The argument that reducing Israel’s Jewish fertility rate (2.7.children per woman) would upgrade Israel’s economy, constitutes an economic edition of “General Dan Halutz Syndrome” that collapsed during the recent Lebanon War. Halutz believed in a small and sophisticated military which relied on the Air Force and smart bombs – while minimizing the role of the manpower-intense ground forces. Halutz’ concept failed in a resounding manner in Lebanon. This argument is symptomatic of a short-term economic perception that jeopardizes long-term growth.

The deficiencies of such an argument are understood by West and North European countries, which achieved a high rate of GNP per capita due to their low fertility rate (1.7 children per woman.) Yet, they concluded that such a policy would quickly transform them into an elderly society, that would not be able to provide young manpower to sustain the economy, and would be increasingly dependent on foreign labor, which threatens their culture. They realize that continued economic growth requires renewal of local manpower, which is a natural by-product of increased fertility rate.  In fact, they provide generous incentives for a higher fertility rate. They attempt to escape the trap of low fertility, which could transform them into a luxury “Rolls Royce” that is reaching the end of the road; it is running out of gasoline and no service-station in sight.

Manpower is the gasoline of a modern society, endowed with a tradition of values and a technological-scientific-educational infrastructure. Foreign investors, who are aware of this, consider Israel a hotspot for long-term investments, second only to the US. They are aware that Israel’s Jewish birthrate is the highest in the industrialized world, and that since 1995 there has been a 35% growth in the number of annual Jewish births (from 80,400 to 109,000). Jewish demographic momentum is a prerequisite to a sustained economic growth and a gradual transition from a “Mitsubishi”-like economy to a well-fueled “Rolls Royce” economy.

Manpower is the most vital growth resource – quantitatively and qualitatively – at the disposal of an astute government, which is capable to realize its potential. Stable and long-term growth calls for the expansion of the domestic consumption-base (not only export that is dependent on external factors).  It also calls for a massive expansion of the number of small businesses and the bolstering of traditional industries (not just high-tech).  Upgrading Israel from being a “Mini Silicon Valley” to a “Maxi Silicon Valley” – which is 10 times larger than the scope of Israel’s current high-tech industries – also requires a substantial expansion of the manpower-base. And, what about the manpower required for the military in the conflict-ridden Mideast, which is replete with terrorism and systematic violation of commitments?! And,  what about the manpower needed for education, human services and homeland security?! What would have been Israel’s demographic, security, technological, economic, and medical fate without one million Olim (immigrants) form the Former Soviet Union?!

The particularly high fertility among the ultra-orthodox (Hareidi) Jewish community constitutes an important growth resource, which is gradually integrated into the commercial and defense high-tech industries, as well as into the economy in general, as is the case in the US, albeit more impressively.  The ultra-orthodox’ potential contribution to Israel’s economy can be construed via the performance of the giant US-based IDT, that employs thousands of ultra-orthodox personnel, as well as the outsourcing services in the ultra-orthodox Israeli communities of Kiryat-Sefer and Beitar Elit, which outperform Indian outsourcing. And, this is just the early-stage of the ultra-orthodox prospect… A large percentage of Israel’s high-tech personnel and Jewish Nobel prize laureates are the descendents of ultra-orthodox families. They constitute a living testimony to the economic potential embodied in this sector’s moral and educational heritage – if only Israel’s leadership would have the wisdom to harness this sector to its overall effort.

The Aliyah (immigration) from the former USSR jump-started Israel’s high-tech industry; the next major high tech surge will emerge from the ultra-orthodox sector. The Jewish commandment of reproduction (“Proo Urvoo”) is based on economic, and not just moral, ground.