How to explain the riddle? Israeli society, which some view as sick, others even as terminal, has produced a lively, successful and flourishing business sector, the target of international admiration. This sector, made up of tens of thousands of entrepreneurs and workers, has contributed to the dramatic growth in the economy and has even, despite the summer war in Lebanon, succeeded in increasing Israel's gross national product, bringing unprecedented foreign investments here. Moreover, while serious instances of corruption in the international business world have come to light - from Enron and WorldCom to Pharmalat and Martha Stewart - the Israeli business sector has admirably demonstrated a complete absence of similar corruption. How can we reconcile such vibrancy in the private sector with the paralyzed nature of the public sector? Why does it feel like everything is rotten in government? Why does the bureaucracy abuse its prerogatives? Why the unscrupulous political appointments and gross favoritism? One explanation is the reluctance on the part of many talented young people to enter public service and politics, compared with their eagerness to succeed in high-tech and industry. And this is not surprising. The minister of Internal Security says that seven candidates refused his offer to serve as police commissioner. That's the reality - even if it does not justify the appointment of Yaakov Genot. Indeed, why should anyone be foolish enough to accept a job in the public sector when salaries are not high, public officials are constantly at the mercy of media attacks and state comptroller reports are lying-in-wait? Who wants to be smeared in the press, even when their actions and decisions have been irreproachable? Who wants to be the latest victim of a commission of inquiry? Who wants to have his calls wiretapped by the attorney-general? Any normal young Israeli would opt for a career in business, industry or science over one in the public sector. A SECOND explanation: The Israeli business sector has undergone a process of comprehensive reform. From capital markets to currency regulations, the entire sector has been reinvigorated. Business is also exposed to foreign competition. This has forced entrepreneurs to work in a competitive international marketplace, enabling the economy to tap the enormous talent Israel has to offer. In stark contrast, government and bureaucracy remains stagnant. Compare the performance of the Israel Lands Authority (or the planning agencies) to similar bureaucracies in more normal countries. No wonder Israeli developers take their investments elsewhere. Nor has the political system been reformed. Everything is paralyzed. Not only because of the fear officials have of making decisions, but also because in the business world responsibility and authority are connected. Business people know exactly what they can gain if they succeed, and what the punishment is or failure. In government, on the other hand, responsibility and authority are completely disconnected. There is no reward, and there is no punishment - and thus no capacity for change. The prime minister - any prime minister - is stymied by his dependency on the support of parties in his coalition. He is constantly threatened with (justified and arbitrary) criminal investigations - and by the way, every Israeli prime minister in the past 20 years has been the target of investigation by the state prosecution, without being indicted. In the end, government's "default option" becomes doing nothing. The same goes for ministers and directors-general. They are supposed to be responsible for their ministries, but they cannot move without a green light from representatives of the attorney-general and the accountant-general who oversee their agencies. Even then, they are afraid to make any decisions. TRUE, THERE are a few individuals who manage to push through reforms, even in this mad reality, but they are the exceptions. And any reader who thinks I'm exaggerating, answer this: Do you really think it is possible today to carry out a major project - like, say, building the National Water Carrier? Imagine having to channel water from the Kinneret to the Negev in today's political and bureaucratic climate. The very idea of implementing a project of this magnitude is preposterous. Which all goes to explain how - in the very same society, with the very same people - two different branches have emerged: one strong and healthy, the other weak and debilitated. WHAT WE need to do for starters is pass a comprehensive reform bill in the Knesset legislating that the prime minister come from the largest party, the one which wins the most votes in an election. Also, the minimum qualifying threshold to enter the Knesset should be raised; the de-facto veto currently held by the accountant-general and the attorney-general over the bureaucracy should be done away with, replaced by advisory boards. Service delivery standards to the public should be set; a time limit in which government officials must respond to public queries must be mandated. In the final analysis, voters must punish those who fail, or who are corrupt. If we can manage to implement these changes Israelis will discover that it is not our society that's sick - it's the governmental system. And even its problems are curable.