Forget ‘Start-up Nation,’ please

The start-up nation does create wealth, but the economic model is conducive to the tremendous concentration of wealth.

Jerusalem Start-up Weekend 370 (photo credit: Courtesy of Newsgeek)
Jerusalem Start-up Weekend 370
(photo credit: Courtesy of Newsgeek)
An alarming report released by the Organization for Economic Cooperation and Development has found that Israel suffers from the highest poverty rate among its 34 member states. As if Israel’s 20.9 percent overall poverty rate is not sufficiently shameful, this statistic is worsened by the reality that one in three children in Israel is living below the poverty line.
These findings have prompted a common knee-jerk reaction – what about “start-up nation?” Don’t we have more companies listed on NASDAQ than other country; don’t we lead the world in start-ups and patents per capita? How could we possibly finish in embarrassing last place, behind Mexico, Turkey and Chile? Indeed, the start-up nation does create wealth, but the nature of the economic model is conducive to the tremendous concentration of wealth. For each typical successful start-up exit, there are two very small groups of people who obtain the greatest benefit: the initial group of investors – people with enough disposable income to risk investing in start-ups – and the small group of early employees at the startup.
This has helped create the absurd reality of modern Israel: an affluent country with over 10,000 millionaires, but with over 150 impoverished citizens for each millionaire living the life of luxury. Adding insult to injury, the planned changes in the budget recently passed by the cabinet include severe cuts to child allowances. According to an analysis of the National Insurance Institute, these austerity measures are expected to exacerbate the problem, leading to circumstances in which yet more Israeli families will be unable to finish the month.
For a country founded upon ideals of equality, egalitarianism and mutual aid, the soaring social gaps between Israel’s haves and have-nots is all the more unfortunate. That inequality in Israel is also roughly delineable along ethnic lines is not only morally appalling, but indicative of the systemic flaws in our social and economic systems that cannot be left unaddressed any longer.
Fortunately, there are those in Israel looking ahead, working to devise more sustainable economic models conducive to greater social cohesion.
Most prominently, The Reut Institute, an innovative policy group in Tel Aviv, has been vigorously promoting its vision of “Israel 15” – an Israel comprised of successful communities in which the benefits of economic success are inclusive.
Their pilot program, initiated in Safed, is a promising attempt to improve the living conditions of Israel’s hard working, ordinary citizens.
Of course, start-ups are hardly Israel’s greatest economic threat: the ubiquitous, concentrated power of Israel’s monopolies constitute a far greater social injustice than the impact of any start-up. Yet, celebrating the successes of Israeli start-ups can easily come at the expense of the 95% of the country who are completely uninvolved with anything relating to startups.
While pointing to Israel’s economic successes may function well as a source of internal pride or as an effective tool for hasbara (public diplomacy), exaggerating their impact can (and does) distort many of the unfortunate realities of contemporary Israel.
These matters may be couched as questions of public policy, but what’s really up for discussion are the values by which we define ourselves. Are we willing to tackle the crony capitalism which plagues the entirety of Israeli society, inflating prices and concentrating wealth? Are we only concerned with “sharing the burden,” or does sharing our successes appeal to us as well? Are we interested in implementing systemic reforms, or are we satisfied accepting the status quo as an unfortunate consequence of our neo-liberal world? Frustratingly, the regressive income tax increases and austerity measures of the new budget will serve only to perpetuate these worrying trends.
The depth of our problems can hardly be cast aside as a consequence of voluntary unemployment.
Lapid’s recent defense of his budget has been along these very lines, namely that welfare is not a solution but a cause of our problems, stating in an interview that only “work brings people out of poverty.” Lapid appears willfully oblivious of the fact that the number of working Israelis living under the poverty line has increased by 65% over the past 20 years.
It’s long overdue that we stop tolerating the status quo as an adverse side-effect of a free society.
The plight of the underprivileged Israeli needs to be prioritized, with the explicit intent to minimize the social gaps which define our present.
Perhaps this begins not by glorifying Israeli venture capitalists, but by focusing on how all of Israel can benefit from our collective resources.
In doing so, perhaps we’ll remind ourselves that the true value of our creativity is reflected in our music, literature and art; in our classrooms, laboratories and NGOs; by our social innovation, inner-city projects and idealistic communities– not by the digits on a stock exchange.

The author has a BA in philosophy from Yeshiva University, and is working as a freelance writer based in Jerusalem.