The News Behind The News
April 25, 2000
The New Israel?
by IASPS Staff
The New York Times has begun, albeit half-heartedly, an attempt to understand why all of this Booming & Zooming noise created by Israeli hi-tech start-ups being valued on NASDAQ at over $2 billion or fetching up to $500 million dollars as infant start-ups has very little impact on the Israeli economy. What is it that the Times has got right and what is it that The Times still gets very wrong?
In an April 16, 2000, story on "The New Israel: Land of Milk and Money," The Times journalist delves into the "mind-set" change that is beginning to take over the youthful entrepreneurs of Israel's hi-tech world. Fighting the Good Ol' Boy Network of Socialists, Statists, Monopolists and Insiders (bureaucrats, high ranking army officers, political elite, and yes, political rabbis willing to play the musical money game of the Israeli political system), these young independent, wealth minded, capitalists are here to do one thing and one thing only: build wealth.
The "problem" with this "New Zionism" is that it is bereft of Zionism and the fact is highlighted by this Times piece through a compare and contrast technique. By comparing Israeli-based Checkpoint, a hi-tech hi-flier, that makes the point of being an Israeli-registered company with Israeli headquarters, with such other Israeli success stories that either quickly "sold out" to big US concerns (i.e., Mirablis and the AOL deal) or Israeli companies that never intended to register as Israeli companies, the article suggests very strongly that Israelis who move their operations abroad are get-rich artists with no real intention of building value. The message: be more like Checkpoint, and suffer the vagaries of Israeli business and corporate law, world-leading high tax rates, a bureaucracy that believes every businessman is a crook and deserves to be treated that way, and the rest of the egalitarian Socialist platform. But, please o' please, remain Israeli.
The fact remains, however, for every successful Checkpoint (and there aren't many, maybe one or two others) that register and headquarter their businesses in Israel, the vast majority leave Israel not because they don't love their Motherland. The reason they leave is that competing in the international business arena is tough enough. Especially today in the world of e-processes where "Internet speed" and "virtual integration" are not just Madison Fifth Avenue babble but market facts, the best and the brightest of Israel's new hi-tech elite will continue to run from a business environment that includes the world's highest tax rate, the most voracious of governments, a hostile bureaucracy, and a deteriorating infrastructure.
The New York Times sought to uncover just why its Booming & Zooming headlines weren't affecting in real terms the Israeli economy. That impulse was good. The rest of the piece belongs to the tired genre of Romanticizing Israel.
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