Israel's Illiberalism Will Kill Innovation

If Netanyahu’s coalition gets its way and continues its steamrolling tactics of turning Israel into an illiberal society, Israel’s economy will lose its vitality.

There was great news for Israel in the past few days: the Technion, together with Cornell University, won a bid for a new applied science center in New York City. This shows, once again, the prowess of Israel’s technology and its academia.

Benjamin Netanyahu is likely to celebrate: for years he has claimed that Israel can succeed economically while gradually turning into an illiberal society. He will think that he can calmly continue on the current course of his coalition, that he can chip away at personal and political freedom. After all, he will say, as long as Israelis will enjoy a rising standard of living, they will not mind some loss of freedom.

Technion - New York City
New York City

There’s just one little problem with Netanyahu’s bet that the country can gradually turn illiberal and that the economy will flourish will not work out. It contradicts everything we know about the conditions of innovation. If Netanyahu’s coalition will get its way and continue its steamrolling tactics of turning Israel into an illiberal society, Israel’s economy will lose its vitality.

Israel’s economic miracle in the last two decades was fuelled by innovation. Israel’s high-tech sector has been the engine of economic growth. Famously Tel Aviv has been named one of the world’s high-tech powerhouses by sources like The Economist.

What are the conditions under which innovation flourishes? Economist Richard Florida has shown that a distinct social class is responsible for most innovation. He calls it the creative class, and it includes all professions that work creatively in their specialty – from engineering and design to research and management. The percentage of the population that belongs to the creative class is a powerful predictor for countries’ and cities’ economic performance.

The creative class has very distinct characteristics. The most dominant is that it hates being told how to live and how to think, it wants freedom of choice, and it wants pluralism of lifestyles and opinions.

That’s not really surprising - after all, creativity is about breaking out of engrained molds and developing new ways of thinking, producing and living.

Richard Florida has also shown that the creative class gravitates toward cities and countries that are liberal. For most of them, a liberal environment is a must, and they are neither willing nor capable of flourishing in stifling, oppressive societies. Florida’s research has shown this conclusively both in the U.S. and the EU. Because cities are highly interested to attract the creative class for their economies and Florida has become a sought-after consultant for cities and countries on how do so.

I haven’t spoken to Florida, but I assume that, looking at the current coalition’s mode of action he would come to the conclusion that Netanyahu and Lieberman have decided to kill off Israel’s innovative potential and its creative class.

Our current coalition loves people who are submissive politically. It would like to tell us how to think, what to say, and what not to say. Their argument will no doubt be “let them continue to be creative in their professions – but let them shut up when it comes to politics.

We’ll tell them what to think. We’ll pour money into universities and research, as long as the creative class is nice and meek”.

That will not work. Look at China, which is pouring phenomenal amounts of money into its universities. China is good at producing what has been developed in the West, but the Chinese leadership is painfully aware that its economic growth has not led to innovation. Every parameter from number of patents to the number of Nobel laureates per capita shows this.

China will not be able to produce innovation as long as it doesn’t liberalize its society and its politics. You cannot command people to be creative. You can only provide the environment that will enable those who are independently minded to develop creativity.

Those of us who cherish freedom don’t need to be convinced that it’s economically good – we accept that as a welcome side-effect of liberty. For people like Mr. Netanyahu, who accepts freedom as long as it doesn’t interfere with their politics, and Lieberman, who basically hates liberty and believes in unbridled political power, only economic argument carries any weight.

They should finally realize a simple fact: they can delude themselves that they can chip away at freedom and keep everybody happy with money. But in an economy that depends on innovation, this isn’t true: creativity and freedom go together. This has been true throughout history. And they won’t be able to change this.