What Latin America Can Learn From Israel

Carlos Alberto Montaner
University of Tel Aviv
Israel, Dec. 12, 2008

Some months ago, on the occasion of the 60th anniversary of the creation of the State of Israel, I wrote and published in several newspapers an article titled The Semite Tiger. The basic assertion, supported by much eloquent data, was very clear: the most successful social and political experience of the 20th Century was the birth and subsequent development of the State of Israel, an event that occurred amid the greatest vicissitudes imaginable. There was talk about “the Asian tigers” (Hong Kong, South Korea, Taiwan and Singapore) and even about “the Celtic tiger,” Ireland, but nobody mentioned the surprising case of Israel.

A Latin American friend who read my column in El País, Montevideo, an admirer (as I am) of the Israeli experience, phoned to congratulate me but also to pose a question not exempt from a certain melancholy humility: “Is there a lesson that we can learn from Israel?” My friend is grieved (and so am I) by the fact that Latin America is the most tenaciously poor and unstable portion of what we call “the Western world.” I told him I'd think about it.

Poverty and instability: the likely lesson

What can Latin America -- a 17.7-million-square-kilometer portion of the New World, fragmented into 20-some countries utterly different from each other, with almost 500 million inhabitants, at least 85 percent of whom declare themselves Christian -- learn from tiny Israel?

At first glance, they are two absolutely different realities. Israel, a state strongly influenced by Judaism, is a small country barely 20,770 sq. kms. (smaller even that El Salvador, the smallest nation in Latin America), with a population of slightly more than 7 million inhabitants, a figure similar to the population of the aforementioned Central American country.

But before delving into the topic, we must specify what exactly Latin America can learn from Israel, or from any successful country that manages to explain its success. First, how Israel, in barely 60 years, despite the huge obstacles before it, has managed to forge a democratic and stable nation. And second, how, amid frequent wars and constant trepidation, it has attained a high level of scientific and technical development in which the middle classes predominate, to the point it has achieved a per-capita income of US$26,600, in terms of purchasing-power parity.

By comparison, let us note that, in Latin America, the country with the highest per-capita is Chile, with US$14,300, at the opposite end from Nicaragua, with barely US$2,800. Between these two figures, the range of income varies notably, but the general average can be placed at about US$7,500.

Another factor that needs to be borne in mind is the distribution of those incomes. If the Gini index or coefficient effectively determines the level of equity in the distribution of wealth, Israel is a fairer country than all of Latin America. Israel's Gini index is 0.38, while in Latin America almost all the countries approach or exceed 0.50. As is known, in this type of measurement the closer a society is to zero, the more equally distributed is its wealth, whereas the closer it is to 1, the greater the inequality.

Naturally, that doesn't mean that poverty does not exist in Israel. According to information in the World Fact Book published annually by the U.S. Central Intelligence Agency -- from which I obtained most of these facts -- 21.6 percent of Israelis live below the poverty line. Except that in Israel a poor person is anyone who earns less than US$7.30 a day, something very different from what occurs in Latin America.

According to the United Nations' Economic Commission for Latin America (ECLAC), 44.2 percent of Latin America's population is poor. That means that approximately 224 million Latin Americans are poor. But there, the threshold of poverty is only US$2 a day. However, out of that huge population of people without resources, people who survive by a miracle, 19.4 percent (more than 90 million) are indigent folks who earn less than one dollar a day. Which leads us to state something that's quite obvious: to be a poor Latin American is infinitely more serious than to be a poor person in Israel, where practically the entire population has access to education, health care, drinking water and electricity, and where it is difficult to find families that literally experience physical hunger.

Comparative disadvantages

Experts usually use the term “comparative advantages” to designate those aspects of the material reality that tend to favor societies and persons and are utilized to indicate what is the best road to follow to achieve economic success. However, practically all that Israel can exhibit are “comparative disadvantages.” Even at the risk of repeating in Israel some widely known observations, let me point out some of the most strident, because this conference, although conducted in Tel Aviv, will be widely reported in Latin America, the final objective of these words.

1.   Israel is a very small country, gifted with very little arable land.

2.   Because it is located in a desert zone, Israel lacks water in significant amounts, both for consumption and irrigation.

3.   Nor does it have crude oil, although it consumes and must import about 250,000 barrels a day.

4.   Because Israel is surrounded by enemy countries, potential or active, and because it frequently has had to participate in wars or military operations, it is obliged to use 7.3 percent of its GDP in defense costs (even in times of peace), while a substantial part of its labor force spends long periods of time in military activities that keep it from participating in productive tasks. In contrast, Brazil devotes only 2.6 percent of its GDP to military costs; Mexico, barely 0.5 percent.

5.   Because of its geographic location -- a corner of the Middle East -- and due to the tense relationship it has with the nations around it, Israel cannot integrate into major commercial blocs that might allow it to create an economy of any scale. Instead, it must be satisfied with making international trade accords and must serve a domestic market whose size is approximately that of the city of Buenos Aires or Bogotá.

