There is no question that the United States is shifting to the left. It has clearly decided on a significant change in its economic policy. We can argue whether Barack Obama will lead the country to "sensitive capitalism" or "a market economy with a social policy," but it is clear that a big change is about to occur after eight years of a pure capitalist regime.
Big changes can only be made through the tax system. And Obama has promised to raise income tax on the rich, raise the ceiling for Social Security taxes, and increase taxes on corporations, dividends and capital gains. At the same time he has said he will lower taxes for low-wage earners. This is a significant change in the distribution of American income.
In social affairs he intends to raise the minimum wage, propose a national health insurance plan and strengthen the unions. He also plans an aid package for homeowners with mortgages, an aid plan for the car industry, large investments in green industries, higher investment in science - and all this will require a major increase in the federal budget.
These big changes have made quite a number of Israeli politicians and commentators happy; those who say we also need to follow Obama's lead: increase the budget, raise taxes on the rich and spend much more on social programs and infrastructure, because if the United States can do it, who are we not to follow?
But that is a huge mistake. It comes from a basic misunderstanding of our position on the map of economic ideology compared with the United States.
If we draw an imaginary line between capitalist and social-democratic systems, we will see that the United States is on the far right of the spectrum, while Europe and Israel are at the opposite left end.
We can prove this using a few figures.
Public spending is the main statistic showing the government's involvement in the economy. In the United States, public spending is among the lowest in the world. It is only 35 percent of gross domestic product, while in Israel it is 44 percent of GDP, the same as in Europe. This means that here we have higher taxes, which are much more progressive. In Israel the top 20 percent of wage earners pay 80 percent of income tax, while the lowest 50 percent do not pay income tax at all. Here marginal income tax reaches 47 percent while in the United States the highest level is only 36 percent.
The state provides many more services here than does the American government. We have a magnificent health system that provides health care for everyone, even if they pay absolutely nothing and have 10 children. The high taxation on the upper deciles pays for it.
But in America there is no national health insurance, so 46 million people have no health insurance whatsoever. Here we have free public education through the end of high school, and there is no private education. In the United States, public schools are on a low level, and anyone who can afford to sends their children to private and expensive schools.
Here the universities are all public and tuition is low. Over there the best universities are private and tuition can reach $30,000 a year, 10 times the cost here. Here we have an entire system of social insurance that does not exist in the United States. There are child allowances and standard deductions. There they have only deductions and no child allowances. In Israel we have 110,000 families that receive guaranteed income support, while in America all you can receive is food stamps.
Here the infrastructure belongs to the state: electricity, water, land, ports and airports. There everything is privatized.
Here we cannot fire employees easily, and we do not throw people out onto the street. We have the Histadrut labor federation and unions. In the public sector there is job security, and large private institutions have a union that prevents layoffs. The American brutality connected to anything related to labor relations does not exist here.
This means we simply are not playing the same game. Our policies are much more humane and considerate of the weak. Here we are basically social democrats with a market economy, not capitalists in the U.S. mold.
So if the Americans want to start moving to the left, as last week's election results show, we don't have to do the same. We don't need to copy Obama, he should copy us.
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