. Ever-growing numbers of dependent, tax consuming citizens became independent, self-sufficient tax paying citizens.
Today hardly anyone is “on welfare” in the old sense of the word. The pride and self esteem of previously demoralized citizens has increased. Another consequence has been budget surpluses that have enabled both tax cuts and substantial increases in retirement benefits and education. From having one of the most disgraceful incomes in the developed world in 2006, today’s Israeli Social Security recipients enjoy very comprehensive benefits. Israel’s expenditures per pupil are now also amongst the highest in the world. Increased expenditures combined with efficiencies in administration released greater resources for frontline pedagogical functions, resulting in a much improved educational system.
The bounty system was a monetary reward to anyone who proposed a money saving suggestion to perform or replace a public service more efficiently. The reward (or bounty) was 25% of the first year’s savings. Many public servants profited this system because they knew where the inefficiencies were. They now had an incentive to become proactive in identifying them. The government workers union, instead of resisting efficiencies in the name of job security, began to conduct workshops for its members to help identify inefficiencies and write proposals on how to correct them. Public servants who eliminated their own jobs were given full pensions no matter what their age or seniority. The primary benefits of this were long term but there were also immediate savings to the tax payer as many ancillary costs were eliminated. Many former public servants pursued a second career in the private sector where their economic contribution to society was much greater.
Public administration research around the world dubbed this the “Reinvention of Israeli Bureaucracy”. This became an object of international interest and groups from around the world came to Israel to study it first hand. Public expenditures in Israel as a percentage of GNP had been the highest in the developed world – over 50% as opposed to the OECD average of 41%. This has been declining 1-2% a year since the institution of the bounty system and is now 38% of GNP and still declining. Resources released by the bounty system as well as the non-altruistic welfare policy have sustained 6-8% yearly economic growth for over a decade. Job satisfaction and a feeling of well being are now a common characteristic of Israeli society, in contrast to the dissatisfaction of former years.
At the time the PM announced that Israel would be doing without American aid and Diaspora contributions, the amount from both sources was less than 2% of the GNP and less than 4% of the State budget. If one subtracted the 75% of the military aid given as credits and deposited in US banks to be used to buy US equipment, the amount of both sources was less than 1% of the GNP and less than 2% of the State budget. The governmental efficiency project made up this budgetary loss in less than two years. The lost military aid this was made up by freezing the deficit reduction policy for several years and gradually transferring the purchase of military equipment from the United States to Israeli companies. In 2006 the debt had been 100% of GNP and the aim had been to reduce it to 80% by 2012. Very quickly the only items Israel was buying from the US were fighter planes and some sophisticated communications and computer equipment.
The multiplier effect of this injection into Israel’s military industry was such that many economists claimed that within 5 years of the declaration (i.e. in 2015) there was a substantial net benefit to the Israeli economy. The continued growth of the economy along with the efficiency project enabled Israel to renew its debt reduction policy in 2013. This year the debt has declined to 60% of GNP and by 2030 will be less than 30%.
Other Steps Contributing to the Economy
Energy independence and growth of tourism to 10 million foreign tourists a year led to a balance of trade and 3-4% unemployment. A lowering of taxes for hotels (as a result of public administrations efficiencies) and more efficient licensing procedures for building (lowering amortization costs) enabled the hospitality sector to double wages without raising rates.
A decision was taken in 2008 to make Israel a world power in non-tangible exports: computer animation, graphics and translations (translations alone being a 25 billion dollar a year global business in 2005) were the types of businesses given special attention in business schools, the Ministry of Commerce and tax authorities. Big Diaspora donors stopped giving at the request of Israel. Instead they bought non-tangible service companies in the West and outsourced to Israel. This produced greater economic and social benefit.
Using the Zip Code wealth creation principle – popularized by Juan Enriques in As the Future Catches You, Israel instituted a policy of economic decentralization. Enriques claimed that post-industrial globalization has enabled single zip-codes to develop wealth equivalent to entire countries. The Kibbutz Movement adopted this principle and became pioneers once again. They re-invented themselves as a high-tech and sophisticated services Kibbutz ‘Cyber-City’ with a population of 150,000. They designed their entire education system around this vision (including establishing the Kibbutz Technological Institute) and re-invented their ideology to conform to this vision. No more Jewish Zorbas toiling in the soil in spiritually “uplifting” physical work. Beersheba, which already had a fine university, followed suit, along with many Development Towns.
Industrial agriculture (really post industrial agriculture) was moved to an automated joint Jordanian-Israeli ‘plantation’ in the Arava – which became a Middle Eastern version of Imperial Valley providing the EU with inexpensive fresh vegetables year round. This enterprise was sponsored by the EU as part of a comprehensive peace initiative. Some former traditional agricultural land was still worked by boutique farmers of various sorts: olives, wine, goat cheese, organic farming etc. Most agricultural land of the kibbutz and moshav was reclaimed by nature with a corresponding enrichment of the flora and fauna of Israel. Israel environmentalists rejoiced.