6.   On the other hand, Israel's population is very heterogeneous. The Jewish ethnic group, which is in the majority and gives the country its sense and form (even though 67 percent were born in Israel), is formed by a complex aggregation of people whose cultural origins precede those of at least a dozen different countries and cultures. This rejects any simplistic view or stereotype that attempts to define the Jew, racially or culturally. If anything characterizes the Israeli Jews, it is their incalculable diversity, enriched in recent years by a flood of one million Russians who escaped from the Soviet debacle.

7.   In the religious field, exactly the same happens. Plurality prevails. Among Jews, there is a range that extends from a minority of ultra-Orthodox Jews who follow the Scriptures to the letter to a high percentage of people who do not subscribe to any type of religious belief. Add to this 16 percent of the population composed by Israeli Arabs who profess the Islamic religion, almost 2 percent who are Arab Christians, and a similar amount of Druses and other people who are faithful to religions that are scarcely representative.

To this brief summary of huge disadvantages we can add other, very notable calamities that make the Israeli miracle even more admirable. Although the Jews constituted an ancient nation, they had lacked a State for millennia. In the mid-20th Century, they had no experience in self-government and didn't even communicate in a common language, inasmuch as Hebrew was a liturgical language that had to be revitalized because it was used only by a well-educated minority well versed in religious affairs. The Spanish language includes a most strange verb, “desamortizar” -- literally “to remove from the world of the dead” -- which can be used in connection with Hebrew; it is a “desamortizado” language, a language brought back to life by the indomitable will of society.

Excuses and alibis

How is this rundown of difficulties useful to us? Basically, to reject in a practical way all the conventional excuses and alibis with which we Latin Americans try to explain away our relative failure or the mediocre results of our societies.

·     It is not true that size and natural riches can explain the development and prosperity of nations. It is difficult to find on earth a country less naturally gifted than Israel.

·     Nor is it true that ethnic and cultural variety constitute an unsurmountable barrier, as we often hear from those who believe that the massive presence of indigenous people in countries like Guatemala and Bolivia (and, to a lesser extent, Ecuador and Peru) makes the great leap to wealth impossible..

·     Those who opine that the lack of regional integration is behind the enormous poverty in Latin America are wrong. Israel is a sort of small island, without any possibility, short- or medium-term, to integrate economically to the world that surrounds it.

·     To think that Latin America's problem lies in the institutional design totally contradicts the Israeli experience. The never-ending debate in Latin America over presidentialism or parliamentarism, federalism or unitarianism, is amusing but basically useless. Israel is governed by a devilishly fragile parliamentary system that is deficient and complex, and lives amid a perpetual political trepidation that keeps the country almost always on the brink of a government crisis, but that doesn't mean it is an unstable nation. A government crisis, which is what Israelis frequently experience, is one thing. A state crisis is different and much more serious. A state crisis is what we Latin Americans suffer with the military coups, the revolutions and the periodical refoundings of the motherland every time an enlightened caudillo decides to correct the ills that afflict us.

·     The idea (so typical of Latin America) that problems are solved by writing a new and perfect Constitution is a foolish way to waste time and create false hopes. Although required to do so by the United Nations in 1948, when the nation was created, Israel has not written a Constitution and so far has been content with what is called the “Basic Laws,” probably because of the complexity of the Knesset and the impassioned tendencies that gather there. Also, most likely, because it was slowly influenced by the British judicial system based on custom and jurisprudence, and distanced itself from the constitutional model of the United States..

·     To attribute the success of Israel to aid from the United States is an unfair exaggeration. Throughout the 60 years of the State of Israel's existence, the United States' generous (and essentially military) aid slightly exceeds US$100 billion. It is true that it is an impressive figure, especially when we recall that the Marshall Plan involved only US$11 billion, but it diminishes when we recall that the same amount of aid was given to Cuba by the Soviet Union during the 30 years of Soviet subsidy, 1961-1991, achieving only the chronic impoverishment of the Cuban people. Mexico, just during the six-year administration of President Vicente Fox, received US$108 billion in remittances sent by Mexicans living in the United States. That amount no doubt alleviated the suffering of a number of Mexicans but did not substantially reduce the indices of poverty the country is still seeing. On the other hand, we cannot overlook the fact that military expenditure is basically unproductive, among other reasons because of the cost of lost opportunities. Every soldier living in a barracks is a worker missing at the factory, and the expensive tank that patrols the border replaces the machine that manufactures shoes or the robot that performs open-heart surgery. U.S. aid perhaps contributes to explain Israel's survival, but not its economic success or the quality of life attained by its people.

The reasons for success

Wherein lies the secret of the relative success of Israel, a country in 23rd place, between Germany and Greece, on the list of 177 countries included by the United Nations in the Index of Human Development it compiles every year?

That may not be very difficult to understand, given that practically all the countries that occupy the first 30 positions in the Index have similar behaviors, even if they are as different as Japan, Canada and Iceland. If Tolstoy maintained that all happy families were equally happy and all unhappy families were diversely unhappy, we can appropriate the Russian novelist's idea and apply it to the behavior of the nations.

·     Successful societies are those where a huge majority of its members, beginning with the rulers, subject themselves to the rule of law, where human rights are respected, the exercise of individual freedoms is guaranteed, and where the press zealously plays the role of permanent monitor of the behavior of elected or appointed officials.

