Innovation in Israel: Economy and Society – 2019 Ilan Troen Lecture on Contemporary Israel Affairs
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Innovation in Israel: Economy and Society – 2019 Ilan Troen Lecture on Contemporary Israel Affairs


Good afternoon everyone I am Katie grabby
the dean of the Brandeis International Business School I’m thrilled to be welcoming
you to Brandeis as we kick off such an incredible series of conversations as part
of our innovation in Israel conference I want to extend a special welcome to the many Schuster and
center fellows who are joining us today she’s driven fellows are alumni of our
Summer Institute in Israel studies program who now teach about Israel in universities
around the country and across the world welcome back to Brandeis many people have
come together to organize this conference I’d like to think I’m take a moment to think Jonathan Sarita
University professor and the Joseph H. And Bell are Braun professor of American
Jewish who history and Ben Go miscast serous the Peter a petrie professor of business and society
for the work they put into bringing this conference to life Professor Sarna is also
the director of the. Center for Israel studies and professor go miscast serous
is also the director of the Asper Center for Global Entrepreneurship So a few words about the Brandeis International
Business School we are an innovative business school with four Masters programs
all STEM designated because of their quantitative content and a Ph D. Program we have a large and thriving undergraduate business
major completely integrated with the larger liberal arts university our identity
is one of rigorous academics experience learning and a very global
population and cricket we are also a human business school
with open doors and a friendly community we are an international
business school with major initiatives in China India and Israel as part of our
Israel initiative we are in the process of building partnerships with I.T.C. Hurts Leah tell of beef and been GURREY
in universities. This event today is a follow up to our commitment
last year to build a bridge between the business and innovation
communities in Boston and Israel I’d like to take a moment now to welcome
Gideon our Gough back to Brandeis he’s a general partner of New Era Capital a technology investment partnership based
in Boston and television he served as an honorary co-chair of last year’s Asper award
event on cybersecurity and he will be joining our conversation shortly on behalf
of everyone at Brandeis we are so glad to have you here with us today. This event today is
important for Brandeis as a university the event brings together two
different audiences entrepreneurs and business people as well as scholars and
activists all interested in the success of Israel’s innovation and its impact on the
world we are hopeful that this event encourages study debate and reflection
consistent with our purpose as a university and it is with that mission
in mind that we are so excited to be partnering with the Schusterman Center
to host this conference innovation in Israel economy and society over the
next two days we will hear from a number of experts on the past present and
future of innovation in Israel we will examine the roots of this started nation
we will explore how years years of rapid innovation has impacted both how we live
and how we do business and we will look ahead asking ourselves what’s next for both
the economy of the commie of Israel and for Israeli society to kick off our conference
I would like to introduce our first conversation the lecture on contemporary
Israel affairs name for one of our professors the best exemplifies the
importance of international entrepreneurial learning. Professor trone is the
founding director of the center and has spearheaded the development of courses
and programs in Israel studies for both undergraduate and graduate students at
Brandeis Professor Troen and we are grateful for everything you have done and continue
to do to broaden learning opportunities for our students here on campus and around
the world our Provost described you to me as a force of nature so I thank
you for being here. It is now my honor to introduce our keynote
speaker for the conference Dr Karnit FLug Dr Flug has done if it dedicated her career
to the implementation of strong social and economic policy and Israel She most
recently served as the governor of the Bank of Israel acting as economic advisor to
the government and overseeing the design and implementation of Israel’s monetary
policy an accomplished academic scholar she is credited for maintaining stability and
supporting growth in the Israeli economy during her term as governor Dr flew
thank you for joining us today OK so now I’d like to hand over the conversation
Tara moderator for this afternoon’s discussion the provost of Brandeis
University Lisa Lynch Provost Lynch is the Maurice B. Hexter professor of social and economic
policy and an internationally recognized labor economist she served as
chief economist at the U.S. Department of Labor under Bill
Clinton Provost Lynch has a tremendous amount of
experience with the U.S. Federal Reserve System She is currently a member of the Federal Reserve Bank of New
York’s economic advisory panel she has served as chair as the chair of the board
of directors of the Federal Reserve Bank of Boston and chair of the conference of
chairman of the Federal Reserve System Please join me in welcoming Dr
fluke and Professor Provost which. Thang. Well good afternoon everyone and yours
is working properly OK excellent. It is a great honor for all of us here at
Brandeis University to host Dr Drew. And I I have to say personally as somebody
who’s been involved in central banking more as a sort of participant observer as opposed
to somebody who’s actually making the decision making I’m particularly excited
to have you here today to kick off our conference before we began a couple of housekeeping items if you will
please turn off your cell phones if you haven’t already done so that would be
most appreciated and secondly you’ll see that everyone should have an index card if
you do not have an index card if you end up in the air will make sure that you get
one we’re inviting people during the conversation the Dr fluke and I will have
over the next forty five minutes to write down any questions you may have we’re
going to collect these questions by four o’clock and then there will be time for
these questions to be answered we’ll put those together rhesus got cards if anyone
needs them but up here in the front we’ve got a request up here in the front. And that
should help expedite the question and answer period at the end of our of our coming
so let’s begin the conversation let me first begin by congratulating you
Dr flew for. Being selected as the central bank governor of the Year for and I’m
going to quote from the citation for delivering major reforms in banking
and pushing for the creation of a financial stability Committee during
your five years as governor of the Central Bank of Israel so I think for that a round of applause thank you. This is a wonderful honor for your work. Heading
the Central Bank of Israel but let’s start our conversation with kind of a big picture question what strikes you
as some of the major differences between the economic culture of Israel and that
of other countries for example like the United States so first the phone
let me just say that it’s a great honor to be here and very
pleased so thank you for inviting me. Before thinking about culture actually
I think the Israeli economy is a small open economy and the U.S. Economy is a large close the corner me and I think
this is sort of the biggest. Difference in the way we think about the economy in the
way the economy behaves so if you do and what do I mean by that in this thread about
thirty percent the thirty percent of the G.D.P. Is exports in ports are about the
same so in terms of openness in exports and imports are
sixty percent of G.D.P. In the US exports are about
twelve percent of G.D.P. Imports about fourteen school together
about one quarter and that if facts how we think about the economy and how the economy
behaves we are very dependent on the U.S. Economy I think the U.S. Economy is somewhat less dependent
on the Israeli economy. And for the Israeli economy most of the fluctuations
in the cycles of the economy are related to what’s happening in
the global economy and the U.S. Is the one defect really is in no way
responsible for the cycles of the Israeli economy so it’s a different perspective. I think in terms
of culture there are actually quite a lot of similarities and I think the
conference here on the innovation and the thing they dynamism there are some
similarities in this respect and I think they interpret in early on spirit and a willingness to take Chris. There
are subsume similarities here and there which are related to do a flourishing high tech sector
in both economies so. You now as. Mentioned at this conference we’re
going to be debating innovation in Israel from all angles what works what doesn’t
work and the implications for the future. How do you think Israel’s economic policies
have promoted innovation and wonder been some of the costs and benefits of these
policies for Israeli. Israeli society . So I think the A There were a lot of. Measures policy measures
early on that were very important for the development of the high tech
sector in the innovative sectors of the economy and they include first of all you
have to have the right human capital so there is education for some which
actually produces the kind of skills and cipher the scientific abilities and
aptitude that actually ascension for the development of innovate in of a fever sector and the
other element is the a promotion of actually calmer Chevy’s
ation of some of there could be in the Demick ideas in relation to actually enhancing
the relationship between their Could the media and the relevant sectors of
the economy and that was partly done by creating subsidiaries in the
universities that actually help in the commercialization and setting the date
the link between their Can they make a deal in a in the industry right taking
them to market. I think the development of the a venture capital industry the financing
which initially the government was very involved in but then actually the industry
developed as an Independent I think the government now correctly is not involved
in the financing but early on it was so I think the combination of human capital
there the connection was they could be MIA the financing and they sort of all
of those coming together created sort of the eco system and that
is. Helping new ideas to be sort of to be transformed into companies
and startups I think there are also some cultural. Elements that contributed
to the development of the high tech sector wireless this interpret Marial
spirit mansion and the other is the willingness to take risk and the fact
that if you fail it’s not considered a failure you will learn from your from
your. Previous experience and then your dog better the next time and the next time
so I think their willingness to test to take risk some may call it torts but because
you risk your own money you risk other people’s money but I think this is very
important for the development of innovation on innovation based industry and I don’t
think that this is something that you have you’ve seen all cultures so I think there
is something unique there and then another element which I think is very
important in some industries in particular is need and they say need is the mother
of invention so if I look at the cyber industry for example defected Israel needed
to develop it it started in the army but then it sort of. It was
transformed also to was simply a new system that’s true for many of
the of the technologies that were missionary developed by the.
