Ethics @ Work: Money and class

Increased economic inequality does not automatically translate into social inequality.

poor person 298.88 (photo credit: Ariel Jerozolimski)
poor person 298.88
(photo credit: Ariel Jerozolimski)
The question of income inequality continues to preoccupy Israel. Just this week Finance Minister Ronnie Bar-On acknowledged that robust growth in the Israeli economy is not percolating down very well to the poorest Israelis, and outlined some ways he thought progress could be made. However, I think that what is really in people's minds when they fret over inequality is not economic inequality but rather social inequality. This priority is reflected in our political discourse. A Knesset committee studying the topic of inequality produced a report on "Social gaps in Israel"; a recent law is intended "to narrow social gaps." The platform of the ruling Kadima party includes the following plank: "Narrowing social and economic gaps, and fighting poverty." What is the difference between social and economic equality? Social class is about status. Some relatively poor people have very high status; a good example is religious leaders. Some of Israel's most lionized public figures are prominent rabbis who live in cramped walk-up apartments in poor neighborhoods. And sometimes fairly well-off people have very low status. Even the wealthiest Arabs in Israel aren't regulars in the upper-crust social scene, judging from the social and gossip columns here. We know what the economic inequality situation is. Incomes in Israel have become much more unequal over the past few decades. Standards of living are much more equal than incomes, but inequality here has also increased at a comparable rate. What about social inequality? Is Israel more or less stratified than formerly, and to what extent is stratification determined by income? In the US there are some interesting studies by Robert Putnam and others showing that class stratification is increasing there. The question of class in Israel is complicated, because stratification is not only horizontal - by levels of income, but also vertical - by sector. A typical American scene is a gated community totally closed to those with mere five-figure incomes, in which wealthy whites, blacks, Asians and Hispanics live in harmony, to the exclusion of mere middle-class families of all ethnic groups. (Other, more exclusive neighborhoods are closed to mere six-figure types.) In Israel, this scenario is rare. It is more common to find rich, middle-class and poor haredim in close propinquity in Bnei Brak; rich, middle-class and poor Arabs in similar propinquity in Nazareth, and so on. This point was also brought into sharp focus this week, when a ministerial committee voted on whether to give official government approval for the creation of a new Arab city for the North. (The proposal was rejected.) The idea of segregated cities, such as Elad, which was designed specifically for the ultra-Orthodox community, is a remarkable and regrettable Israeli planning concept. In my opinion a segregated city is a virtual oxymoron. When I sought a definition of "metropolitan" on an Internet dictionary, the first definition that popped up was "of, noting, or characteristic of a metropolis or its inhabitants, especially in culture, sophistication, or in accepting and combining a wide variety of people, ideas, etc." I'm not sure how people in metropolises are supposed to accept and combine a wide variety of people and ideas if the metropolis's makeup is narrow by design. So the question is: Is there growing economic-class segregation in Israel? And if so, does it aggravate existing class cleavages by introducing a new layer of isolation, or perhaps alleviate them by throwing the rich and poor of varying sectors into the same boat? My impression is that there is growing economic segregation in Israel, and that it is aggravating rather than alleviating existing stratification. In order to measure this scientifically, we would need surveys of the economic status of respondents' neighbors and acquaintances, and I'm not aware of such surveys. But here is one thought-provoking approach: One way of seeing how important money is, is to see how much well-being is correlated with income. In all societies there is a positive correlation, but the strength of the correlation varies, presumably with the importance of money in the value system. I calculated this correlation for the Israeli Social Survey for 2002, and again in 2006. What I discovered is that for each population sector - secular Jews, haredim and Arabs - the correlation of reported life satisfaction and income grew during the period. (The actual level, however, varies drastically. Among secular Jews the correlation is very marked - more than 90 percent. For Arabs it is much less - closer to 50%. And for haredim, it seems that money does not buy happiness; in this sector, which is the happiest by far, the correlation with income is negligible.) So it is true, and worth remembering, that increasing economic inequality does not automatically translate into the kind of social inequality that is our true concern. But practically speaking, it seems that stratification is increasing in the social sphere as well. [email protected] Asher Meir is research director at the Business Ethics Center of Jerusalem (, an independent institute in the Jerusalem College of Technology.