With Benjamin Netanyahu’s Likud Party the top vote-getter in the November 1 Israeli election, public attention is focusing on whether Israel is tilting toward the extreme or intolerant right and on what that might mean for diplomacy and national security in the Middle East and beyond.

The untold story of Mr. Netanyahu’s success, though, and perhaps the one with the most far-reaching international implications, is the economic one. If the international press corps and state department types don’t grasp it, Mr. Netanyahu himself surely does. So do the voters, who seem to be restoring him to premier. 

The economic reform narrative is detailed in Mr. Netanyahu’s new memoir, “Bibi: My Story.” It tells how as finance minister and prime minister, Mr. Netanyahu pushed “to change Israel’s economy from a semi-socialist to a capitalist one.” He quotes a Nobel laureate economist, Milton Friedman.

In 2005, Friedman wrote a column urging Israel to adopt “broad free market policies.” He wrote that Mr. Netanyahu understood how Israel had been hampered by “far reaching and rigid government intervention in the economy, socialist policies embraced by the government and unnecessary state ownership of critical means of production.”

Israel’s “shift to free markets” under Mr. Netanyahu, as described in the new book, had four main elements: tax cuts, privatization, deregulation, and welfare reform. On taxes, Mr. Netanyahu cut the top personal income tax rate to 49 percent from 60 percent, and he cut the corporate tax rate to 24 percent from 26 percent. 

“Haven’t you heard of the Laffer curve?” Mr. Netanyahu challenged his detractors in the finance committee of Israel’s parliament.“With lower tax rates, Israel’s economy began growing rapidly,” Mr. Netanyahu writes.

The Israeli leader privatized the state-owned national airline, El Al; the state-owned shipping line, ZIM; the state-owned cellular telephone company, Bezeq; the  state-owned banks such as Bank Hapoalim and Israel Discount Bank, and privatized state-owned land, “increasing private ownership of land by 50 percent.”

Mr. Netanyahu loosened rules that had restricted housing construction. On the advice of Robert Mundell’s doctoral student Jacob Frenkel, then Israel’s central banker, Mr. Netanyahu eliminated foreign currency controls.

“For the first time since the founding of the state, Israelis were able to take their money out of the country as they pleased,” Mr. Netanyahu writes. He explains, “Do you believe in free markets, or don’t you? I asked myself. Well, if you do, then get on with it.”

Mr. Netanyahu writes, “as a rule, governments should tamper as little as possible with markets.” That includes overly generous welfare payments to able-bodied people, which “give parents an incentive not to work.”

The reforms paid off in prosperity and economic growth. Israel’s GDP per capita grew to 19th in the world in 2019, “outstripping Britain, France, Japan, Italy, and Spain.” That, in turn, had diplomatic consequences, as Arab countries such as the United Arab Emirates and Bahrain decided that with Israel it was worth doing business.

As Mr. Netanyahu prepares for the possibility of returning to the prime minister’s office, he may contemplate how much further Israel has to go. Even though Israel’s tax revenues pay for health insurance benefits and military defense in some ways exceeding those of the United States, there is still plenty of additional room remaining for individual rates to be reduced.

Mr. Netanyahu’s  drive for private land ownership so far has brought the government share to 87 percent from 92 percent. There is still plenty of land left to privatize.

The other striking thing is how easily this is replicable elsewhere. For all the talk of special Jewish genius or immigrant hustle, Israel’s economic miracle was really an implementation of the economic policy playbook implemented by Reagan and Thatcher and even, in the case of welfare reform, as Mr. Netanyahu points out, Bill Clinton.

Milton Friedman had his influence on them, too, but the story is less about any individual economist, president, or prime minister, however heroic, and more about the timeless power of incentives, ownership, freedom, and private property rights.

With Reagan, Thatcher, and Friedman all deceased and economic freedom recently in retreat in the United States and in the United Kingdom, Mr. Netanyahu’s Israel may yet emerge on the economic policy front as a “light unto the nations.”