Keeping Israel's economy strong

The Jewish poverty rate in Israel is actually lower than that of the US - but returning to the skewed system of child allowances would drag it back up.

By JEFF BARAK
When the United Jewish Communities (UJC) of North America made its plans for this year's General Assembly, now taking place in Jerusalem to mark Israel's 60th anniversary, no one could have foreseen that this impressive gathering of Diaspora communal leaders would be held in the shadow of a world economic crisis that has put the problems of this region way down on the list of international concerns. No doubt some of the GA participants are spending a good deal of their time here anxiously checking their Blackberries to follow the markets back home, and with good reason. The prospect of a full-fledged global recession is of serious concern, both for individuals with plenty to lose and for the wellbeing of the American Jewish community at large. For despite the stereotype, not all American Jews are rich. Indeed, the Jewish poverty rate in the United States is actually higher than that in Israel. Here, some 24 percent of the population is considered poor, but only around half of this number are Jewish, as Israeli Arabs make up a large percentage of Israel's poor. In the US, around one in five of Chicago's Jews, for example, is regarded as poor or almost poor, while in New York, a federation survey conducted earlier this decade showed that 350,000 Jews in New York City and state live close to the poverty line. The UJC itself estimates that 15 to 20 percent of American Jews are poor. Given this state of affairs, it would be only natural were the GA to look inwards. Israeli organizations looking for handouts at this week's gathering should realize that now is not the time to be handing round the begging bowl. Some organizations have already realized this and, anticipating the worst, the Jewish Agency last month announced that it was slashing $45 million from its 2009 budget, with some $12.5 million of this figure coming from organizational restructuring and cutting management costs. Inevitably, this type of organizational restructuring means job losses, and the threat of unemployment is hanging over a growing number of Israeli workers in all areas of the economy. But interestingly, on the macro level, Israel might be better placed than the US to survive the global slowdown. According to a Merrill Lynch report cited in the Israeli press last week, Israel's economy is less susceptible to risk than that of other developed countries such as the United States, Canada and the Euro bloc. In a report on the financial and economic vulnerability of 44 nations, Israel is only the 24th most vulnerable. The list, for those who are interested, is headed by Australia (because of a huge influx there of foreign capital over the past five years), and the United States is ranked 10th. ONE REASON for Israel's decreased susceptibility to risk is the fact our banking system is more tightly regulated than that of the U.S. Thankfully, Binyamin Netanyahu's arrogant boast to the US Congress in 1996, after he had just been elected prime minister, that "You know, there's not a Hebrew word for deregulation. By the time this term of office in Israel is over, there will be a Hebrew word for deregulation," never came to fruition. If it had, and our banks had behaved in the same way as American ones, the economic situation here would be that much bleaker. But later, as finance minister in Ariel Sharon's government, Netanyahu did make a major contribution to the Israeli economy when he ended the unfair system of child allowances which disproportionately rewarded families with more than four children. Before Netanyahu's reform, the system was skewed so as to support the lifestyle choice of haredi men who, with their exemption from IDF duty guaranteed for as long as they are in full-time Torah study, preferred to spend all day in the kollel, while their families lived off their wives' salaries and state benefits. Not surprisingly, with only one low-income earner in the family, and lots of children, the haredi sector is one of the poorest in Israeli society, along with the Israeli-Arab sector, where women tend not to work and families are also large. Now with elections approaching, Netanyahu is eager once more to court the haredim and has talked of restoring the old child allowance system. This must not be allowed to happen. As with all crises, the current economic crisis also presents a golden opportunity to prise the average haredi male (and not the truly outstanding student) out of the kollel and into the labor market where he will make a contribution to society rather than just taking from it. When the Hazon Ish (Rabbi Avraham Yeshayahu Karelitz) persuaded David Ben-Gurion in 1952 to exempt yeshiva students from recruitment into the IDF because "the Torah is their trade," no one envisaged the massive scale of draft evasion that would follow. Neither man also thought Israeli society would reach a point where 63,000 married haredi men are currently enrolled to study in a kollel, avoiding the responsibility of providing for their family or helping to defend the country. Until now, this unsustainable system has been propped up by child allowances and a small monthly NIS 720 government stipend on the one hand, and donations from rich Jews from abroad on the other. But with the credit crunch affecting their wealthy donors, the kollels are in deep financial trouble and are unable to provide their students with the grants to which they have become accustomed. It would be a crime were the next government, due to a coalition deal with Shas, to come to their rescue. With Netanyahu certain to turn to Shas as his senior coalition partner, here already is one reason not to vote Likud, even before the election campaign has begun in earnest. The writer is a former editor-in-chief of The Jerusalem Post.