Hi Mark,

START-UP NATION: THE STORY OF ISRAEL'S ECONOMIC MIRACLE, by Dan Senor, is a fascinating read... Here's part of an interview with the author, that gives a bit of insight into the sort of value that Israel's compulsory national service brings to their society and economy, the benefits appear to FAR outweigh the negatives, it seems to me... America is well on it's way to losing an entire generation or more, a social and economic underclass which will never become truly assimilated into our society, seems some variation of the Israeli model could be the best chance we have of keeping these kids from falling through the cracks...

Obviously, compulsory military service would be unworkable on the scale of a country as populous as ours, but some sort of national service might not be... I really wish we had a guy running for President who would dare to raise this issue again, and evoke the memory of those famous words from JFK's innaugural, and inspire our young people to consider a path such as the Peace Corps, or similar...

Here's part of the interview with Senor, well worth a read, IMHO:

Q.

Why is Israel the ultimate “Start-Up Nation”?
A.

Israel has the highest density of tech start-ups in the world. More importantly, these start-ups attract more venture capital dollars per person than any country — 2.5 times the U.S., 30 times Europe, 80 times India, and 300 times China. Israel has more companies on the tech-oriented NASDAQ than any country outside the U.S., more than all of Europe, Japan, Korea, India, and China combined. But it’s not just about start-ups. Scratch almost any major tech company — Intel, Microsoft, Google, Cisco, Motorola, and so on — and you will find that Israeli talent and technology play a major role in keeping these multinational companies on the cutting edge.

.......

Q.

At the age of 18, almost all non-Arab Israeli citizens must serve in the Israel Defense Forces (IDF) for at least two years. How does the IDF service experience shape the future of young Israelis and contribute to the country’s economic success?
A.

Certain units have become technology boot camps, where 18- to 22-year-olds get thrown projects and missions that would make the heads spin of their counterparts in universities or the private sector anywhere else in the world. The Israelis come out of the military not just with hands-on exposure to next-gen technology, but with training in teamwork, mission orientation, leadership, and a desire to continue serving their country by contributing to its tech sector — a source of pride for just about every Israeli.

Beyond the elite tech units, the military has a much broader cultural impact. The compulsory service produces a maturity not seen in Israelis’ foreign peers who spend that time in university. “They’ve got more life experience,” British Telecom executive Gary Shainberg told us, which “is critical, since innovation is all about finding ideas, and finding new ideas is often about having perspective.” And perspective typically comes with age. But in Israel you get perspective at a young age because so many transformational experiences are jammed into Israelis — including military service — in their late teens and early 20′s.

Perhaps even more surprisingly, Israel’s resource-stretched and constantly tested military teaches improvisation and flattens hierarchies. Soldiers learn “the value of five minutes” as one general told us. They are taught to get the job done and figure out how. And especially in the reserves, barriers are broken; young people command their teachers or bosses, no one salutes, and privates address generals by their nicknames. All this contributes to an informal and anti-hierarchical culture outside the military, which is critical for an experiment-focused, probing, and innovating economy.

......

Q.

Tell us about Israel’s immigration policy and why it’s different from policies in other countries. Have Israel’s recent immigrants helped or hurt its economy?
A.

A key lesson from Israel is that innovation is not just something that goes on inside companies; it comes from a wider culture that fosters both innovation and entrepreneurship. Israel is a country of immigrants — there are over 70 nationalities represented in this tiny country. Two out of every three Israelis are newcomers, or the children or grandchildren of newcomers. The Israeli battery-operated car grid company Better Place was founded by the son of an Iraqi immigrant. The Israeli company Koolanoo — the third-largest social networking site in China — was founded by the child of an Iranian immigrant. The Internet music start-up FoxyTunes — which was recently sold to Yahoo for tens of millions of dollars — was founded by a young Ukrainian immigrant. Walk around Israeli neighborhoods, and you’ll find yourself dealing with Israelis from Ethiopia, Poland, Yemen, Russia, and Australia, to name a few.

Immigrants are natural risk takers since they were willing to uproot themselves and start over. In particular, the great wave of immigrants from the former Soviet Union in 1990 to 2000 brought to Israel a tremendous boost in engineering talent just as the tech sector began to take off. Israel is also the most pro-immigration country; politicians there actually compete with each other with campaign promises to bring in more immigrants, not fewer.
Q.

Various countries have attempted to duplicate Israel’s entrepreneurial culture, with limited success so far. What policy initiatives would you suggest to a country hoping to become the next “Start-Up Nation”?
A.

A key lesson is to learn to leverage the business talents of young people with military experience. In Israel, employers look for and value the leadership skills of young officers who have already received tremendous management skills by age 21. By age 25, they have both military experience and a university degree. In the U.S., by contrast, too many corporate executives are illiterate when it comes to reading a military resume. We heard one story about an Iraq-war vet being interviewed by a corporate recruiter. The vet walked through all his incredible leadership experience from the battlefield. But at the end of the interview, the interviewer said, “that’s all very interesting, but have you ever had a real job?”

American business needs to embrace, not spurn, this incredible reservoir of ex-military talent.

This does not mean that other countries need the military conscription model that Israel has been forced to take to become entrepreneurial. Other frameworks, such as national service programs, could also provide the management and maturation experience that Israelis get, but in a civilian context. Finally, the Israeli experience shows that countries that want to be more entrepreneurial should welcome immigrants as a great resource for rebooting their economies.

http://www.freakonomics.com/2009/12/04/how-did-israel-become-start-up-nation/