Are our economic problems a result of the absence of peace? If we continue with the peculiar version of “Zionism” that Prime Minister Benjamin Netanyahu represents, are things bound to get worse? Yes. Hell, yes. But before we connect the dots, a word of caution:
Israel’s high degree of inequality is not, by itself, proof of economic injustice so much as of how globalized the Israeli economy is. Our growth is driven by high-technology exports in software, value-added components, advanced medical devices and other “solutions.” So we are bound to have a social profile more like Silicon Valley than a manufacturing city like Wolfsburg, Germany. I could work a lifetime teaching at a business school and not amass the fortune of one former student, who just sold his start-up to Getty Images for over $20 million. Bless him.
The real question is whether those of us who do not have a shot at a fancy technology jackpot have growing incomes and an improving quality of life. Does what we earn and pay taxes on leave us with enough for essential things like higher education, medical care, cars and fuel − and, yes, housing? If not, why not?
The answer is that the atmosphere on Planet Netanyahu is slowly suffocating us:
• The settlement project was, and is, insufferably expensive. Upwards of $20 billion have been spent on settlements and infrastructure in occupied territory, and that doesn’t include the costs of securing them. Meanwhile, traffic on the coastal plain long ago graduated from heavy to infuriating; mass transit projects in major metropolitan areas are constantly postponed.
• The industries that liberated Palestinians will focus on, and draw regional investment to, are precisely those that lower-income Israelis are bound to benefit from: tourism, construction, retail, food processing. Israel and Palestine are one business ecosystem. Israel could generate another $8 billion in GDP just from doubling its number of tourists from 3 to 6 million a year. (Florence gets 12 million.)
• One-sixth of the government budget goes to defense, and that fraction is creeping up to incorporate new weapons systems. Social services are inevitably trimmed. Moreover, the ratio of national debt to GDP is stuck at around 75-80 percent, not unmanageable as long as interest rates remain low and growth rates remain high, say, 4-5 percent a year. But if Israel were to enter periods of lower growth − as would be inescapable with greater political isolation, that is, with Israeli start-ups facing new obstacles to building relationships with European corporations − it would be impossible to outpace the social tensions we now see or the discontent in the Israeli-Arab community.
• Educational infrastructure is in serious decline. Critical preschool is crushingly expensive for young couples. High-school classrooms average 30-40 students. University budgets have been slashed. Yet the Netanyahu government is focusing on the “Zionism” content of the curriculum, not on development of critical thinking in a science-driven economy.
• The health-care system is in crisis, yet Israeli medical training is world-class. Medical tourism, especially from neighboring Arab countries and the Gulf, could rejuvenate the Israeli medical realm overnight.
• Participation in the Israeli workforce is among the lowest of OECD countries, about 56 percent as compared, say, with 68 percent in Japan, which is among the highest. This is largely because of the long-standing policy of the Likud and Company − a policy Yossi Sarid, when he was education minister, tried to change − to keep ultra-Orthodox yeshivas on the dole.
• The major driver of high land prices is the Israel Lands Administration, a throwback to the old Zionist Jewish National Fund (whose lands still constitute about a fifth of the ILA’s holdings), managing roughly 90 percent of Israel’s land for “the Jewish people.” Privatization and auctioning of land is necessary to bring the cost of housing down. But this would mean that Arab towns would be able to buy much more land for their own development, which is anathema to the Israeli right.
• Ginning up the cost of flats themselves, especially in Tel Aviv’s and Jerusalem’s core, are absentee owners: Wealthy Diaspora Jews who − excited by the right’s pandering, and encouraged to think of Israel as a kind of metaphysical theme park − drive out younger buyers and renters.
• Incessant war tension, among other things, has degraded the quality of life. A million Israeli Jews live abroad today, disproportionately well-educated people who could be founding companies at home.
• Last, though not at all least, is Netanyahu’s freewheeling approach to market regulation − so much like that of American Republicans, and masked by ultra-nationalist distractions. This means concentration of ownership in Israel: The wealthiest 16 families own 20 percent of the top 500 companies. Conglomerates take super-profits from, in effect, monopolies in banking, telecom, food retailing, media and so forth. But they are also over-leveraged, and highly invested in real estate. Let the air out of the housing market − by releasing a great deal more ILA land, for example − and some will find themselves under water, kicking off a recession. Until we break them up, we must live with their need for higher national growth rates than can be achieved with a continuing occupation.
Without peace, in short, the “start-up nation” is bound to run down. And the marches prove that the young of Tel Aviv − with global experiences and cosmopolitan instincts − do not live in a bubble. It is Netanyahu and the right, settlers and the Orthodox and Russian Putinists, who live in a bubble. God willing, the streets of Tel Aviv will burst it even before the streets of Ramallah do.
Bernard Avishai is the author, most recently, of “The Hebrew Republic.” He writes for numerous magazines, including Harper’s and The New York Times Magazine. He teaches business at the Hebrew University and blogs at TPM Cafe and Bernard Avishai Dot Com.
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