Defense Industry and then were civilian lives I’m not sure that’s the
right word but anyway. So I think this is the example we’re in mean breeds innovation
water is another great example you know that in Israel about at least half of the
countries defy. And is there the desert so we used to have a shortage of water I remember commercials
since many many years there have been this slogan was Israelis drying up and
want to scrap the whole commercial but that actually led to very innovative
ideas in water irrigation to drip irrigation which was invented in Israel
and the dissenting nation that was the new technologies were invented. And the
wreaks cycling Gulf water in Israel is the highest among all countries so Mead actually
also leads to innovation so I think this is sort of the I would say the main
building blocks or the main elements that I believe contribute
to the development of. Industry that is based on you know
variation. So this is the bright side and I think the main challenges or the one thing
that people. People have to remember that at the broad this definition or
only fourteen percent of the population actually of workers work in high tech at
the broadest the Finnish and so on the fourteen percent of the population
actually directly enjoys high productivity X. This industries are very competitive
so they are they pay high wages they have very high productivity their
outward looking they most of four day produce is for the global economy but
then you have the rest eighty six percent which have relatively
low access to this innovation and in fact I think the defect that these
industries have very high demand for experience extremely skilled people in a way deprived of the rest of the economy
of this valley and saw the rest of the economy which is more in work looking which
is services and goods that are produced mostly for the local economy.
Have har har time even adopting adopting. Technologies high technologies
because they have hard time actually paying the kind of wages that are needed
to attract the highly skilled people so we sort of have a dollar economy. There is the
result of. I guess on the one hand this extremely successful
innovation based industry and insufficient skew is which we can talk
about later to actually even Joyce some speed. Oversell for this phenomena in the
rest of the economy so I want to pick up on this theme of what’s not working with
respect to the innovation you can I mean last year you were quoted by Bloomberg is
saying that Israel’s economic locomotive meaning the high tech high tech in
innovation is pulling decrepit railroad cars so what did you mean by that and how should
Israel have to address that challenge there so what came Manti’s that really we
have this extremely successful high tech sector with. Very has the top notch in engineers and scientists and. All other highly skilled people have high wages
and are very competitive globally. And we have the rest of the economy which
employs most of the of the employees which has mediocre wages which doesn’t
have which doesn’t tend joy actually the faults of this innovation
because of Forte said before and it’s also job graphically very clear
that the high tech sector is centered in the center and of proportion of high
tech companies and the innovation based companies in the periphery
is very low. And as I said even in adopting technology
existing technologies in some of the a periphery is more difficult if you can
hire the technician or danger near that would actually help. Put this
technology in place the main issue I think is education from the
very early starts and up to all a up toward. Being at
adulthood. And vocational training if you look at the Israeli
results in standardized tests for a doubt but also for students what you see
is two things One is that the effort is not what you would expect from the start
up nation it’s lower than the average of the O.E.C.D. Substantially lower and that’s true in all
the basic skills the turn necessary for . Engaging successfully in their labor
market of the twenty first century it’s the. Literacy in their
belief to do some basic math and even in digitally digitally
proficiency. The results are really not what you would expect but
what is even more striking is that we have the highest a variance in terms of results
saw actually there is one indicator at the time or ways to look at
it which I think gives you the sense of the inequality in the quality of education
to different people get from different backgrounds and this indicate or is the
proportion of people who are coming from the lower quarter in terms of income per
capita of their families that actually get results of the highest quarter
in terms of the the results so I look at it as an indication of the.
Of what they do occasional system is doing to to get people a better chance to actually succeed and
we are we have the lowest proportion of those people was from low
income. Families have relatively very small and very small
proportion actually get I think it’s sixteen percent that get to the highest quarter
of results in these standardized tests so that you creation system doesn’t.
Provide people with the rights queues enough people was the right skills
and that’s reflected in productivity and also the vocational training which you
couldn’t get if you didn’t get the right here’s the new your. Basic Education
and in high school you would. Expect a system to provide some vocational
training to sort of up to grade your skills and also over your life’s time
because now people have to have skills that are sort of changing over over
their lives and that’s not happening to a sufficient degree that implies
that we have very high wage to gaps across it costs employees
actually the highest gaps in wages per hour or so all
and that’s basically a reflection in the very large
gaps in skills. In my view this is the area where we must
invest invest much more not on the resources because there has been some
increase but smart resources in an effective way we can also talk about different
populations that are not getting sort of the core core record on. To to be able
to work to really engage in these industries or or even
any. In. Job the tree choir even basic skills so I
mean it’s striking for me as a labor economist who’s been involved
in central banking that what you just described of these issues of skill.