·     They are societies governed democratically within limits clearly established by law, where the leaders behave according to certain minimal standards of civic cordiality that govern interpersonal relations, and where meritocracy is a cult. This prompts society's members to consider any form of favoritism as a reprehensible comparative offense that disqualifies anyone who shows it.

·     They are open societies, where the productive apparatus rests on the private sector and transactions are made within the market rules. They are societies where economic competition works, where contracts are met and plans can be made medium- and long-term because property rights are truly guaranteed and the State will not arbitrarily run roughshod over them.

In these 30 “open-access” societies (to use an expression from Nobel laureate Douglass North), individuals perceive a certain sensation of fair play that leads them to believe that their legitimate efforts will bring rewards, that the violation of standards will be punished, and that a system of justice exists that will allow them to defend their rights when they are violated or when they conflict with those of other individuals or the State. It is from that, from the sensation of fair play, that the emotional connection of a citizen to the State is established. It is worthwhile to defend it, because it exists to serve us, not to oppress us, as we frequently perceive in Latin America.

On the other hand, we know today that the success of societies is derived from the sum of two intangible capitals, plus the social medium in which both are conjugated, added to the quality of the governments that administer the public space. The two are the human capital, composed by the education of the people, and the civic capital, which includes the values and attitudes that outline the people's behavior. An additional key element is the quality of the system of rules wherein the people interact, in other words, the suitability of the laws and the available institutions, as well as the government measures or public policies that are carried out with the product of the taxes collected.

We can also talk about material capital, perhaps the least decisive, which deals with the availability of investments, of equipment and infrastructure at hand. Nevertheless, material capital can be promoted and maintained only if the other two capitals (human and civic) are entities sufficient unto themselves, if the system of rules where those forces operate leads to development, and if the government's measures are reasonably on-target. When these factors do not mesh properly, material capital bogs down or is destroyed.

The three capitals

First and foremost, Israel's wealth, as happens in all nations that are technically developed, is in the minds of its people -- in its great human capital. For various historical and cultural reasons, Jews constitute one of the ethnic groups that cultivate intellectual formation most intensely. I know that it is common to remark on that feature of the Hebrew people (it is said that when they invented a day, the Sabbath, to devote to the affairs of the spirit, they began to accumulate intellectual capital) but, whatever its origin, that's one of the keys to the economic development of the State of Israel. That intellectual capital is often demonstrated with the impressive list of Jews of all nationalities who have won the Nobel Prize, a list that also includes notable musicians and artists.

The explanation is very simple and unfolds before us almost like a syllogism. Wealth is created only in business enterprises; to generate large sums of wealth it is essential to add value to the production of those enterprises by means of sophisticated processes that require knowledge and expertise. This is possible only if the society has a significant number of well-educated persons. That's what human capital essentially consists of. Without it, there is no development.

But human capital will produce little fruit if it's not accompanied by a great civic capital. It is on this point that values and attitudes intervene. In societies where people who respect the rules (the moral and legal rules) predominate, where there is respect for the legitimate hierarchies, and the citizens have a real commitment to the search for excellence, human capital flourishes.

This doesn't mean that in Israel, as in any other society, there are no psychopaths or unscrupulous beings who break the law, or people who lack good working habits. But the people who show those attitudes are perceived with contempt by the whole of the citizenry and are not sufficient to derail the country from the track of development it follows, or to destroy the basics of coexistence.

I don't want to sound like a religious preacher, but without solid moral and civic values societies fail and institutions stop producing. What I mean is that in Israel, as in all successful nations, there are moral sanctions for the rule breakers, an attitude that not always is present in large areas of the Latin American peoples, where the corrupt or illegal behavior of some rulers does not invalidate them in the eyes of a great many people who are willing to tolerate the violation of standards rules if they can also benefit.

When the president of Mexico recently declared that at least half the Mexican police force was an accomplice to the criminals, he was acknowledging something very grave. He was admitting, though it surely grieved him, that a substantial part of society lacked civic values and moral judgment, because those tens of thousands of people from all strata and all corners of the country who colluded with the criminals were a cross section of Mexican society itself, to the degree that the policemen are not a special caste of human beings.

The final lesson

What, in sum, have the Israelis done? I repeat: the same as most of the successful nations. Some years ago, a laconic American philanthropist was invited to deliver a commencement speech at a Catholic university in Central America and was asked to talk about the principles of ethics. He simply repeated the Ten Commandments and reduced them to a final recommendation that was totally unoriginal but absolutely valid: Behave toward your neighbor as you would want him to behave toward you. His speech lasted only three minutes.

If there is one lesson that we might extract from the Israeli example, it is very simple. If in the middle of the desert and battling every adversity this small country has managed to become “the Semitic tiger,” there is no valid excuse for any Latin American country not to follow a similar trajectory. Obviously, however, to copy those results one also has to reproduce the way to achieve them. The behavior that, as in the case of all the happy families described by Tolstoy, characterizes all the successful nations. That is the road. It is long and complex and there is no shortcut that will speed us to the goal. Lamentably, that's the secret.

Print this page