Start-up Nation (15 page)

The challenge facing Ben-Gurion in operational management and logistics planning was extremely complex. Consider just one
issue: how to absorb waves of immigrants. From the 1930s through the end of the Holocaust, as millions of European Jews were
being deported to concentration camps, some managed to flee to Palestine. Others who escaped, however, were denied asylum
by different countries and forced to remain in hiding, often in horrendous conditions. After 1939 the British government,
which was the colonial power in charge of Palestine, imposed draconian restrictions on immigration, a policy known as the
“White Paper.” British authorities turned away most of those trying to seek refuge in Palestine.

In response, Ben-Gurion launched two seemingly contradictory campaigns. First he inspired and organized some eighteen thousand
Jews living in Palestine to return to Europe to join the British army in “Jewish battalions” fighting the Nazis. At the same
time, he created an underground agency to secretly transport Jewish refugees from Europe to Palestine, in defiance of the
United Kingdom’s immigration policy. Ben-Gurion was at once fighting alongside the British in Europe and against the British
in Palestine.

Most histories of this era focus on the political and military struggles that led to the founding of Israel in 1948. Along
the way, a myth surrounding the economic dimension of this story has arisen: that Ben-Gurion was a socialist and that Israel
was born as a thoroughly socialist state.

The sources of this myth are understandable. Ben-Gurion was steeped in the socialist milieu of his era and was heavily influenced
by the rise of Marxism and the Russian Revolution of 1917. Many of the Jews arriving from the Soviet Union and Eastern Europe
in pre-state Palestine were socialist, and they were highly influential.

But Ben-Gurion was singularly focused on building the state, by whatever means. He had no patience for experimenting with
policies that he believed were simply designed to validate Marxist ideology. In his view, every policy—economic, political,
military, or social—should serve the objective of nation building. Ben-Gurion was the classic bitzu’ist, a Hebrew word that
loosely translates to “pragmatist,” but with a much more activist quality. A bitzu’ist is someone who just gets things done.
Bitzu’ism is at the heart of the pioneering ethos and Israel’s entrepreneurial drive. “To call someone a bitzu’ist is to pay
him or her a high compliment,” writes author and editor Leon Wieseltier. “The bitzu’ist is the builder, the irrigator, the
pilot, the gunrunner, the settler. Israelis recognize the social type: crusty, resourceful, impatient, sardonic, effective,
not much in need of thought but not much in need of sleep either.”
⁵
While Wieseltier is describing the pioneering generation, his words fit those who risk all to found start-ups. Bitzu’ism
is a thread that runs from those who braved marauders and drained the swamps to the entrepreneurs who believe they can defy
the odds and barrel through to make their dreams happen. For Ben-Gurion, the central task was the wide dispersion of the Jewish
population over what would one day become Israel. He believed that an intensely focused settlement program was the only way
to guarantee Israel’s future sovereignty. Otherwise, unsettled or thinly settled areas could someday be reclaimed by adversaries,
who would have an easier case to make to the international community if Jews were underrepresented in contested areas. Moreover,
thick urban concentrations—in cities and towns like Jerusalem, Tiberias, and Safed—would make obvious targets for hostile
air forces, which was another reason for dispersing the population widely.

Ben-Gurion also understood that people would not move to underdeveloped areas, far away from urban centers and basic infrastructure,
if the government did not take the lead in settlement and provide incentives to relocate. Private capitalists, he knew, were
unlikely to take on the risk of such efforts.

But this intense focus on development also produced a legacy of informal government meddling in the economy. The exploits
of Pinchas Sapir were typical. During the 1960s and ’70s Sapir served at different times as minister of finance and minister
of trade and industry. His style of management was so
micro
that Sapir established different foreign currency exchange rates for different factories—called the “100 exchange rate method”—and
kept track of it all by jotting each rate down in a little black notebook. According to Moshe Sanbar, the first governor of
the Bank of Israel, Sapir famously had two notebooks. “One of them was his own personal central bureau of statistics: He had
people in every large factory reporting back to him on how much they sold, to whom, how much electricity was consumed, etc.
And this is how he knew, well before official statistics were kept, how the economy was doing.”

