We should be celebrating the apparent success of a protest movement initiated by
Israelis outraged by an increasingly hedonistic society that displays scant
concern or compassion for the underprivileged. After the tents have been
dismantled and the protesters return home, there is every likelihood that their
exercise in people power will have a longterm impact, creating a new political
agenda obliging legislators to ensure that societal and welfare issues are no
These protests cannot be compared to the riots in
undemocratic Arab countries, which are largely inspired by the oppressed,
desperately poor and unemployed masses.
Nor do they remotely parallel the
chaos perpetrated by violent hooligans in Britain.
Our demonstrators were
not even influenced by trade unionists, many of whom are themselves fat cats
receiving disproportionately higher salaries than those in the streets. Nor,
ironically, do they represent the lowest underclass of the community – haredim
and Arabs. And reflecting the uniqueness of this movement, the opposition failed
to capitalize on the protests.
Despite the presence of summer vacation
drifters and far-left-wing zealots, the protesters primarily reflect the
frustrations of educated, middle-class Israelis struggling to maintain a decent
standard of living and outraged by their perception of the cynical greed and
nauseating rapaciousness of the super-wealthy.
The primary issue of the
tent protest is affordable housing. As in many Western countries, young couples
struggle to purchase homes, but in Israel the problem is magnified by the
monopolistic state control of 90 percent of land by the Israel Lands Authority
and its cumbersome and frequently corrupt bureaucracy.
In addition, there
are the scandalously low salaries paid to doctors, nurses, police, teachers,
etc., despite their crucial contribution to the well-being of
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Then there is the role of the super-rich, which has enraged the
In his previous term as prime minister, Binyamin
Netanyahu’s reforms to break up the bloated state bureaucracy stimulated the
market economy. As finance minister during the Sharon government (2003- 2005),
his focus on debt reduction and renewed efforts toward privatization enabled
Israel to avoid the debt crisis currently confronting EU countries, most notably
However, at the time, he was condemned for being too harsh on the
poorer sections of the society, and it was alleged that his privatization
further empowered the megarich.
Since his first term as prime minister,
he and his successors of all political stripes have failed to curtail the
explosive growth of these new tycoons, to the point that currently 10 of the
largest families in the nation allegedly direct or control 30% of the
Their influence extends to the banks, supermarket chains,
insurance companies, media and cellular companies. One of the worst consequences
of such centralization of wealth in the hands of a few has been a frequent
collusion to limit competition, ensuring that the costs of basic consumer goods
and services escalate to much higher levels here than in Europe and the US,
where salaries are much greater.
Daniel Doron, one of the country’s most
incisive economic analysts, observed that in our dysfunctional economic system,
it is “the bureaucrats, the oligarchs, the monopoly unions and others with
privileged access to power” who maintain the system for their own benefit. He
describes these tycoons as “a tiny fraction of the population who use a third of
all credit, which they leverage into highly risky investments, mostly in foreign
In addition to their disproportionate access to borrowing
public funds, it has been outrageous to observe some of these tycoons defaulting
on their debt obligations not only to the banks and other lenders, but even to
pension funds. They have demonstrated a total absence of moral scruples by
refusing to dip into their own reserves to repay public debts that must be borne
by the holders of debentures or taxpayers. The Movement for Quality Government
rightly urged that those defaulting on repayment of loans from public coffers
should be denied access to loans from banks and pension funds for a
NOTWITHSTANDING THIS overview, one must be encouraged by the fact
that despite carrying a heavier defense burden pro rata than any other nation,
Israel remains one of the best performing economies in the Western world and has
one of the finest health systems.
By balancing the budget, limiting the
national debt and maintaining fiscal responsibility, Netanyahu averted the
greatest economic plague – unemployment.
Today it stands at a 20-year low
(5.8% compared to 9.2% in the US).
There are, however, major tax
VAT at 16% is extraordinarily high, burdening poorer people
with excessive indirect taxation, and must be reviewed. On the other hand, the
combined direct taxes (including health and insurance dues) for lowest-income
earners only amount to 2.8%, while the highest levels pay 82%. Of course unlike
salaried employees, the super-rich, as in other countries, manage to create
legal loopholes to minimize their taxation. But one should not accuse Netanyahu
of being entirely a stooge for the tycoons. He did succeed in breaking the
monopolies of the banks and demanded higher natural gas royalties from the
The government must now demonstrate compassion and a
willingness to listen to the genuine grievances of the people. But at the same
time, it must retain its nerve and avoid being panicked by populists employing
“social justice” catch-phrases to justify spending sprees that could undo 20
years of responsible financial management overnight. At all costs,it must avoid
a return to direct state intervention or state socialism, which led to the
collapse in Greece and other Western “welfare” economies.
inflict untold suffering on all segments of Israeli society.
therefore remain alert to prevent movements for reform from being hijacked by
demagogues or political agitators exploiting genuine grievances for narrow
partisan political reasons.
THOSE SEEKING to exploit the situation merely
to achieve Netanyahu’s ouster, or insisting that the source of the problems are
the “occupation” and settlements would – if successful – make this movement
toxic and must be marginalized. Clearly, were significant numbers of settlements
dismantled, the cost of resettling the residents within the Green Line would
lead to a massive escalation of prices as demand for homes
Netanyahu has “urged financial responsibility alongside
social sensitivity.” His appointment of Prof. Manuel Trajtenberg, who resigned
as head of the National Economic Council after Likud won the election,
demonstrated courage. On the surface, Trajtenberg seems to have the right
approach and will hopefully engage in a long overdue process of social reform,
with recommendations of how to reverse the spiral of increasing inequality and
high cost of living – especially inflated food prices – provide more affordable
housing and stabilize the status of the middle class. He may also suggest a
review of the sacred cow – the defense budget – that a number of critics claim
is highly inflated with expenses unrelated to genuine security issues and is
mushrooming out of control.
There are genuine prospects for reform, but
they cannot be implemented overnight.
And in the process, we must
zealously ensure that with another looming global economic meltdown, we retain
the unique strength of our economy – one of the healthiest and fastest-growing
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