October 17, 2018

The Mobileye deal: Start-up Nation or Torn-up Nation?

The largest ever purchase of an Israeli tech company was announced yesterday. Intel is taking over Mobileye for $15 billion. A hefty sum. A notable achievement. First and foremost, it is the achievement of Mobileye’s founders, inventors, managers, investors. These people had the vision to understand that developing systems that make cars smarter and more autonomic is the right thing to do. They had the capabilities and the ingenuity to develop such systems better than most others. They deserve praise for what they did (and, of course, the nice compensation they will get for their years of labor).

But Israelis – all of us – also have a right and a reason to be proud and pleased with this achievement. Some critics are questioning this right and saying that a country has no claim over the achievements of individuals, but this is hardly true. A country is an environment that cultivates achievements (or not), that fosters a culture of excellence (or not). Israel, with all of its many faults, has proven time and again to be a place in which ingenuity and excellence are encouraged. At least among some of its citizens.

As soon as the deal was announced, a debate began in Israel concerning the tax that Israel will now collect – $3-4 billion – and what should be done with it. Prime Minister Netanyahu hinted yesterday that he wants to use it to reduce the level of taxation. In truth, $3-4 billion don’t really change Israel’s fiscal situation (the sum that Israel collects annually in taxes is a hundred times larger), and hence the decision whether to reduce the level of taxes has little to do with this specific purchase of an Israeli tech company. Critics of Netanyahu say that the funds should be used to bolster Israel’s social services – namely, used by the state rather than returned to the public.

And, of course, the debate about taxes is a much larger ideological debate about Israel and its character. It is a debate about the relations between the state and society, it is a debate about human nature, it is a debate about economic strength and social cohesion. Netanyahu believes that Israel can survive only if it will be a very powerful nation. It must be strong militarily. And to achieve this, it must be strong economically.

There are other Israelis who emphasize social unity as Israel’s main source of power. To have a strong military Israel must have a sense of unity of purpose, and this sense erodes when the country becomes one of great divides between the rich and the poor, the “haves” and the “have-nots.” These critics of current Israeli policies look at Mobileye and see not just an achievement – they also see a problem. Mobileye is merely the most recent example of Israel becoming a place of great divide – on the one hand, ingenuity, excellence, wealth, mobility, and on the other hand many Israelis that are left behind. Those who cannot excel in mathematics, those who don’t serve in IDF tech units, those whose professional talents are becoming obsolete in the new economy.

It is, in short, the battle over how to prevent a Start-up Nation from also becoming a Torn-up Nation. The Netanyahus say: we must foster the talent, compensate excellence, get stronger, economically, technologically, militarily – this is survival, and you do not mess with survival. The Critics say: spread some of the wealth, or your success will be temporary and unsustainable because Israel’s pool of talent will never grow and the burden of backsliding sectors will gradually be too heavy to carry even for a booming high-tech sector.

Clearly, a balancing act is needed, and it is not an easy one to pull off. It is also not always easy for Israelis to understand the competing worldviews. Does Netanyahu want to reduce taxes because of his belief that reducing taxes is the way to success, or because he knows that new elections are behind the corner and some artificial sweeteners won’t hurt his chance of electoral success? Do the critics understand that raising taxes in a world of high mobility will only serve to scare away Israel’s best and brightest, and that the way to success is not taming Israel’s most excellent sector, but rather making other sectors rise?

Strangely – and this has been true for a long time – Netanyahu’s political strength is based mostly on voters who do not enjoy the successes of the high-tech sector. It’s based on Israelis who make smaller salaries, who live in poorer cities or in the periphery, who are less educated. For some, this is proof that his voters lack in smarts, that they don’t know what’s good for them (social justice, social services, the spreading of wealth). But is it not possible that they show good judgment by refusing to play along with the script written for them by naive well-wishers and opting to vote for the policies (Netanyahu’s, but quite possibly also Yair Lapid’s) that will provide Israel with as many Mobileyes as possible?