Sanbar also believes that this system could have worked only in a small, striving, and idealistic nation: there was no government
transparency, but “all the politicians then . . . died poor. . . . They intervened in the market, and decided whatever they
wanted, but at no point did anyone pocket even one cent.”
⁶

At the center of the first great leap was a radical and emblematic societal innovation whose local and global influence has
been wildly disproportionate to its size: the kibbutz. Today, at less than 2 percent of Israel’s population, kibbutzniks produce
12 percent of the nation’s exports.

Historians have called the kibbutz “the world’s most successful commune movement.”
⁷
Yet in 1944, four years before Israel’s founding, only sixteen thousand people lived on kibbutzim (
kibbutz
means “gathering” or “collective,”
kibbutzim
is the plural, and members are called
kibbutzniks
). Created as agricultural settlements dedicated to abolishing private property and to complete equality, the movement grew
over the following twenty years to eighty thousand people living in 250 communities, but this still amounted to only 4 percent
of Israel’s population. Yet by this time the kibbutzim had provided some 15 percent of the members of Knesset, Israel’s parliament,
and an even larger proportion of the IDF’s officers and pilots. One-quarter of the eight hundred
IDF
soldiers killed in the 1967 Six-Day War were kibbutzniks—six times their proportion in the general population.
⁸

Though the notion of a socialist commune might bring up images of a bohemian culture, the early kibbutzim were anything but.
The kibbutzniks came to symbolize hardiness and informality, and their pursuit of radical equality produced a form of asceticism.
A notable example of this was Abraham Herzfield, a kibbutz movement leader during the state’s early years, who thought that
flush toilets were unacceptably decadent. Even in the poor and beleaguered Israel of the 1950s, when many basic goods were
rationed, flush toilets were considered a common necessity in most Israeli settlements and cities. Legend has it that when
the first toilet was installed on a kibbutz, Herzfield personally destroyed it with an ax. By the 1960s, even Herzfield could
not hold back progress, and most kibbutzim installed flush toilets.
⁹

Kibbutzim were both hypercollective and hyperdemocratic. Every question of self-governance, from what crop to grow to whether
members would have televisions, was endlessly debated. Shimon Peres told us, “In the kibbutzim, there were no police. There
was no court. When I was a member, there was no private money. Before I came, there wasn’t even private mail. The mail came
and everyone could read it.”

Perhaps most controversially, children were raised communally. While practices varied, almost all kibbutzim had “children’s
houses” where children lived and were tended to by kibbutz members. In most kibbutzim, children would see their parents for
a few hours each day, but they would sleep with their peers, not in their parents’ houses.

The rise of the kibbutz is partly a result of agricultural and technological breakthroughs made on Israeli kibbutzim and in
Israeli universities. The transition from the extreme hardships and unbending ideologies of the founders’ era, and from tilling
the land to cutting-edge industry, can be seen in a kibbutz like Hatzerim. This kibbutz, along with ten other isolated and
tiny outposts, was founded one night in October 1946 when the Haganah, the main pre-state Jewish militia, decided to establish
a presence at strategic points in the southern Negev Desert. When daylight broke, the five women and twenty-five men who’d
arrived to start the community found themselves on a barren hilltop surrounded by wilderness. A single acacia tree could be
seen on the horizon.

It took a year before the group managed to lay a six-inch pipe that would supply water from an area forty miles away. During
the 1948 War of Independence, the kibbutz was attacked and its water supply cut off. Even after the war, the soil proved so
salty and difficult to cultivate that by 1959 the kibbutz members had begun to debate closing Hatzerim and moving to a more
hospitable location.

But the community decided to stick it out since it became clear that the problems of soil salinity affected not only Hatzerim
but also most of the lands in the Negev. Two years later, the Hatzerim kibbutzniks managed to flush the soil enough so that
they were able to start growing crops. Yet this was just the beginning of Hatzerim’s breakthroughs for itself and the country.

