Israeli Expansion sets example for South Dakota

July 13, 2007 - Sioux Falls Argus Leader, by Marty Gallanter

When I last visited Israel , there were about 5 million residents.  In early June, 2007 – returning after a fifteen year absence – the population had risen to more than 7 million. 

The impact of this incredible 40% increase was evident everywhere.  Tel Aviv and Jerusalem , cities that offered parking and traffic challenges since the 1980s, exhibited rush hour gridlock on a scale with New York or Chicago .  And everywhere they’re building.  An entire skyline of new skyscrapers is going up in Tel Aviv.  Commercial and residential towers rise in the hills of Jerusalem .  Once rural “development towns” have grown into prosperous suburbs.  Entire new communities are appearing in the desert and in the hills of Galilee .  The construction crane seems to be the new Israeli national bird.

This fantastic economic engine (a GDP rate in 2006 of +5.1%) is not the result only of population.  After all, the nation of Chad has received a million new residents from the Sudan in the past couple of years and all that’s created is a refugee crisis.  When the Soviet Union fell apart, Russian Jews no longer needed to apply for exit permits.  They came to Israel by the tens of thousands.  They probably represented the best educated mass immigration in history.  They were doctors, scientists, engineers, writers, musicians and teachers.  And since post-secondary education in Israel is virtually free, the Russians joined one of the already best educated work forces in the world. They provided a shot of adrenaline to an economy just starting to bubble.  Behind them came Google, Cisco, Intel, Microsoft, IBM and others.

But even more important than the influx of international corporations was the energy of a young and innovative population, both born in Israel and recently arrived as immigrants.  While I was in there, Tom Friedman wrote about them in The New York Times of June 10th in an article entitled “Israel Discovers Oil.”  His point centered on how this surplus of educated human capital is Israel ’s source of future wealth, its own “oil wells.” 

Last year venture capitalists invested $1.4 billion into Israeli startups, a figure that puts tiny Israel in real competition with the huge nations of India and China .  There are over a thousand new start-up companies in Israel today.  No, they won’t all make it, but in that group there is probably another Google and maybe even a Microsoft.

All this is happening in a country whose tax policies and banking systems are still stuck in the obsolete socialist mentality of the 1960s.  Imagine how much better they could do if they had made the same changes in economic structure as Ireland (Irish Miracle – Argus Leader 6/23/07).

It’s another lesson for us to learn here in South Dakota and another example to follow.  Our tax policies are already business friendly.  Our banking system is highly developed and as competitive as any.  The cost of living is reasonable and quality of life is high.  All we lack is that educated work force that is the foundation of the Irish, Israeli, Indian and even much of the Chinese economic expansions.  We have all the universities, private and tribal colleges, vocational and technical schools we need.  We simply need a lot more students in those vacant seats.

I know it’s not simple, that it would require a substantial investment of resources.  I know that at first graduates would be leaving the state because there are not enough jobs.  But like the Irish and Israeli experiences, they will come back.  I know that new people will move to the state just to take advantage of bargain educational opportunities.  But is that such a bad thing?  People move here, they like it and they stay.

I truly hope we have the political courage to invest resources in the future and maybe not see returns for a decade or so.  But the world is setting example after example for us.  All we have to do is learn.

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