I have worked for many years in Israel, so what I say is from first hand knowledge, not from hearsay.

You are right that conscription is bad for business.

Nevertheless, in most businesses the employees lost to conscription are a small fraction of the workforce. Much more is gained from the pressure that can be applied on all the other employees, due to the permanent war economy. I pitied my Israeli colleagues, most of whom were very nice people, but who were powerless against the system that exploited them.

You are right about the reputation, but it appears that the power is held by those who do not care about reputation.

I have lived in Israel both before and after Ariel Sharon and his accomplices seized the power. The differences in tourism were huge, because before that you could walk safely anywhere through Israel, while after that you had to avoid carefully any place inhabited by Arabs, unless you had appropriate weapons with you, for any emergency.