The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
Subscribe to the Flinchum File
View Archives

Little Lessons

06/17/2017

I was a teenager when I read Leon Uris’ classic Exodus, about the Holocaust survivors making their way to Israel and building their own nation.  Though it was fiction, I enjoyed the story and learned a great deal of history.

As a young veteran when the Yom Kippur war between Israel and Egypt broke out in 1973, I was massively impressed with Israel’s defense capability.

When I lived in Washington, I briefly shared an office with a Palestinian refugee and was reminded how there are always two sides to every story, which tempers my enthusiasm.

In 2009, I read Dan Senor’s eye-opening book Start-up Nation, describing a nation born in 1948 with no natural assets and surrounded by enemies, yet it lifted itself up by its own bootstraps, albeit with a little help from the U.S.  The takeaway from Senor’s book was that Israel’s success was due to their choice between military/economic success and loss of national sovereignty.  He did not attribute any of their success to a lack of institutions.

I just finished a new book by Katz and Bohbot entitled The Weapon Wizards, which is an excellent, more narrowly-focused, sequel for Senor’s book.  Describing Israel sixty years ago as primarily an exporter of oranges and false teeth, its main exports today are electronics, software and medical devices.  It is also the world’s sixth largest exporter of weaponry, about $7.5 billion annually.  Israel spends 4.5% of GDP on Research & Development, the most of any nation, and 30% of that goes for military R&D, compared to 17% in U.S. and a miserly 2% in Germany.  The authors quote the man behind their satellite program, who famously said “the shadow of the guillotine sharpens the mind,” as a reason for their success.

I find it hard to believe that the 8 million people of Israel are any more innovative than the 330 million people in the U.S, but I am impressed by the number of Pentagon officials trekking to Israel for inspiration.  I am even more impressed that tiny Israel has 1,100 defense companies and has the third-most companies listed on the U.S. Nasdaq stock exchange.

The book would be improved by a comparison of new product life cycles.  From the moment of inspiration, how long does it take for the plans & specs to be approved, for initial funding, for beta-testing to begin, for formal approval, for sustained funding to be identified, and for the annual audit process.  In a nation as large as the U.S., institutions play an important role, up to the point when they become crippling.  How will we know when we have reached that point?

The elephant can learn from the mouse, indeed!

We are a fee-only advisor providing best interest fiduciary services to clients
in Chesapeake, Newport News, Norfolk, Suffolk, Virginia Beach, Williamsburg, and the surrounding areas of Hampton Roads.

CONTACT BAY CAPITAL ADVISORSWe Will Respond Promptly

Contact Us Bottom