Failure of the education system to truly provide that. Basic Education that you
truly need for the twenty first century widening inequality everything that you
just said could have been said and in the United States and certainly has been a focus of discussion in US central
banking policy insofar as as you stated as this results. In lower
productivity and you know the economy as a whole sort of undermine the fact that
we don’t invest more and more people in their human capital development acts as a drag on the potential growth. Of
an economy so so tell me how those conversations played out in Central and
central bank discussions in Israel on how you think about that issue of inequality
and how you think about the ways in which a monetary policy should or shouldn’t
respond to those structural damages identified so we saw actually
normally that would not be a question asked for sent off central
bankers and in Israel. And like in other central banks actually. The governor
of the Central Bank is also a deacon nomic advisor to the government
so in this capacity actually the Bank of Israel it has been looking and studying
issues in of much broader than just the ones that are relevant for
running monetary policy another a peculiarity I would say about the
Bank of Israel you know we have a new law of the Bank of Israel since
two thousand and ten. And in that law there are dis stated goals of the monetary
policy and they include price stability they include the a supporting the economic goals of
the government including growth and a employment but they also include
reducing dish socially gaps which is very unique you don’t see it
in any other law of any central bank Strangely enough it was
introduced into the law as a result of some negotiations about the
law I want tell the whole story but it was there basically a choice between there some issue of the
budget of the Central Bank being overseen by him by the Knesset or
putting this. This. Is part of the cause of monetary
policy so this was the result of a negotiation in any case I don’t
think monetary policy per se has a very clear and direct
effect measurable effect on inequality it also is a policy that is directed this at the
business cycle and I think the issues that you have to deal with when you want to
really tackle the issue of inequality are more structural and more long term
issues but I certainly took very seriously the role of economic advisor to
the government and in this capacity this central bank off the back of
his role has actually done a lot of work on the structural source of
stuff inequality and walked are the main primitives. So in Israel they’re half full glass is the inequality has. Actually been
coming down over the last six years or so. After going very
drastically in the early to tower sense. But then it
started coming down now the Danish phenomena that led to the
decline in unemployment had been defective there has been a very substantial increase in the
labor force participation in the increase in two breadwinners to proportional
families was to bring the breadwinners has increased dramatically
and that actually led to a decline in the what we call economic
inequality so this is the equate inequality may measure does a gene the measure of gross
income before transfers and taxes that started to decline in
actually about ten years ago following very substantial cuts in wealth for
which actually were designed so as to promote all in the entrance into the labor
market and that was quite successful. But. Part of the of the downside of
cutting well for was that people who are basing themselves basing themselves
on wealth for became very poor now with time what we see is that when the. Welfare
System stab it it’s the decline in the economic inequality eventually
also led to decline which we’ve seen in the last few years of
disposable income so net of transfers and taxes income inequality
has actually come down however it’s still very high so where did the trend is
positive or I should say negative because it reduces their wallet. But the level of
inequality is still very high comparing to other countries and I think the very
end here there are two elements that can explain that while the relatively I
would say modest Well first system and income tax which is very it’s progressive
but it’s relatively modest when I say this in an Israeli crowd people don’t
believe me when I say that taxes in Israel are relatively modest people don’t
believe me because usually those who sit in the room do pay income tax
however fifty five percent of employees don’t get to the threshold where
they actually pay income tax so income taxes which are tend to be that’s part
of free distributive policy to reduce inequality a relatively modest and the well for
payments are also quite modest So there is relatively modest redistribution
which by nature leads to relatively high quality the up side of it is that
people. Both tend to be in the labor market the downside of it is that you have a terribly high. Inequality the other
element of inequality is what him mentioned before and that is defective we have
very high disparities in the in skills because of it’s of the an
equal education and that leads to. Toward high inequality in wages which also
contributes to inequality so there is no easy way out but I think that
education is the basis and if you would upgrade the skewed of people
by giving them the basic skills that are needed for the labor market this
is the sort of define demented way off reducing inequality is education but as
you mention training because if you are already in the labor market you’re out of
the formal schooling system so finding ways in which people can both be working
and continue to work choir skills that’s another challenge that’s
true and Israel has a relatively modest system of OK tional
training and I think that generally and that’s true not only in Israel because
I think the mobility between jobs now is much higher than it used to be and the
skills that So you really need to update your skill set up great use of over
your life time that’s definitely not happening to a sufficient degree in history and it’s
something that you need to develop these lifelong. Skill provision in order
for people to review be able to move from one job to another
and get the basics again then a very common theme as well that we
see in the United States. Switching focus just a little bit in terms of the Israeli
economy sort of with your had on this as. The main advisor in the
Israeli economy there’s been a lot of pressing controversy about the
power of large business conglomerates in the Israeli company. So we’ve been talking
about startups and you think small but there’s a there are also very large conglomerates
So how do these large incumbent business entities treat or engage with the
new high tech startups do they help to help innovation and promote innovation
or not or do they sort of live a separate life. I don’t think they live
a separate life but there are there is a complex relationship there first so I
think the issue or the discussion of concentration in the economy.
Was at its height may be seven or eight years
ago and then there was a committee that actually led to
the breakdown breakup breakup breakup of the what we called the pyramids
so I think this phenomenon is now more or less a disappearing and generally I think there
is much more competition then there used to be although there are
some sectors where there is a room for further enhancement of
competition one sector that actually is I think going through a transformation is the financial sector
in the banking sector. And there actually were are Israeli is in the
state saying we but Israel. Is in the process of implementing their
reform which is supposed to enhance competition in the financial
services. I have to say here that concentration and the lead costs of
competition are not synonymous because if you have a low barrier is to entry and we have been
reducing the barriers of entry so you might have only a few large large. Banks
for example because maybe there are returns to scale
in banking to the extent that in a small economy maybe having by then
all thirty banks would not be in it would not be efficient enough but I
think it’s important to reduce the barrier of barrier. To entry and that’s
what actually has been happening as a result of the reforms that have been a have been implemented. The
kind of reforms for example that some of the day but the reforms in this
area where the requirement of actually breaking up to a. Car. Card company how
do you say credit card companies on credit card from banks that
owned them in order to create additional players and the other part of the reform
is to reduce it to actually allow a very easy transfer of fewer come
from one bank to another it’s actually a technological platform that is being now
put in place that should make it very easy to move from one bank to another
and that’s introducing competition even without changing the structure or in
increasing the number of players I think here also fame tech companies are
very important player and they could be enhancing competition
and hence in deficiency actually about eighty percent of the fainted
companies we have about six hundred of them in Israel are B two B. Which means they’re basically providing
services to banks and changed the way banks are providing services they make them more
consumer friendly they make them much cheaper and they make them
different and more in different types of services. About fame
tech and the financial industry it’s still not clear what will be did end result
whether if most of the fainted as is happening for now in some countries will
actually make the banks more efficient and change the way the banks will provide
services all whether fame tech or big techs will be the provider of financial services
the in themselves as is happening in China and in some other places so what
will be the sort of model is not clear but it’s very interesting to watch. And the
norm is interest to our students as well as many of our students are demanding
more and more courses in tech area. So both of us are women in a field that it’s not known for
being particularly female friendly. And it’s certainly very male dominated and
going through its own self-examination process that’s been you know a long time coming. When you look
at the innovation sector that as well has sometimes been
characterized as something of a boys’ club both in Israel and
in the United States. So can you talk about the challenge of gender
diversity in Israel perhaps even from personal experience I would try. I did most of my career at the Bank
of Israel if I started this in a research or their research department
about thirty years ago. And I have to say that up to doing fine moden point I
thought actually of the work even the gender blind institution. I
never felt all the way maybe except for the last stop.