Israel began calculating international patents per million citizens as well as the number and business volume of non-tangible services export companies in order to measure economic health, and the effectiveness of the educational system. This practice has been copied by other countries and is now one of the variables cited by the Economist when analyzing a country.
The economy has grown by 150% relative to 2005 while the population has grown by 25%. The per capita standard of living has grown accordingly. Israel has been repeatedly cited by the World Bank as one of the top five business-friendly countries in the world – up from 26th place in 2006.
Restructuring Relations with the World
The decline of oil neutralized the power of Jihadists, reactionaries and thugs. This empowered progressive Arabs and Moslems and encouraged them to advocate a Second Caliphate based on the knowledge economy rather than oil. Dependence on the knowledge economy obligated their respective countries to become open societies with constitutional protections and democratic institutions. This presented Israel with both an opportunity and a solution to a chronic problem. The massive influx of technical and scientific skills from the former Soviet Union in the 1990’s had been a necessary feature of Israel becoming one of the world’s high-tech centers. Israel’s continued high-tech dynamism and the lessening of engineering and scientific aliya from the former Soviet Union had resulted in a chronic shortage of technical manpower and a threat to economic growth. A substantial portion of this problem had been solved by the simple application of social justice. The Israeli Arab sector as well as a significantly higher proportion of the non-Ashkenazi Jewish sector had begun to contribute their share of engineers, scientists and technicians to the Israeli economy. But this was not enough and chronic shortages had begun to develop.
Israeli economic policy makers decided to turn this problem into an opportunity and create projects designed to improve relations with our neighbors. The new Arab dedication to the knowledge economy was a useful backdrop to this Israeli initiative. Israeli economic parks with branches of Israeli companies were established adjacent to Egyptian and Jordanian airports to exploit their surplus technical and engineering human resources Israeli managers flew in every morning and returned home every evening. The Tel Aviv Cairo, shuttle, especially, came to resemble the New York-Washington shuttle.
Egyptian officialdom, recognizing more than the rest of the Arab world, that Israel could perform the same economic tasks in the knowledge economy for the Arab world that Honk Kong did for China in the industrial economy, decided to build a Science City at El Arish adjacent to Israel’s southern border, which was a half hour high speed train ride from Tel Aviv. This was soon compared to Guangzhou adjacent to Hong Kong, the development of which was a major factor in China’s economic reform and subsequent remarkable growth. The Egyptians received EU planning and financial support for the idea. Since the Israeli economy has already absorbed most of Jordon’s manpower surplus, its future growth is tied to the Egyptian initiative – which still has vast pools of underutilized academic talent.
Not wishing to be overly dependent on Arab countries, Israel has also established a similar arrangement in the Anatolia region of Turkey – a half hour commuter flight from Tel Aviv. Israel is also exploring the possibility of similar setups in African capitals, as a magnet for underutilized African talent. Not only has this development been beneficial economically it has provided Israel with favorable PR. Israel has begun to be seen as a development bridge between the developed and the developing worlds. What western “idealists” and NGOs have been preaching Israel is doing.
During this period Israel has become an Asian economic force by continuing to upgrade relations with China and India as well as the other dynamic economies of Southeast Asia. By 2016 Asia had become the fourth leg of Israel’s economic table joining in equal measure the EU, USA, and its own domestic market. This strategy was reinforced by Jewish-Hindu and Jewish-Chinese Friendship Associations in the Diaspora.
Grandiose plans to totally restructure the Israeli electoral and political system yielded to a more practical and incremental approach which gradually improved the quality of Israeli democracy. Calls for a Presidential system and/or direct regional elections of the entire Knesset (to replace the list system) were dropped. It was finally recognized that in modern political history politicians had never voted for anything that would endanger their own political careers. It was further recognized that calling for such far-reaching and unachievable reforms actually inhibited the adoption of reforms that were politically possible and which would enhance the system. The course taken was a conscious imitation of the English strategy of incremental constitutionalism and reform. Unlike the English strategy it did not take centuries, but rather years.
The steps taken were:
- Passage of a party primaries election law which, as in the United States, designated a particular day for all party primaries. This was regulated by the State and conducted according to criteria similar to the general elections (again as in the United States). Criminal sanctions for violating primary election laws were identical to those of the general elections. These laws were made more severe. This eliminated much corruption and established more public confidence in the process.
- Adoption of the Norwegian Law requiring all Ministers and Deputy Ministers to resign from the Knesset, their seats to be taken by candidates behind them on the party lists. This reinforced the separation of powers principle between the executive and legislative. It also reinforced effective legislative oversight. A typical Knesset had been composed of: 40 new MKs (the highest percentage of turnover in the democratic world – a function of the list system) who had little knowledge of committee work and needed time to become effective; 20 MKs serving as Ministers or Deputy Ministers with little time for committee work and with a built-in conflict of interest between their executive and legislative oversight functions; 20 MKs who were former Ministers or Deputy Ministers who many times felt themselves above the drudgery of committee work. This left a grand total of 40 MKs to perform the oversight role of the Knesset. The Norwegian Law added another 20 MKs to this function. It was also politically attractive to the rank and file of the larger parties because it enhanced the opportunity to become a MK. This political self-interest made it doable.
