Nobel Prize Laureate Dan Shechtman 311 (R).
(photo credit: REUTERS/Baz Ratner)
Dan Shechtman not only won the Nobel Prize this year, but his discovery in many
ways epitomized the Israeli ethos.
His first reaction at observing
quasi-crystals was “no such creature exists.”
But he didn’t turn off his
electron microscope and ignore what he saw because accepted science said it was
impossible. He explored further, verified his finding, withstood the assaults on
his reputation by the defenders of orthodoxy and ultimately
There is little doubt that Shechtman is poster boy par
excellence for Israeli innovation.
But what has it gotten us? Nothing to
scoff at: A disproportionate number of Nobel and other prizes, some impressive
achievements on the battlefield and in defense technology, and a lot of start-up
Unfortunately there is also a list of what Israeli brainpower
hasn’t got us. It has, by and large, failed to create and sustain large
multinational corporations that prove their mettle by competing in global
markets. Instead, broad swathes of the Israeli private sector are inefficient
and uncompetitive, unable to create enough jobs, pay the salaries or deliver the
goods and services at the prices and quality of an advanced economy.
did we become so smart and so stupid at the same time? Look no further than your
neighborhood school. Amid the Nobel Prizes and multi-million-dollar technology
mergers, there is a tendency to ignore how seriously the educational system,
from kindergarten through the universities, is failing. For a country supposedly
so dedicated to its intellectual resources, we spend less per pupil on education
than the average for OECD (Organization for Economic Cooperation and
Development) countries. In fact, spending at the university level and higher
actually fell between 2000 and 2008. Israel has more university graduates than
any other OECD country except Canada, but it is the only one where the
proportion of university-educated people is falling (43 percent for those aged
25-34 versus 45% for the adult population).
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We get what we pay for, maybe
even less. The OECD Program for International Student Assessment (PISA)
routinely puts Israeli students at the bottom of the rankings. In 2009, Israeli
students scored fourth from the bottom of OECD countries in math and science and
fifth from the bottom in reading. In math performance, Israelis scored closest
to Turks, a country with a booming economy but not one based on knowledge
Israel is being pulled up by a tiny class of the most
intelligent and resourceful.
They plod through the morass of elementary
and high school, get their real education in thinking and other skills in elite
army units and then thrive at university here or abroad. They produce our Nobel
prizes and great science. The most commercially minded turn their intellectual
property into hi-tech companies.
But that’s where they stop. The idea is
developed and patented, the product might be brought onto the market – and then
the company is sold. A recent Reuters story noted that Israel has been overtaken
by China as the foreign country with the largest number of listings on the
Nasdaq Stock Market because Israeli start-ups prefer to be bought out than to
stay independent, go public and grow.
The track record for Israeli
companies expanding and developing into true multinationals capable of competing
in the great big world is poor. There is Teva, a few other companies several
sizes smaller and then the list trails off.
A lot has been written about
why Israel hasn’t been able to produce a Nokia (a standard that should be
revised, given the Finnish company’s recent performance, but nevertheless a
It’s not a question of patriotic pride, but an issue for
all of Israeli society to be worried about.
Hi-tech start-ups provide a
small number of jobs, mainly for the cutting edge and creative elite. Big
multinational companies (which in a tiny country like ours are the only kind of
truly big companies there can be) create lots of jobs for the great middle – the
well-educated, skilled, competent and reasonably intelligent – who won’t wow the
world with the next big advance in telecommunications or biotechnology but know
how to engineer it into a workable product, set up a production line, plan a
marketing campaign, manage the company’s finances, personnel and logistics, and
undertake a host of other unsung but skilled and well-paid tasks. Those are jobs
that tend to be ignored as we marvel over another Nobel prize and laud Jewish
The best can overcome the mediocrity of our educational
system. Others succeed by imbibing the country’s freewheeling, can-do
atmosphere. But too many of the rest enter the workforce without the skill sets
required by a modern economy. A hi-tech entrepreneur deciding whether to keep
his company independent has any number of forces working against him – the
demands of his venture capitalist backers to cash out, the complications and
cost of complying with securities laws – but I would suggest that the difficulty
of filling out the ranks of managers is a major factor as well. It might also
explain why so many start-up entrepreneurs who dreamed of bigger things
It would be unfair to blame all the economy’s ills on education.
Many of the inefficiencies are the inevitable consequence of being a small
country, isolated from its neighbors, burdened with heavy defense expenditures
and increasingly weighed down by the haredi population, which as it has grown
has created an intolerable burden on the economy by refusing in principle to
contribute any productive labor.
But a failing educational system strikes
right at the heart of the economy’s most powerful asset – its people and their
intellectual resources – and is entirely in our power to fix. By comparison with
making peace with our neighbors or changing the socio-dynamics of a religious
community, it’s a straightforward and simple investment with significant a
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