That there was any issue. Regarding or any difference in
their ability to move forward. As a woman and saw it was in a way friendly or just ignoring the issue
of gender which is friendly enough I guess. I think one meets the politicos in sis. The police politicians who
make the decision which is the governor is saying is appointed
by the government. Called be that they’re less used to not
over looking qualified women that are around so that’s how I can
put it but I did get them pointed. When I made my toes seem your appointments
the first two senior appointments that I made that the Bank of Israel happened to
be women not because I wanted to appoint women but because I probably didn’t overlook
very qualified women that were around so my deputy was a. Very bright. Economist
and also the head of the banking supervision
which I chill as well as a woman I made some excellent male
appointments so I think it was not a I didn’t decide by gender I should say
that actually is rarely in the financial sector or a has I think the glass ceiling
was broken many many years ago when a banking supervisor
by the name of god be a mole was the name in the eighty’s
and later many years later she became the head of one of the largest
banks and actually when you look at the Israeli banking sector it’s I wouldn’t say
female dominated but I think you don’t see there this traces of the glass ceiling
However that is not true in other sectors and certainly not in the high
tech sector where you see it is see a relative a really small proportion of women.
And that’s true or so in the boards of large companies and in the rest
of the sectors of the chord in me now why is that why are we not all
to actually using the talent of fifty percent of the
population so I think there is a combination I guess of.
Cultural issues as to you women are in most families the
primary child care take care. I think there are also education of
barriers still when you look at the proportional for women in nearing
in computer science in math. There are less than thirty percent. And
there are very high proportion in the caretaking. Professions which are
very important but are matchless well paid. And that’s I think has
to change from very early on I think somehow. We still give the
message to our daughters that it’s OK to take we have this system a few minutes in this row for you wouldn’t
say math is OK for our girls but it’s not OK for our boys if my boy I
want to talk about my kids but somehow or other you know. That.
But I think that that’s the message in society still really
strangely math it’s changing but very very slowly and when you look at the
university the compositional few new various universities two of them to me it’s amazing
that you see only twenty seven percent of the A B A. Students in
computer engineering are women only twenty seven percent.
So I think there is a long way to go. And I think also workplaces
have to be more family friendly in general and that would have
women and men and maybes but still I think in many maybe is somehow
it’s the expectation that Eve The child is safe it will be the woman who
became from. Kindergarten hopefully that would slowly change well
I know how important it is also for. The impact that you’ve had as a role model for. Women and
Families. In Israel and so. Work to come on that
front. Switching gears a little bit and trying to
anticipate a little bit of a conversation that we’re going
to have with Guinea and. There’s a well known link between Israel special
cyber defense military and the innovation sector and you’ve talked about that already
this afternoon what does that mean for Israeli society in terms of
who’s in who’s out of Asian opportunity. It’s true that
the graduates of eight to one hundred days a are. Sought after your say by a high tech industry and
they are screened to be VERY was high abilities and then they get to
they get the training that helps them to be extremely valuable to high tech companies
but I think the twisted development of the industry and the shortage of people
was this kind of training. There is more and more. Opportunity
for people who get the Rye it’s education have the potential to actually
get in so I think actually the shortage of skills maybe they way to
sort of opening the door for some groups they too are in the past
excluded didn’t is from these sectors who actually get aid I know that for example
Khaled the women they have. To get a basic education are actually there
are there are more and more of them getting into the high tech
sector initially it’s more basic. Basic types of jobs but they slowly move
up so I think actually the shortage may be active allies seeing bowling pick capitalizing
and all and that’s true also for the Arab population where in the past you had a lot of people who had to be finished
their engine nearing training and ended up as teachers not that they looked down the
teachers but they couldn’t find jobs in some of the companies in the high
tech sector and that’s changing slowly but I think we’re moving. In
that direction in that their action the army self is actually when they’re looking
for people to get into some of these units they are making an effort
today very Sify. Candidates for these units because they’re also
they also understand that there is a lot of Parliament wasted and in there
so they’re trying to actually get to the periphery and to find people whose potential
that they do cation system didn’t quite get them but was some help
there to make it will get there. Now many of Israel’s leading innovators
have chosen to be uber Israel to pursue their education or to grow their
own start ups in places like Boston New York and Silicon Valley So how does this
so-called brain drain or international flow of businesses out of Israel
affect Israeli innovation. I think that. It’s very natural We’re
living in the global war and I think people are going and going back and
I think this enriches in a way the the ability you have to know
the market you have to know in the market is the Lobos so I don’t see it as a negative phenomenon I think it’s part
of people are global and certainly people in these kind of industries. Get a lot from spending some years abroad
maybe coming back. For Yeah so I think that I see this as a very natural phenomena of
this very very global sectors. So we’re getting close to four o’clock
and I want people to make sure you’re writing down your questions but as
you’re finishing up your questions to be collected. You’ve completed your term as
governor of the Bank of Israel on you and I had an opportunity before earlier this
afternoon to talk about your plans so what are your plans for the future. And what
work what exciting because you know. When I was thinking about my
retirement I thought of dual. Be reading novels and do some of your guy
and go to the gene. And any ever so and take longer cations it happen
every little bit. But not not to the extent that they sort of imagined
my my time after thirty years at the Central Bank and five years as a cop you know. What I found
is that I actually enjoy. Working in my field doing
thinking about D.C. So I do some. Consulting to some
other central banks. And I would be joining the Hebrew University and
hopefully. Be able to prepare a course that would use some with my
experience in policymaking I think there isn’t enough full force there to actually teach
English in economics ordinary really more so hopefully I’ll bring some of that
experience and I I basically discovered that. The enjoy thinking about forty C. And it’s nice to do it from a different angle so I think that’s what I
would be doing wonderful and I hope this is the first of many trips as you’re doing
this focus on helping people. Understand the role of policy and economics this is
the first of many such talks at every end ice university so we’re going to
now bring up another panelists to. Get a N R. And. Again welcome
back to Brandeis. Mr Guppy has been a wonderful partner for many activities
here at Brandeis University is as Dean gravity mentioned before. So I could
be and you’ve been listening to this conversation. Any comments
on some of the topics that that we’ve discussed. So it’s great to be
here again and thank you so much and it’s an honor to be here with. With.