In 1965 a water engineer named Simcha Blass approached Hatzerim with an idea for an invention that he wanted to commercialize:
drip irrigation. This was the beginning of what ultimately became Netafim, the global drip irrigation company.

Professor Ricardo Hausmann heads the Center for International Development at Harvard University and is a former minister of
development in the Venezuelan government. He is also a world-renowned expert on national economic development models. All
countries have problems and constraints, he told us, but what’s striking about Israel is the penchant for taking problems—like
the lack of water—and turning them into assets—in this case, by becoming leaders in the fields of desert agriculture, drip
irrigation, and desalination. The kibbutz was at the forefront of this process early on. The environmental hardships the kibbutzim
contended with were ultimately incredibly productive, much in the same way Israel’s security threats were. The large amounts
of R&D spending deployed to solve military problems through high technology—including in voice recognition, communications,
optics, hardware, software, and so on—has helped the country jump-start, train, and maintain a civilian high-tech sector.

The country’s disadvantage of having some of its area taken up by a desert was turned into an asset. Looking at Israel today,
most visitors would be surprised to discover that 95 percent of the country is categorized as semi-arid, arid, or hyperarid,
as quantified by levels of annual rainfall. Indeed, by the time Israel was founded, the Negev Desert had crept up almost all
the way north to the road between Jerusalem and Tel Aviv. The Negev is still Israel’s largest region, but its encroachment
has been reversed as its northern reaches are now covered with agricultural fields and planted forests. Much of this was accomplished
by innovative water policies since the days of Hatzerim. Israel now leads the world in recycling waste water; over 70 percent
is recycled, which is three times the percentage recycled in Spain, the country in second place.
¹⁰

Kibbutz Mashabbe Sade, in the Negev Desert, went even further: the kibbutzniks found a way to use water deemed useless not
once, but twice. They dug a well as deep as ten football fields are long—almost half a mile—only to discover water that was
warm and salty. This did not seem like a great find until they consulted Professor Samuel Appelbaum of nearby Ben-Gurion University
of the Negev. He realized that the water would be perfect for raising warm-water fish.

“It was not simple to convince people that growing fish in the desert makes sense,” said Appelbaum, a fish biologist. “But
it’s important to debunk the idea that arid land is infertile, useless land.”
¹¹
The kibbutzniks started pumping the ninety-eight-degree water into ponds, which were stocked with tilapia, barramundi, sea
bass, and striped bass for commercial production. After use in the fishponds, the water, which now contained waste products
that made excellent fertilizer, was then used to irrigate olive and date trees. The kibbutz also found ways to grow vegetables
and fruits that were watered directly from the underground aquifer.

A century ago Israel was, as Mark Twain and other travelers described it, largely a barren wasteland. Now there are an estimated
240 million trees, millions of them planted one at a time. Forests have been planted all over the country, but the largest
is perhaps the most improbable of all: the Yatir Forest.

In 1932, Yosef Weitz became the top forestry official in the Jewish National Fund, a pre-state organization dedicated to buying
land and planting trees in what was to become the Jewish state. It took Weitz more than thirty years to convince his own organization
and the government to start planting a forest on hills at the edge of the Negev Desert. Most thought it couldn’t be done.
Now there are about four million trees there. Satellite pictures show the forest sticking out like a visual typo, surrounded
by desert and drylands in a place where it should not exist. FluxNet, a NASA-coordinated global environmental research project,
collects data from over a hundred observation towers around the world. Only one tower is in a forest in a semi-arid zone:
Yatir.

The Yatir Forest survives only on rain water, though only 280 millimeters (about eleven inches) of rain fall there each year—about
a third of the precipitation that falls on Dallas, Texas. Yet researchers have found that the trees in the forest are naturally
growing faster than expected, and that it soaks up about as much carbon dioxide from the atmosphere as lush forests growing
in temperate climates.