1.
At the beginning of the 19th century, artificial shipping canals were the height of technology for transporting goods. The enthusiasm of nations to transport and lower shipping costs – which weighed heavily on economic development – along with the success of canal digging in Britain between 1790 and 1810 alongside the Industrial Revolution, such as the digging of the Bridgewater Canal, completely transformed the British economy. The State of New York got excited. The Erie Canal in New York opened on October 26, 1825. "Canal mania" swept governments, which entered a fury of public investment in building massive canal networks.
The 584-kilometer artificial waterway in New York State connected for the first time the Great Lakes in northwestern New York to the US via the Hudson River. The work lasted eight years, during which New York Governor DeWitt Clinton was mocked due to the project's engineering complexity. Freight prices along the line dropped by at least 90%, and shipping took just a few days compared to two weeks previously. As a result, New York grew at an amazing rate, and New York Port became the most important in the US and a global center, as all agricultural produce from the West passed through it. Cities grew along the canal, including Buffalo, Rochester, Syracuse, and Albany.
The idea led to a wave of canal digging in states like Ohio, Pennsylvania, and Indiana, while Britain actually neglected canals in favor of laying iron railways – an infrastructure that developed rapidly in the US and rendered canals irrelevant. The result: States like Pennsylvania and Indiana reached the brink of bankruptcy from a wave of failed investments in canals that immediately became unprofitable. The train was faster, cheaper, and did not freeze in winter. Lesson one: Do not invest in yesterday.
2.
In 1955, the British government launched a giant modernization plan for the national rail network with a huge budget for that period of about £1.2 billion. All this while the British economy was licking its financial wounds from World War II, which had exhausted the economy.
As part of the plan, the state ordered hundreds of new steam locomotives, based on the perception that this was a proven and reliable solution for the short term, alongside a slow transition to electricity – this at a time when the US and Europe had already moved rapidly to diesel and electric locomotives, which were much more efficient and cheaper to maintain. The result: The new steam locomotives built at enormous cost were sent to the scrap heap within just a few years. The entire plan is still considered to this day one of the most famous financial failures in Britain.
It is difficult for politicians to admit that their decision to invest in yesterday's technology was wrong. Regulatory capture and the interests of veteran industries, alongside heavy pressure from existing industries on the government to protect their technology from new alternatives, led to failure. Once again it turned out that the free market is faster than any government bureaucracy, which mostly loves services and products from the past. Lesson two: Do not invest in yesterday.
Examples like these are not lacking around the world. In the late 1970s, the French government telecommunications company, France Télécom, launched Minitel – a basic computer terminal distributed free to millions of households that allowed ordering tickets, checking bank accounts, and chatting. In the 1980s, this was considered a dizzying national success and the pride of France, which loves to show off against other Western nations.
In the 1990s, when the protocols of the American WWW network began conquering the world, the French government continued to subsidize and develop the closed and centralized Minitel to protect its pride. The ridiculous insistence delayed the adoption of the internet and the development of the web and digital web industry in France during critical years compared to the US and Britain, which climbed to great heights. Lesson three: Do not insist on yesterday.
A fourth lesson can be found in Japan. During the 1970s and 1980s, the government broadcasting authority NHK, together with the Japanese Ministry of Posts and Telecommunications, invested billions of dollars in developing the Hi-Vision (MUSE) broadcast standard – a high-resolution broadcast system based on analog technology. Japan saw this as its next technological growth engine and encouraged huge national investment in infrastructure and television sets compatible with the broadcast standard. However, in the early 1990s, companies and scientists in the US developed digital compression technologies, which almost instantly rendered the Japanese analog system unnecessary. Japan was stuck with expensive and irrelevant infrastructure and was forced to make a very late and expensive transition, especially as it was and still is an export-oriented economy.
Let us move to Poland, where the communist government during the 1980s invested critical national resources in an attempt to complete a nationwide rollout of analog telephone exchanges based on Crossbar mechanical switches, which were also common in Israel for some time. The Polish government committed to long-term five-year plans to produce the analog exchanges, while the West had already completely switched to digital and computer-based communication exchanges.
Communist five-year plans are not suitable for a competitive and dynamic free economic market, and with the fall of the Soviet bloc in the early 1990s, it turned out that Poland had invested enormous wealth in infrastructure that was manufactured and deployed, but became "technological garbage." The infrastructure was dismantled and replaced almost from scratch by Western telecommunications companies within a few years. Tremendous capital sank into the depths precisely when Poland needed economic and financial rehabilitation from its membership in the bankrupt Warsaw Pact.
3.
Israel too, of course, fell into yesterday's investments. For decades, the copper infrastructure of the telephone and internet network was subsidized and upgraded with technologies such as ADSL and VDSL. The state and national operators, mainly the monopolistic Bezeq at the time, invested huge sums in "squeezing" a bit more speed from old copper infrastructure. Israel fell heavily in global fixed internet speed rankings and lagged behind technologically in telecommunications for a critical decade for the economy's development – until a massive rollout of fiber optics began (and still continues).