With With my way with Mrs bestrode who. Did such a wonderful job bank of history
and. A few comments I mean the first thing is. I don’t come from
an academic background I come from a. Practical background in
this case. I am spending a lot of my time looking for Israeli
technology companies who might be outstanding companies in the future and might be able
to grow successfully and so that’s the basis from which I would make the comments
I think it’s important to remember that all of Israel is an experiment the whole
country is essentially one living. Very very large startup operation it’s
been around for longer than most startup companies but not nearly as long as some
countries including the United States so there’s a lot that’s still in process and I think
some of those issues have been highlighted it’s very very effectively by coming through
you know during her discussion. The second the second thing is that it was
mentioned but but I would want to emphasise that the fact that Israel and the Israeli
economy has been able to develop as it has and by the way in one nine hundred
forty eight there were seven hundred thousand people in Israel. Today
there are eight million so ten times ten to one the ratio of the G.D.P. Today to that in one thousand forty eight
is approximately forty to one I believe it’s the highest. It there’s nothing like
it in terms of the disparity between the growth of the economy and the growth of
population anywhere including China which is very important to note as well. But
it’s this is happened despite the fact that there are demographic impediments in
Israel to economic inequality which are really really serious twenty percent of the
population are Israeli Arabs one fifth of another ten percent or nine percent are
ultra-Orthodox and historically at least these are elements that have been not
excluded but some by choice and some by exclusion not been able to
participate in nearly as successful a way in the building of the economy as Dr
Fluke is noted that’s changing but that has a long way to go and despite that Israel
is where it where it is. I think what’s happened. In Israel over the past
fifteen years is really in the startup nation of Israel is there for sort
of broad trends that are different today than they were a decade or
fifteen years ago the first is a much broader base of technologies
that you see coming to market. Israel traditionally has been a cyber
hot bit as we know and it’s been a hotbed of telecom technology
what’s called T.N.T. And software a lot of that has a military background in terms of the
people who get involved and then it’s had some really great national champions
that have emerged in areas like I grew cultural technology with companies like in a theme in pharma of course with PIP which
is an outstanding company going through difficult times but an outstanding company
in some unusual areas like cutting tools for machine machines which is east car
the company that Warren Buffett bought a number of years ago
so. But but today it’s a much much broader kind of set of
technologies you have you have autonomy sphere calls and technology behind those
you have digital health both medical devices and software you have advertising
technology companies you may have seen last week a company called Dynamic yield that was
bought by McDonald’s for over three hundred million dollars It’s an ad tech company
which McDonald’s will use to drive. Advertise to drive people more effectively
to their stores companies like iron source and Outbrain Fin
Tech as. Dr fluke mentioned is a very important area particularly peer to
peer kinds of technologies companies like lemonade insurance and also payments
companies companies like P. And here and others have grown and
become quite large cyber continues to be a very important area but along with
that there is robotics and what’s called automation four point zero It’s everything
to do with automating warehouses and the livery of goods to people as well as many
factoring There’s gaming these are all areas that are part of
this is really start a mission that fifteen years ago most of
these were not significant the second you know change has been
access to capital there is a lot more access to capital today for a young company than there used to be and
I think the biggest change is that there are three hundred or so multinationals
that have offices in Israel today or regularly send their people. And actually
are looking to find the jewels in the crown so to speak either invest
in them or buy them it’s a huge change. And that’s in addition to a lot of venture capital companies both
home grown as well as others outside of Israel the third thing is
there’s now General there’s a generation of founders of Israeli
companies that are second and third time C.E.O.’s and the amount this is hard to
underestimate and I haven’t seen the statistics on this but I’m encountering a lot of companies that are you know being
led by people who already had multiple exits which means they’ve built businesses
they’ve made mistakes hopefully at least they’ll make new mistakes and not the old
mistakes that they already made that’s what we all try to do and the chances of
success are higher if you’re if you’re a multiple If you have done this several
times and the last thing is there’s something called a lean startup
methodology for creating a business much more effectively and quickly
than it used to be the case this is true globally this is true in the United
States as well but I’ll give you one small example of how it works in Israel today
most startup companies know in Israel that to be successful. And again Dr fluke
hinted at this you have to actually build your R. Indian Israel but you have to as quickly
as possible get all of your customer facing infrastructure out of Israel and
into those places where your customers are likely to be close to you and so there are
many examples of Israeli companies that have large operations centers in the US
in Europe and some cases in Asia leave their R. And D. In Israel which
they should do and it’s been a really interesting formula that’s been
quite successful all four of those changes are quite new in the past sort of ten
fifteen years and they’re driving the next wave of innovation. We can go as you’re describing you know
we’ve been talking about. This foundation and the openness so the Israeli economy
and you’ve just talked about you know the strategy of a base in the R. And D. Within Israel and then immediately going
to get scale outside of Israel what strikes me is what that’s happening and
that’s you know there’s been so much progress and at the same
time we’re in the midst of a huge you know potential retraction of
trade. So I was curious both of your reactions to. The challenges to having
an open economy with some of the current debates and discussion that we’re having
both on trade things like BRAC said sort of how how that might potentially slow down
or undermine some of the vitality that you both describe Dr Klein I think it’s a very Morrison development they actually
I think that the trade the growth of trade over the last decades has
been been officially. For most. Most of us most countries I think
there wasn’t sufficiently. Attention paid to those particular
groups that were hurt by by globalization particular groups but as a whole I think. It is the Israeli economy
and the US economy I think benefited tremendously from free trade so I think
going back on that would be really. What will set us back many many years so I hope
that somehow you know so far there has been a lot of talk but
for example there was a some renegotiation was that of the
enough the green men so it I mean I think there was a threat but it didn’t materialize and I
hope the other threats will also somehow be resolved but it’s certainly something
that is war something I want to say anything about the BRICS
it is. I think. Not a good idea. So what Israel is is is very vulnerable as a small economy to outside macro
crises in trade around the world one of the things I would say. If
so many of the investors you know in Israeli technology over the
past five to ten years a significant source of those actually
been in China. Chinese investors have been have been what Israeli companies they
bought moved by which is the largest. Food you know. Company or you know basic
foods company they they bought a company called The Machine which
is one of the largest. Agricultural. Car companies making fertilizers principly
they’ve been very active and today for both reasons have to do with China itself
and also Chinese relations with the United States and now other countries as
well and the tensions around that you can absolutely see at least anecdotally
I can say that there’s a lot of pulling back on the part of Chinese
investors and companies who are and Israeli companies are being much more wary
some pressure from the United States so Israel is very vulnerable to
these crosscurrents cream or. So to start up with you know I know you
you are one of these people that spends a lot of time going back and forth between
the United States and Israel what do you think are some of the needs of Israeli
innovators for the future talk a little bit about skills talent capital
markets but what do you think are some of the big As you’re looking at crystal ball
and looking say over the next five to ten years what are the areas that they
most support I think they need a lot of patience which is not exactly and
you know high supply in Israel. You saw another Israeli company being sold about a week ago. Which which. Was
which is which is you know development company. To the
to Nvidia it’s a it’s a it’s a it’s part of it’s a microprocessor. And software business
which sold for about seven billion dollars And and it’s an example of what happens
when an Israeli company’s able to make decisions that enable it to
actually grow and become a global player I think. Attentional A
There are too few Israeli companies that make it to that to that size and
scale for many reasons there’s a pressure to exit from investors there’s a pressure to exit from you know the
mother of the founder who owns the founder that I mean there’s all kinds of pressures
to do sort of sell too early but I think that. It would be a good thing to see more examples of
companies like mobile I and others that are able to grow and become really global
players and then sell or not sell but sell for a position of real of real strength. And and
not too early so that’s that’s one thing the biggest issue is talent that Dr fluke
talked about this. Unless Israel is able to bring in two of the
available pool of town. The periphery which is everything outside
of what’s called might be not that I believe the state of the leaves everything
north of the county I’m south of of you know Ashdod or even even the south
of us still needs to be brought in. The ultra-Orthodox who by the way demographic
trends are problematic today they’re ten percent of the population in thirty
years they will be twenty five percent of the population and and that’s because they
have very large families. Israeli Arabs not so the average Israeli Arab family has
less than three kids today it’s actually less than the secular Jews in Israel
which is a complete turnaround from a generation ago but unless these Arabs
are also brought in. It’s nice that fifty percent of all be part of the system is
real or Arabs that’s great but why should why is that why that particular profession
and not so many others why are you. Engineers who are artificial intelligence
roles in Israeli companies why are you those Arabs It starts in school and starts
in primary education and that’s where as Dr correctly said that’s the real challenge
going. To go three years you think about these challenges facing the
high tech sector Dr you talk about quality both mention
skills so what role then should government have in terms of
supporting innovation you talked about the role that government had in me in
initially sort of setting up this large start up funds to sort of get financing going
in the sector traditionally think of government playing a key role in education
and in training because there’s a market failure in the delivery of education
in in training don’t see the private sector itself typically stepping in to
to do that so from for both of your perspectives when you’re looking forward
what do you see as some of the key government policies. That either need to
be reinforced or put in place to further promote innovation. To go back
to the basic And that’s and U.K. Ssion And I think the discrepancy sort
of gaps in the level of education that our population gets I mean that defect
that in terms of resources there is less spent per child.
