Neoconomics 101: Conscription and War as Wealth

neoconomicsYesterday published Grant F. Smith’s book review  “Neoconomics: Conscription and War as Wealth”  discussing Dan Senor and Saul Singer’s 2009 book Start-up Nation: The Story of Israel’s Economic Miracle.

A 19 minute radio interview is available today.

2:19 Israeli conscription and societal cohesion
2:43 Bomb releases to electric car batteries
3:13 Ben-Gurion and Shimon Peres as entrepreneurs
4:21 An international entitlement: preferential US market access
5:55 Are US entrepreneurs battle tested?
6:36 Start-up Nation’s exclusive focus on supply-side
7:20 US consumer market buys 40% of total Israeli exports
7:39 $10 billion in yearly trade surplus as aid to Israel
8:06 US can’t ask for peace in return for aid or support?
8:27 The Startup Nation US public relations campaign
9:25 Government to government transfers, non-market exchanges
9:54  Previous neocon manifestos
10:10 Does the US need to emulate Israeli conscription?
11:30 Israeli spies as heroes and “swashbucklers”
12:30 Senor: from HBS and AIPAC into the Iraq occupation media campaign
13:01 Militarizing the US economy
13:13 Start-up Nation follows the Israeli military censor protocol on nukes.
13:42 Polakow-Suransky’s conflicting CFR research on Israeli nuclear proliferation
14:25 Neoconservative political appointees in the US government
15:42 Conclusion: perpetual war is not a comparative advantage-dangerous implications
16:20 Policy recommendations, glowing interviews and reviews
16:20 No critical establishment press book reviews of Start-up Nation
17:17 Neocons still not producing good ideas…for the US
17:29 The US economy, militarism and “acceptable” illegal activity

4 thoughts on “Neoconomics 101: Conscription and War as Wealth”

  1. Grant hi. I too was not overly convinced by the arguments in Start-up nation despite having worked for a few start-up here including one that was written up in the book.

    Nevertheless the argument that the reason for the relative success of Israeli companies is due to preferential treatment by the US government is just silly. Here is a brief list of Israeli companies with varying degrees of global presence and success none of which can be attributed in the way you dismissively attempt.

    Even if you’re not convinced, the argument that IDF officer training may be one of the best MBA programs in the world requires more sober reflection than you afforded it regardless of whether or not you believe that is a good thing.

  2. Hello. Since you read the book, you know that there is a two-track theme. One is the start-up culture in the business community. The other is the theme of Israel itself as a start-up, guided by the vision of Ben-Gurion and later Shimon Peres (who the author quotes quite a bit. You argue that current crops of new companies aren’t beneficiaries of US largess.

    I disagree. Israel has received more benefits and breaks from the United States than any recipient country in modern history. Early benefits delivered by the Pentagon included:

    1970 Master Defense Development Data Exchange Agreement – Technical data exchange for military surveillance, electronic warfare, air-to-air and air-to-ground weapons.
    1979 Memorandum of Agreement – Israel allowed to bid on 560 Pentagon contracts
    1981 Defense Trade Agreement – $200 million/year Israeli equipment – R&D support
    1983 Strategic Cooperation agreement – offset programs to invest in Israeli military tech
    1984 MOU

    All of these enormous gifts from US taxpayers and the DoD helped lay down an incredible national technology infrastructure and long term tech workforce, along with US consumer market demand enabled by the 1985 free trade agreement. But the book mentions none of this or the preferential bilateral market access (which mainly benefits Israel).

    Also, the book does not focus exclusively on IDF officer training, it makes MUCH broader statements about compulsory service being “better than college.” I think the anecdotes (there is no hard data) tend to overrate the benefits of youth military service and the reserves. If Bill Gates and Steve Jobs had spent their best years invading Grenada instead of pounding out code, I seriously doubt they would have launched their incredibly successful businesses. Such things take time and focus. That’s not to say its the same for everyone, but Singer and Senors arguments are mainly storytelling.

    Frankly, the book seems to be trying to sell constant conflict as a comparative advantage, and cajole the US into reinstating the draft. The US would be wise to reject that argument and demand that Israel and its proponents try harder to serve its natural regional market, starting with bona fide peace efforts.

    1. I told you I wasn’t convinced by the book.

      If we’re going to talk about the weakness of anecdotal evidence, it would be better to avoid mentioning Gates and Jobs at every occasion. I think by anyone’s estimation they are outliers rather than examples for comparison.

      Also I fail to see how the agreements you list above had any impact on AOL’s decision to buy ICQ as the basis for all internet chat.

      I concede that the book is flawed, but it seems fairly obvious to me that one of the reasons Israel’s start-up community is both vibrant and successful relative to almost every other country in the world is because of Israeli society’s ongoing relationship with conscripted service.

      1. I don’t buy it. I think that US subsidies, Israel’s I/T infrastructure, access to capital, inter connectivity with advanced markets (particularly the US) and education investment offer more quantifiable explanations. Israel is in the top global tier in terms of education education expenditure per student.

        But somehow “Educ-Nation” or “Subsidiz-Nation” just don’t have that snappy ring. Also, any major neoconservative work that ends up making the case for US conscription deserves very close inspection. Senor and Singer’s inexcusable self-censorship on the nuclear weapons issue alone put the entire book in doubt.

        Skeptics might wonder whether making a case for US conscription might have been the starting point for this book, rather than trying to explain entrepreneurship. Stranger deceptions have emerged from neoconservative movements.

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