Israel, it should be recalled, relies on the high-tech industry, and high-speed fiber is the country's oxygen.
Even before that, Israel made huge errors when it insisted on investing enormous sums in computing systems for the National Insurance Institute, the Education Ministry, and the healthcare system. The accountant-general in the Finance Ministry went out of his mind from the ongoing failure. More and more huge budgets were invested, but the systems did not work well and frustration was great. Systems were built with the architectural approach of "monolithic systems" for a five to ten-year period ahead, while the software world moved rapidly to cloud technologies and microservices architecture.
Much capital was invested in Education Ministry systems – a disgrace that lasted for years. Instead of investing in students, so they would achieve high grades in mathematics, English, physics, and computer science, the Education Ministry raised white elephants in the form of giant computers that required expensive and difficult maintenance.
Staying at home: In the early 2000s, instead of immediately investing in a light rail or underground system in Haifa and Dan Region, the state preferred to promote old solutions of the BRT (Bus Rapid Transit) type – articulated buses on dedicated lanes, such as the Metronit in Haifa. Public officials and the Finance Ministry saw types of Metronit as a cheap and quick solution.
Cheap, as you know, very quickly becomes expensive. Bus technology is limited in capacity, takes up valuable road surface area that Israel does not have in abundance, and cannot provide a response for a dense, rapidly growing metropolis. The result: The area allocated for the Metronit and public transportation lanes later required additional and several times more expensive infrastructure work to introduce rail-based transit systems.
4.
In general, Israel's wise figures have been working on updating mass transit systems in Dan Region since 1997. Every few years changes are made, and every single time it turns out that the plans are bad, the planning fails, and above all that there is no ground route, because Dan Region is not abundant in land and digging a metro system underground is considered very expensive. In February 2022, the government approved the Metro Law. Where will the money and capital come from to build this megalomaniacal enterprise? Future governments will have solutions, especially against the backdrop of the continued ballooning of the defense budget. Thus Israel entered the list of countries that invested in yesterday.
The truth is that a metro system is no longer needed, because the world is changing before our eyes. Let us move to the future, in the successful Israeli high-tech nation: The combination of advanced artificial intelligence and high-speed fiber-optic infrastructure is creating a revolution that is not only technological, but geographic and social.
Technology dramatically reduces the friction factors of human activity, the need to move a physical body from point A to point B to perform a daily task. The need for daily commuting and travel in general will drop amazingly. The result: The demand for traditional offices operating five days a week is steadily declining. Fiber optics enable video communication and augmented reality communications while AI fills management, analysis, and routine operational roles. The office is not disappearing completely, but its role is changing from a daily workplace to a social-cultural meeting point for brainstorming, bonding, and building trust.
In the commercial and retail field as well, changes are about to occur: Operational meetings, status updates, and basic sales are already moving almost completely to the virtual space with AI agents that summarize, translate, and manage follow-ups. In-person meetings are reserved for critical stages of deals or building personal relationships. Physical visits to government offices are becoming rare and will serve mainly exceptional cases. AI systems backed by fiber optics are capable of processing applications, issuing permits, and providing real-time civic service from one's place of residence.
In the medical field, remote clinics and medicine are developing; AI-based diagnostic tools together with continuous communication sensors make it possible to shift 70%-80% of primary medicine, family medicine, diabetes tracking, and blood pressure to expert consultation at home. Physical arrival at a clinic or hospital is reserved for complex laboratory tests, invasive treatments, X-rays, and physical procedures.
Online shopping will increase, visits to physical stores without cashiers will decrease, the pace of parcel arrivals from China, Europe, the US, and Israel to your doorstep will accelerate, and home entertainment will also increase given the surge in home entertainment quality. Real-time personalized content based on AI, high-resolution virtual reality, and interactive experiences are turning the home into a very rich leisure complex. So who exactly will ride the metro?
This ambitious project is largely unnecessary, and its cost, currently estimated at NIS 200 billion, will in my assessment jump to NIS 400 billion. A real risk of investing in yesterday. It is possible to invest this insane capital in AI-based congestion-reducing traffic light management, dynamic lanes according to rush hours as in several countries abroad, purchasing and operating autonomous vehicles whose technology is already available in micro-vehicles, converting public transport lanes into smart shared lanes, generous grants for companies relocating their offices to the periphery, and simultaneously continuing the rollout of fiber optics to every home, business, and complex in Israel, alongside establishing server farms and accessible computing infrastructure that will enable smooth and secure remote work for all sectors of the economy.
Both the metro and AI-based alternatives will require dynamic defense systems against cyberattacks. In any case, it is dangerous for Israel to crowd Israelis into Dan Region. Decentralization is the order of the hour, and the war with Iran emphasizes this. The Iranians openly announce that they seek to wipe out Tel Aviv, so why should we concentrate all residents near it?
Let us hope that the next government will cancel the grandiose and arrogant metro project. No to yesterday's investment, no to a metro system that was rightly launched in London in 1863. Yes to investing in tomorrow for the benefit of the public, instead of wasting enormous capital and massive land area above ground and below it.