- Doubling the electoral threshold to 5% of the votes cast. This meant that any party with less than 5% of the votes cast would not have its candidates seated. This further increased the disincentive of very small parties to run and made it easier to form coalitions. This reduced public cynicism.
- Limiting the election campaign to 40 days from the fall of the government to elections and another 10 days to form a government. This saved up to 40 days of indecision and expense and helped lessen public disrespect for the process.
- The concluding significant law passed in this process determined that 30 Members of Knesset were to be elected from regional electoral districts. This was the only concession to direct regional elections that was possible as under the more far reaching reform proposals (calling for from 80-120 members to be directly elected in regional elections) MKs might be voting themselves out of office. This was, therefore, a politically feasible compromise. Part of the compromise determined that the 30 regionally elected MKs could not serve as Ministers or Deputy Ministers. They were elected to serve a particular constituency and this is what they were required to do. This part of the compromise was also politically attractive to MKs elected under the party list system because it increased their chances for portfolios. It was also politically attractive to rank and file party members who felt they had a better chance to become candidates in regional primaries. From the reform aspect it guaranteed an additional 30 MKs fulfilling their parliamentary oversight function. Within a decade this law and the Norwegian Law doubled the effective number of MKs performing this function.
Several other laws were passed that enhanced Israeli constitutionality and democracy. Members of party central committees were prohibited from being lobbyists and banned from being present in Knesset committees and sub-committee meetings. This was to prevent them from intimidating Members of Knesset in favor of special interests. The Law against insulting government workers was revoked. It was replaced by a law against abusing citizens. This law had provisions for fining government workers whose laxity, inefficiency or hostility caused damage to a citizen’s person or property.
Moreover, personal liability was placed on departmental directors of ministries and board members of governmental firms. They could now be sued by citizens for damages caused by incompetence, inefficiency or misapplication of the law. The government employees and not the taxpayers would have to pay for damages. This greatly limited the ambitions of incompetent political operatives to aspire to public jobs for which they were not qualified. The general level of public service increased greatly as a result.
Government payment practices to suppliers of goods and services had been notoriously poor – driving dozens of small and medium size business into bankruptcy. The immorality of these practices, as well as the economic damage they caused, was finally exposed. Binding legislation was passed into law. All government bodies (local, national and public bodies) are now required by law to pay all bills by end of month plus 30 against a pro-forma invoice. Nonpayment subjected departmental directors to personal liability to the supplier. Pro-forma invoices have also become legally binding in the private sector. Taxes will be paid upon receipt of payment only and after checks have cleared. As a consequence of these laws the liquidity of small and medium size companies has improved greatly and the number of bankruptcies has declined. The discipline, quality and ethics of public management have also significantly improved.
All government bodies (local, national and public) are now required by law to construct a website atlas of public employees, consultants and contractors – their names, what they do and what they are paid. This has become a useful tool of the bounty system (and “bounty hunters”). It greatly improved the public service and political ethics. It became impossible to hide unqualified hacks and inefficiencies and absurdities in the system. The argument that this violated privacy was rejected. If you are a public servant, you are employed by the public and the public has the right to know who it employs and what they are being paid. If you want to be private, you can’t be public.
Contempt of court laws were amended and limited to the courtroom only. Anyone could say or write anything against a judge outside the courtroom. The principle of the limitations of power was finally applied to the courts. Israeli Bar feedback became a legal and integral part of choosing higher court judges (as it is in the United States) and it was legislated that at least one supreme court judge not be a previously seated judge but rather a practicing lawyer or academic. All this was reflected in a change of attitude towards the public by politicians and public servants, which was demonstrated by a landmark speech in the Knesset by a new Speaker:
We must realize that mistrust in government is inherently healthy in a democracy and even a necessity if we are to widen and deepen the constitutional protections we all value. The higher the automatic trust in government, the easier it is for totalitarian tendencies to emerge. This kind of trust enables shrewd demagogues to create a tyranny of the mob. In the United States in the 50’s trust in the government was at its highest – so was McCarthyism. The growing wariness of the Israeli citizenry to public officials (elected and civil servants) is not a sign of the decline of democracy; it is a sign of the maturity of democracy. It is not a sign of a decline in the objective morals or abilities of the government apparatus but a reflection of the rising expectations of the citizenry. The moral and administrative levels of Israel’s public servants might be higher than in the 50’s but the demands of the citizens are higher still. The rising expectations of a free people are the greatest guarantee of freedom. Let us all dread the day when our people are happy with us!
For more from Tsvi Bisk go to https://thestrategicfuturist.wordpress.com/