In the Arab community that’s. The I would say the
basic impediment for their progress I think now there is more
openness on the part of the companies to actually. Get engineers for
example so I think there is a chance that if they come was the right
it was the right skills they will be able to to get into to that sector and then
there is the holy Demain where we actually see a retraction regression
really a regression. There was a period in which there was some link
between resources it’s the third given from the budget to schools on the basis of
providing core curriculum that the last few years were actually we went back which
means the less there was less demand to actually provide core require gnome
in order to get public resources for the schools and you actually and there was
an increase on the other hand of. Transfers for people who study for time
religious studies and we actually see in the numbers a decline in the proportion of the men who
are actually in the labor market there is a direct link and I think as you mention
actually when you look thirty five years forward half of the population will be either
alter or to adopt or are so if we don’t make sure that they talk populations
for different from different sources so reasons if they don’t come with the
right skills the Israeli economy will go bare in fact there was just today the
Bank of Israel report was released and showed sort of for long term analysis
about for the. Teva to misread and me for very clearly shows that unless
infrastructure is enhanced unless the basic education is provided to all parts
of society and there are some other issues which have to do with regulation and
the Doing Business and farm and. Its really economy not only will not close the
gap in terms of income per capita visa fee that most of us economists but it would
actually go down so it’s vital that we do these things I completely agree
I don’t think I can actually add to that except one thought which is there
there is you know dition three economic issues around equality there or are.
There issues that are really quite basic around identification on a sectoral basis and the degree of
inclusiveness in Israeli society which are really serious the base the touch the
economic issues but they also go beyond them and they remind one of some things that
are very similar this country if you read you know J.D. Vance’s book you know in this country or
the new one by Tara Westover which which is called educated they’re both amazing
books and they’re about how entire populations can be completely alienated
from the national culture and grow up in a you know an alternate universe and that’s
what we have Israel today where entire populations are living in an alternate
universe I personally think the one thing the government needs to tackle straight
up is compulsory national service for community service fifty percent of all
people in Israel do not serve in the I.D.F. . Many of those are women but also almost
all Arabs do not serve and I’m not suggesting they should serve in the I.D.F. Because the idea does need all these
people however it would be great to have a some program that actually creates a sense of common purpose and common
shared values which is really important if your society wants to actually align
itself instead of actually become more and more fragmented over time and maybe at
some training and education into that program as a whole for everyone some final
thoughts. Your doctor for your city your successor at the
Central Bank of Israel. While I think the. Thing main building
blocks of the right probably see our wedding known and there is so broad
you know if agreement but understanding the issue is the political will to actually
implement these forty six and I hope that the next government will have the
political will they would have maybe a few at the start of their
of their surveys there is a longer horizon so maybe there would be
less concentration of very short term. Benefits and looking further into the
horizon to make sure that it is right is on the right let’s start by I would only add a quote from the report that came
out which is which is put out a yearly basis I guess. And it’s called
the Global artificial intelligence landscape it’s it’s put out in Europe by
Roman Berger and here’s what it says the U.S. Is the global market leader for official
intelligence with forty percent market share . China second and Israel
third have the text strongest ecosystems most other countries lack
the needed combination of research entrepreneurship funding
in any way to build a sustainable and competitive
ecosystem so this sounds like a fantastical thing to even be reading to
you. Just reminding you that there are probably thirty cities in China with
populations in each of them that are greater than all of his real so I’m an
optimist. And I think that Israel is an experiment that will continue to evolve
and solve these thorny issues because when you have this kind of a basis to work with than the sky’s
the limit. Well on that note I think a round of applause for both but thank you thank you and we will turn to
some of the questions that you have written I’m going to turn
to my colleague Professor Alex K. Who is going to start our open discussion
with your questions thanks so much secured thank you so. A little economy
here has been very productive in manufacturing questions
and I My job is to keep a rein in the inflation a little bit in the increase efficiency
and I officially run out of the metaphors so I’ll just move on now very
well actually start but that’s that’s my full extent of the economy related
metaphor jokes. So that the questions have sort of arrange themselves
fairly naturally into a few different areas and I’m going to sort
of. Put several questions together and in these in these categories.
