[amit_m]

You cannot base a good argument on two data points. I suggest a 3rd point which I believe is a counterexample to your hypothesis:

Israel has more startups per capita than any country in the world, but has socialized working laws. The legal minimum is 10 (I think), the exact amount for engineers varies from company to company, but it's usually at least 15-18 days of paid vacation per year with some of the bigger employers offering 20-30. We also get 3 months maternity leave, several months of unemployment, etc. Not as good as France or Holland, but much better than the US.

I'd say the approach of the US with regards to anything social can work against risk taking. e.g. Healthcare.

It's much easier to take risks when you have a social safety net.

[davidandgoliath]

But as a nation you also receive massive amounts of foreign aid, thus have an even larger safety net: someone else is funding a good % of your bills.

At some point that also has to be accounted for when taking into account a country's economic conditions.

[amit_m]

So you think only highly prosperous countries can afford vacation days? I believe that among western countries it's more about priorities and who is pulling the strings - if it's the regular folks who have power through their vote or the company owners, who use lobbying firms, campaign donations and control of the media to abort any legislation mandating vacation days, etc.

Western europe has used its economic prosperity to get more vacation days over the years, maternity leave, free education and other social goods. While in the US it seems to work in the exact opposite direction.

The extreme case is France, where they seem to be on constant vacation (>60 days!), get free university education, excellent free healthcare and all the good wine to the great dismay of the Chicago school economists that keep predicting its imminent collapse year after year.

Israel's history is also a counterexample, as it was very poor in its early years (1948 - 1980s) and much more socialistic than it is today. Surely Israel can afford MORE vacation days and other social benefits today than it could 40 years ago. But the trend is exactly the opposite. Unfortunately we have a US educated prime minister.

---

About the magnitude of US foreign aid to Israel and its role in the economy, here are some numbers:

Total US foreign aid to Israel: about 3$ billion / year. [1] Total israeli budget: about 100$ billion / year. [2]

Even though this is serious money, canceling the US foreign aid would not make a huge dent in Israel's budget. e.g. 3$ billion can be taxed by increasing the VAT from 16% to 18.8%. [3]

In addition to that, as someone who watched how this foreign aid budget is spent in the military, one dollar of foreign aid is worth MUCH LESS than one real dollar. Since goods must be bought from a specific purchasing catalogue, and this catalogue is both limited and has highly inflated prices. e.g. more than 2500$ for a standard IBM desktop PC.

I think this follows partly from the requirement that at least 50% of the manufactured goods must be made in the US. So many products are made in China, then shipped to the US for repackaging (where their price is doubled) and then shipped back to Israel.

Note also that a large part of US foreign aid goes to purchasing very expensive fighter jets (F-15, F-16) and spare parts. A hugely important goal of the Israeli air force is to have more F-16 planes than the egyptians have. But the Egyptians also get their aircraft from US foreign aid. My interpretation of this state of affairs is that main reason congress is backing both sides of this arms race is in order to take taxpayer money and give it to the military-industrial complex.

Sources: [1] http://en.wikipedia.org/wiki/Israel%E2%80%93United_States_re... [2] (sorry, hebrew only) http://budget.msh.gov.il/#00,2012,0,1,1,1,0,0,0,0,0,0 [3] http://www.ynet.co.il/articles/0,7340,L-4234752,00.html

[dennisgorelik]

3% GDP economy boost is a lot.

Update: Sorry, 3% of budget. It's less than 3% of GDP, but still a lot.

[amit_m]

3% of the budget, not the GDP! I am not sure it makes too much sense to divide it by the GDP.

Israel's GDP is around 250$ billion. So US foreign aid is around 1.2% of GDP.

However, as I mentioned in the previous post, this aid does not come in the form of actual dollars but in the ability to purchase goods with highly inflated prices and some strings attached. I'm pretty sure Israel would happily trade 3$ billion of US foreign aid with 1$ billion of actual money.

[davidandgoliath]

All valid points. Israel is definitely becoming a force of it's own in the tech. sector, and I'm extremely glad to hear of it's flourishing VC ecosystem as well.

re: vacation days & prosperous countries -- no, I don't believe the two go hand in hand (poor folk get all kinds of vacation days in the form of funemployment), nor would I consider the U.S. on average a 'prosperous' nation, I'm merely stating that had the U.S. suddenly had outside funding for it's military for the past ~$x years there'd be far more liquidity to spend on other things like one month vacations for everyone.

[rmc]

0.5% of the US federal budget goes to Israel as aid money. That might skew the figures a bit.

[skurry]

I found that number hard to believe, so I looked it up. In 2007 (the most recent figure I could find) the US sent $2.5 billion to Israel. The total budget was $2800 billion. So it was more like 0.09%.

[rmc]

Huh. My source was the New York Times ( http://www.nytimes.com/2012/07/08/opinion/sunday/the-coffin-... ) who stated " all foreign aid accounts for about 1 percent of federal spending — and that includes military assistance and a huge, politically driven check made out to Israel, a wealthy country that is the largest recipient of American aid. True humanitarian aid constitutes roughly half of 1 percent of the federal budget" so I thought it was ½% of US budget went to Israel.

[bgilroy26]

"Federal budget" is a multivalent term. It's more likely that 2.5 billion was .5% of discretionary spending for that year.

When you take the prior obligations of Social Security, etc. the budget gets much smaller.

[cbr]

I think you're misreading the quote. It says foreign aid is 1% of federal spending, only half of that is true humanitarian aid, and the country that receives the most aid, humanitarian and not combined, is Israel.