Bank of Israel 370.
(photo credit: Wikimedia Commons)
The middle class never enjoyed much respect. Marxists disparaged the
petite bourgeoisie as sad characters who lived off the crumbs of the capitalist
class while the workers would remake society. The right distrusts it as too
self-interested and distant from the soul of the nation. Intellectuals have
scorned it as a bastion of conventionality, light on culture, smug and
self-satisfied. “What is middle class morality?” Eliza Doolittle (really George
Bernard Shaw) asks. “Just an excuse for never giving me anything.”
politics of our time and place – in the rare instances that economic issues
arise at all – the classes of interest are the lower ones (who suffer unless the
state steps in to help them) and the upper ones (who are routinely subject to
rhetorical attacks even though the state is always stepping in to help them).
The tent protests in the summer of 2011 were remarkable not only because they
put economic concerns on the agenda, but because the wish list that emerged from
it was unashamedly middle class. Yair Lapid’s campaign slogan “Where is the
money?” is an appeal to the middle class rarely articulated in
But of course, the tents were folded up a long time ago and
Lapid is looking at six or seven Knesset mandates. The political class
has moved on to Iran and Palestinian terror, when it can find some.
the circumstances, it is not at all surprising that a Bank of Israel report
released last week on the middle class got far less attention than the National
Insurance Institute’s annual poverty report or the Business- Concentration
Committee report suggesting how to take down the tycoons a notch or two. The
middle class provides the recruits for the army, volunteers for parents’
committees, goes to work and pays its taxes. It is the object of neither envy
nor pity. It’s just there.
OR, AS it turns out, it is a little less there
every year. The Bank of Israel estimated that the combined middle and
upper-middle class shrank to just over half the total population in 2010-11 from
nearly 56 percent in 1997. The wealthy kept their share throughout that
period, at about 19%, while the poorest part of the country grew nearly five
percentage points to 30.2%.
The Bank of Israel chose to measure the
middle class by income, defining it as people with incomes between 75% and 125%
of the median for the economy, which in 2010 amounted to NIS 14,385 per
household. Many would argue that being middle class is mostly a state of mind,
that its denizens have in common certain broad values and lifestyles more than
similar take-home pay. But of course, those values are not going to be
easy to actualize in a household whose pretax income is NIS 10,800. How can you
pay for private tutoring or theater performances?
Israel is not alone in seeing
its middle class decline. In the US, for example, the percentage of
households whose income falls within 50% of the median dropped to 42.4% of the
total last year from 44% in 2000 and just over 50% in 1970. But the years the
Bank of Israel charted were ones when the economy was mostly booming, with
hi-tech coming to the fore, foreign trade opening up to create new
opportunities, taxes falling and GDP per capita increasing by 23%. There was one
major recession in this period, but otherwise it was an era of near-constant
growth. In other words, if the middle class was shrinking at a time like this,
when will it ever grow?
APOLOGISTS FOR Bibi-nomics will say that it’s because
Israel remains a state-dominated economy of excess regulation and taxes. But the
argument is pretty limp: Israel has made giant strides in the direction of free
markets and less government, yet the benefits have not only failed to trickle
down to the poor, they seem to be circumventing the middle class, too.
better argument is that the educational system is failing to create the skilled
workforce needed to create and sustain a wealthy economy. On the one hand, we
have the Start-Up Nation, which employs the tiny minority of talented engineers
and entrepreneurs, but does little for the rest of us; on the other, we have a
large and growing segment of the population – the haredim – who simply refuse to
either work at all or acquire the skills needed for jobs in an advanced
economy. The kind of jobs that keep the middle class employed –
middle-management jobs at big companies, a skilled and efficient government
officialdom – do not exist in large numbers. There are few big, multinational
companies to employ them, and the civil service is an army of too many
underpaid, undertrained clerks.
Economists, like those of the Bank of
Israel, naturally express their concern about the decline of the middle class in
economic terms. However, it is not just the backbone of the economy that is
fragile, but the backbone of democratic society. And in times like these – when
democratic values are under assault – a middle class that is well-educated,
economically secure and self-confident (dare we say smug?) is the best line of