Much of the country’s current frustration stems from being bombarded with hype regarding the economy’s strength and yet the average citizen will never reap the benefits. Politicians and oligarchs seem to be the only ones that are conspicuously gaining from Israel’s economic success story.
By CAMERON S. BROWNshekel versus dollar 521(photo credit: REUTERS)
On paper, it is simply inconceivable that Israelis are staging a revolution (well, what passes for one in a democracy).RELATED:It isn’t Bibi - it's the system, stupidWhile the economies of Europe and America teeter, Israel's is growing at one of the fastest rates in the industrialized world. European and American citizens suffer unemployment rates between 9-10%, while ours has shrunk to one of the lowest levels in the past 20 years.
Perhaps most telling of all, the shekel is gaining value. Relative to other currencies, the shekel is now more valuable than it has been for almost 15 years (spare a brief dip in 2008). The shekel is now almost 30% more valuable vis-à-vis the U.S. dollar than at its peak in 2003 and 9% stronger compared to this time last year.Although a strong shekel does not bode well for Israeli exports, it should be a boon for the average Israeli consumer. It means that the standard of living should have improved substantially over the past few years: from cars and electronics to the price of gasoline or vacations abroad, anything produced in a foreign currency should be substantially less expensive for Israelis. It should even translate into somewhat cheaper Israeli-made goods, as our raw materials are often imported. So if all our macro-economic indicators scream success, why are hundreds of thousands of Israelis shouting about the government’s failure?While a number of pundits have attempted to dress the protests up in their own private agendas (suggesting a factor is the financial aid to haredi or settler groups), what is actually driving events is buried in another set of economic indicators: the distribution of wealth in Israel. The sad truth is that this society--which gave birth to the kibbutz--has become one of the most unequal of all advanced industrialized democracies.Consider the Gini coefficient, the most commonly used measure of income (or consumption) inequality. Compared to the roughly 30 other industrialized democracies that make up the Organization for Economic Cooperation and Development (OECD), Israel has the 5th most unequal distribution of income - on par with the United States. One core reason is the extremely large number of Israelis who work for relatively low salaries: over 24% of fulltime wage earners make less than two-thirds of the median salary, placing Israel as the third worst in the OECD.Most disgraceful of all, if we use a common standard for measuring poverty, then Israel has the highest poverty rate of all 31 countries in the OECD group, with 21% of the population earning less than half the median income. It may not be realistic to reach the poverty rates of the Scandinavian countries (a mere 5%), but there is no reason the OECD average (11%) should seem so far away.To add insult to injury, spending the little we do earn empties our pockets faster than in other industrialized democracies. Israel's economy is infamously monopolized by a small elite and the lack of real competition means we pay more for nearly everything.At the end of the day, hearing and reading about how the economy as a whole is flourishing only frustrates the average citizen, because his own finances have barely benefited from the economic boom. If anything, the housing bubble has only made his situation even more impossible than before.But someone out there must be benefiting from all this growth, the stronger currency, etc.-- just not us. When we see the conspicuous consumption of our politicians, which stands in such stark contrast to the norms established by the nation’s founders, the poverty experienced by so many becomes even more palpable.It is no nostalgic mid-summer night’s dream to fondly recall that once upon a time, things were different here. We can point to that last remaining monument--ironically, the building that houses the Bank of Israel--which stands as a testament to our founders’ original aspiration for a country that embodied true social justice. Designed in the late 1960s, the architecture of the Bank of Israel sought to symbolize the sort of society its founders wished to build. Typically, modern societies were "pyramidized," i.e. with most of the wealth concentrated at the top in the hands of a few. On the other hand, Israel’s founders envisioned our state as an inverted pyramid, with its wealth dispersed among the hands of the many.Those who wield power no longer strive for any measure of economic equality. Successive governments have failed to ensure competitive markets, just as they failed to ensure that everyone who works a fulltime job will make a living wage.The protestors are right: this revolution cannot simply be about the outrageous cost of housing. We must, as a country, use this opportunity to get our economic house in order. It is time to change the fundamental rules of the game. On the one hand, we must ensure that hard work will be met with just and fair compensation. On the other hand, we must ensure that those who reap enormous profits are doing so because of their diligence and brilliance, not simply because they have monopolized this market.The writer is the former Deputy Director of the Global Research in International Affairs Center (GLORIA) in Herzliya.
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