From Socialism to Start-Up Nation: Netanyahu’s Capitalist Revolution in Israel
The moral and economic revolution that turned a besieged Socialist welfare case into a free-market superpower.
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by Rod D. Martin
October 7, 2025
Lost in the current debate over Israel and Hamas is the utter transformation of the former over the last two decades.
For years, Israel was a Socialist backwater. A welfare case, filled with smart, hard-working people whose economic system rendered them dependent on the charity of others.
But that was before Benjamin Netanyahu.
The MIT-educated Netanyahu, a longtime friend of Donald Trump’s father Fred, believed strongly in the power of freedom and free markets to transform Israel’s future. He dreamed of the day when Israel might be the Hong Kong, Singapore, or Silicon Valley of the Middle East.
Beginning in the 2000s, he began to make it exactly that.
The Israel Test
My friend George Gilder — tech guru, father of Supply-Side Economics, and Ronald Reagan’s most-quoted living author — described this transformation in The Israel Test. In it, he posed a moral question …