Let’s begin with a fairly sort of a technical question the number of people
interested in hearing about the economic practices of every day Israelis what kind
of investors are they what kind of savers are they what kind of spenders are they. Sure paranormal. Characterize you know that oh this is a country of savers their people are you
know really are very nervous and so they see more and other countries that are you
know like us so no one saves or I spend corns not extreme I would say
not extreme in spending not extreme in saving I’ll give you
maybe one. Sort of. Example there has been a lot of discussion of the increase
in credit taken by households and huge headlines and the discussion
that this is that people are drowning in debt and the increase over the last ten
years was from thirty nine percent of G.D.P. Of G.D.P. To forty two percent
of G.D.P. Of household debt in the U.S. To the best of my memory
it’s around one hundred or a little bit more so we’re not drowning
in debt although there was an increase in in the. Saving or not extreme savers
like in China but we’re not extreme spenders like in the U.S. So I think the saving great is around
twenty percent. Yeah it’s fairly high compared to the work toward the U.S. By the way saving I think is very much
related to this social safety net in were there is no strong safety net there is
more spending and in Israel there is more saving any Ted actually gone up
with some loosening of the safety net but I would say that we’re not extreme
in that sense not trying to please let’s place. Your experience. When you feel
that you’ve lived in both countries you went. What do you find yourself different
when you’re like. Yes the circus specially behind the wheel of a car. I’d say I mean home ownership
statistics are very different Israel it’s a far I think it’s a lower home ownership and higher renter
percentage in Israel than in the U.S. So reps and. I I’m not sure I can add
to what Dr said about the stuff. Let’s talk about politics or just if ever a topic for Central Bank Well now you’re
liberated from that you’re no longer the central banks are you saying free get
out the Central America ship from. There were there were there were many
questions on on this topic and and I think they sort of fall into two baskets of
questions and I’ll I’ll try and summarize them to the best of my ability and the first
is the topic that you just alluded to in the last sentence that you said which
is the relationship between the central bank and the government and and I mean
I think it’s fair to say that in many countries there’s typically a tension between economic interest or the
interest in terms of economic policy of government which tend to be more short and
more partisan and the central bank which tends to be more long term and hopefully
more neutral and and many people are interested in your own experiences of
that tension. Yes I did experience some tension say. You’re right that a central banks and governments usually
there is some inherent tension because central banks are supposed to make
sure. To make sure directories price stability and at least in the past
when the main challenge was to reduce inflation interest rates
would go up and there is not helping. Politicians who look at troth
term because it may actually reduce to some extent activity and cause some E. But there would be some prize in terms of
unemployment and I would say that’s the main reason why central banks are independent
because if you would believe the poli sci that is. Intended to ensure price
stability to pull it and so have to be reelected they would
probably want to have just a little bit more inflation to have just a little bit more employment in the
favorite because that would make them more popular so that’s the fundamental
reason why central banks are generally now independent. And that it
allows them split sort of to look long term and really apply for
the C’s to the long run. The May tension between the Bank of Israel and the
government has not been monetary policy over the last five years there were
two areas in which there was some tension one was generally I would say A I
think the fact that this central bank the Bank of Israel. Is engaging
in Poli Sci discussion and prescriptions there as you say are
long term and are not some time to Ted been critical of the government for being
too short term oriented and that actually causes this role of being the
government’s advisor raises the level of friction right then sort of the normal
relationship between governments and central banks the other issue will dictate to be
too late to stop production was around the issue off reform in the financial
sector where this government in particular the Minister of Finance came was
the agenda often Hansing competition in the banking sector which I think
is the right direction and it’s a good agenda but there was quite a. A lot of friction about
what speed to. Go even in walk truth be discolored in some of the
details where I think again the political system sort of takes financial
stability for granted and the fact that Israel had not been affected by the
global financial crisis and the system and all the institutions remained
stable sort of lead to. A guest say. Some sense that this
is given and now we can sort of. They do introduce competition and
if Shore financial stability will take care of itself and I
share my that they needed to be in a position of reminding that you have
to be very mindful of the issue of stability and that also led to some friction
although I think that at the end we sort of devised a. Reform and there twirling hence
competition while making sure that the system remains safe well and
that creation of the financial stability Committee was one of the things that was
highlighted in your recent. Receiving this honor of being the number one central banker
of the year which is. Very impressive Would you would you recommend now that
you’re you’re out from the central bank that you know for the good of the central
bank it would be bad or not to have the governor of the central bank so be the
economic advisor to the government. That’s a question that we’ve been debating
internally in the central bank for a long time and especially around the change
of the law in two thousand and ten. At the time Stanley Fischer was the governor
was I head the. Research department and we had an internal discussion also
about three where I stand at the time thought that maybe we should give this
position are I as the head of the research thought there if it’s not in the Central
Bank this kind of an independent and very professional and very
impartial. Body of knowledge in analysis would not be created somewhere
else and so at the end it stayed was in the role of the central bank. When they
became governor I had the chap who was Stanley Fischer and they told me Now I
understand better why you were willing to sort of give this. Roll up and he
told me I think you were right it should have remained at the central
bank so. I think that if you design institutions from scratch
you would probably not port in. This role was in the Central Bank but
when you are given the interest of the existing infrastructure and the.
Defected to the bank has been doing this and has accumulated a lot of human capital in knowledge in a very wide range of areas of folly see I
think for Israel it’s correct to continue doing that and I think it’s part of what
Also all the public expects and I think it actually enhances the credibility of the
central bank rather than. Reducing it which is some risk that people would mention
thinking about that from the outside. So the discussion just now was about the
relationship I suppose which we know the economy and politics and a number of questions came up about the
relationship between the economy and society and and several of them dealt
with then the questions of history in the education system and gaps between different
sectors of the population and you’ve actually touched on many of those
questions in the in the last part of the discussion so I won’t really ask all of
those questions but one angle to many of these questions just to give a bigger thematically. Is what’s really in
the driving seat is it the economy or is it society or to put it another way. You
know it’s possible to say the way that Israel will be successful is if it invests
in such and such an area and it does better education and so on but of course
there are historical reasons there are social reasons ideological reasons why those
things haven’t already been done so is the economy sort of a hostage to
society or actually is the economy in a position to be able to push along
those social programs. I think it’s not by accident they. Can all
mix is part of soul of the social sciences. And I think that
they really go together I think you can think of economics the caption
from the society in which you are grieving and actually three main
things to something that you mentioned before you talked about. The medical
cohesion and I think that in Israel when we lost to some extent the
social cohesion or the solidarity and some of the issues that are not being
Greece solved is because there. President driveline talked about the tribes
the four tribes and the ways to some extent sort of think too much as
tribes and not sufficiently as one society and I think their
baby teeth will actually. Act as one cohesive society somehow
needs to be enhanced so I think education is one way and I think I
think the issue of for example the principles of democracy and
and. Our need to be somehow in the hands also by the
implication system. Just. Earlier coming we started this discussion
about the social movement mobility the economic mobility of all of that sector
that came from the lowest You cannot make one and and their ability to make it into
the highest into the highest level of wages and earning and so forth and
how linked that is to educate. So I would agree that. That
that is the single largest challenge and the problem
is that. It’s you know in a political environment where.
You know sexual politics dictates who is in government elections
happen frequently and and and there’s not enough time to develop long range policies
and it’s very difficult to address these issues I think the good news is that most
Israelis understand today that this is an existential issue I think that the
person in the street knows. That unless unless there’s a sense of
shared community unless there’s a better educational on Iran you
know onto the ladder of success for a different populations that
the future is not necessarily a linear extrapolation of the past
so so we will see how that you know plays out in the realm of politics
over the next few years put that that has to happen both of you just now talks
about the importance of education and I’m gratified as somebody has a story that somebody from the humanities
that when you talk about education in the economy you’re talking about both science
and technology and economics but also about grounding in the humanities and you
know producing democratic citizenship. How does Israel educate its students in the
form of Casserly that is to say how is science education taught
is innovation taught as a specific explicit subject
and in the education system. Let’s start here that if you have to
remember that in Israel there are different school systems first of all depending on
what part of the population we’re from there is it is a it’s the only country that’s like this
I think that I’m aware of because having been there and worked with Malaysians
is in Malaysia where you have a similar story and I wouldn’t you
know it’s not not the sort of the best comparison so there is a secular
there’s a there’s a little P. Which is the norm at the what we would
call the public school system there’s a movement to that Pete which is the religious
public school system there is the at the schools who are who are fundamentally
operating on different principles including less of an emphasis on core
curriculum as Dr Blix said there are the Arab schools who have a very different system although they have
to serve have certain courses that that are sanctioned All course have to be
sanctioned by the Ministry of Education but when you have different populations with
different fundamental level of school systems and not mixing really very much
you know until they get into it and not even further and in the Army because
they don’t all go to the Army this creates a huge set of issues. You
know around. And around common Come values and come and go so
that that’s the burden that Israel is is operating on now the good news is there’s a survey every year that’s done of
schools which consists of looking at the percentage of graduates of high schools who
actually go and get their baccalaureate it’s their book with them in Israel and
also what. How how how good the schools are in terms of the standardized test results
it’s very interesting to read the results of this last survey because one finds you
would expect maybe schools and you know the best there is and to leave in some of
the best suburbs of the of the and some in Haifa and other areas would be the
predominately best schools actually it’s not the case there are schools and. There
with little schools there Arab schools. That have done incredibly well in terms of
preparing their kids which is to me it. Leaves me with some optimism because it
means as it usually does that the quality of the staff on hand is so critical that’s a local issue and that if the curriculum
and if the investment the doctor who talked about can be normalized across
different demographic groups and if better people could be attracted to become
teachers and principals and schools than there’s no reason any of the population
Israel should not do much much better than in many cases they do. The fact
that we actually have basically almost exclusively public
schools I think is a good starting point but then you really
have to make sure that these public schools get a sufficient funding to get
good teachers and by the way it did a moment that eleven or what is
required to get into. Becoming a teacher is that truly really not sufficient
teachers also have to be better paid so that it attracts people that have
alternatives so I think these are the main areas but because we have a public school system mostly it’s almost
only public I think there is it’s really a decision a government decision a policy decision that you can
actually improve the schools and. One of the I think weaknesses that
we’ve because it’s a public in a system it’s very much related to who
is the minister of education and we’ve actually seen same very substantial
changes in the policy between different ministers and I think the system needs
more stability and sort of more long term plans rather than each minister
of education sort of having a. Pet. Promotes. Thank you I think it’s time for two
maybe three more short questions before wrapping up. So first our question about
the past of Israel and the economy Israel was founded more or
less as a socialist state and a number of people were interested in
the legacy of socialism in the current economy and I know many people have written
about the sort of the pioneering spirit and startup nation and so on but the
questions came from a direction more of a an ideology or or an interest in
social democracy and the economy today. I think there is a maybe the. There was a very egalitarian. Society
early on any became very unequal I think when you look at
the actual numbers there was never a very equal society in Israel. I
think the ideologies changed but I think that when you look at the actually
economic developments Yes inequality has risen in the early two thousand but
it was quite high also earlier on and yes it’s the now it’s the climbing and
again I don’t think it’s declining because of ideological sort of quest for equality
but because of the phenomena of economic phenomena that I described before I also
think that when you look at the different . Parties the difference in
the economic party policy is quite small that’s not what
the discussion or the debate around the elections is focused on it’s
mostly focused on other issues there’s very little mention of economics actually in the
public debate around the elections not only these elections but also in the past.
Sounds like the government knows it has a petulant economic advisors so nobody the
politicians don’t need to worry about so or so and they need to listen more
carefully to what you know about. A question about the relationship between
Israel’s economy and the region and sort of. International politics. When
several people asked about the relationship or I guess they were I think
these questions were looking for some glimmer of hope that the economy and the
changes in the economy might help in the relations between Israel and other
states in the region and others asked a question from a similar question
from a different angle which is B.D.S. So the Boycott Divestment Sanctions movement
and the question of whether that is something that Israeli economists are
thinking about concerned about interested in . Really the chronic relationships between Israeli and Palestinian population
in the street are quite intense and they’re there are many for station
is mostly there is they have put a stimulus actually working in
Israeli There is something like a hundred twenty thousand I might be
off by. By some but that’s roughly and that’s very important source of income for
the Palestinian economy that’s not the case in. There partly because of that and
for other reasons obviously poverty is that. I think there was an
expectation that if the way to be. If the economic ties were going be more
in hand and more intense and there will be an increase in the standard of
living that this will reduce the sort of level of tension and violence I’m not sure
that if you look at the history of over the last twenty years it actually
supports this thesis I mean unfortunately also in periods
of relative improvement in the economic situation in the West Bank and
Gaza we had eruptions of violence in and. Five and seven terrorist attacks so I think they’re very good reason tool to
to look for improvement and for peace of four but it cannot mix will not do the
job on its own and I would say to this way. The other
question was about B.D.S. . When you look at the numbers you
don’t truly see much of an effect and I very much hope that this would be
the case also calling for it there is a lot of. Talk about that
but at least in terms of. The markets we have been sort of following
where there are effects on the level of exports and so on there I would say anecdotal
evidence but it’s not something to test in effect so far and hopefully
also in the future. Get in you want to talk about your experience I mean one of
the things that you’ve done. With us here Brandeis is been very you’ve been involved
and met the beginning on we start up our Generation Speaks which brings together
Palestinians Israeli Arabs and Israelis to in a start up mode they want to talk about that
experience when you’re in your sense of what. That group of us from that program my hope that that is a wonderful program started by Bradley
Brandeis among them fellows who’s an Israeli and who. You know how
do I claim described as a vision of what life could be like
if there would be cooperation. And. Joint work to set up
companies and enterprises together between Palestinians and
Israelis and he made that happen through a program called Our Generation Speaks
which is here at Brandeis in the amazing program now it’s a thirty year third or fourth year or third
year. So the evidence is that and it is anecdotal and it’s preliminary There
have not been any scale enterprises yet created there have been not as many jobs
as creative as as hopefully will be in the future what has been created is
relationships that if they survive the test of time. Can be drawn
upon. When at some future date determine the Fortunately there can be a political circumstances you know which
which allow for more free interchange of Commerce as there should be. There
is some work that gets done between Israeli companies and Palestinian companies
you have albums company for example employees I just had lunch you know with
the jungle called the Shah muscly was a good friend who here in
Boston because he does a case study at Harvard Business School
every year about his project which is called Rawabi it’s the first planned
Palestinian city it’s modeled after more the enough you get a much nicer that much it’s much nicer
there yeah it’s beautiful I would highly recommend going there
it’s extraordinary That’s a good practice right so Bashar was here
and so there reminded me that I love it’s company employs about one hundred twenty
engineers in Rawabi and that when they were were just when they received their
when they were bought just literally being bought right now for seven billion
dollars He hated just as much in a in a bonus for every employee in Palestine
and the C.E.O. The Israeli C.E.O. Is good for an employee in Israel so there
will be several billion dollars that go to Palestinian workers who work in this
company in Palestine in or lobby who are basically doing the work of technicians
and quality control supervisors and whatever it is they do software
engineers so if you look at that as a small example you’ve just reminded
by really reminded of what Robert Kennedy said so many years ago which is you
know you throw one if you throw stuff. Into a pool of water creates a ripple and if you throw many
many stones you can create a tidal wave in this case of good
things that can happen. I think. You know people are capable of. Forgiving. And sympathy for others and I think that
ultimately that will happen in the region they doesn’t see. Why I think on
that note that seems like just the right place to start this conversation thank
you everyone for participating in the forum. Thank you thank
you. And I have written it wouldn’t be a conversation
at Brandeis without a little Brandeis wag so I want to thank
you Dr fluke and send you back with some Brandeis. As well thank you everyone no last housekeeping the conference
tomorrow continues that eight thirty AM with coffee and check and a reception that starts in the Laureus
which are the rooms just behind here and love and brass and I believe that there
is for those that are staying for for dinner or there will be. Up
to the dinner side reception reception no Shana tell me what
to say. Right around the corner thank you very much thank you
everyone. Thank you my stepdad.

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