Opinion |

If Big Government Is the Post-pandemic Future, Israel Is in for Trouble

Israel's public sector is sluggish and hidebound, yet all the signs point to a growing role for the state even after the coronavirus crisis has passed

David Rosenberg
David Rosenberg
A view from the top of an Azrieli Tower at traffic jams down  below, Kaplan intersection
A view from the top of an Azrieli Tower at traffic jams down below, Kaplan intersectionCredit: Ofer Vaknin
David Rosenberg
David Rosenberg

Let me start with a short story that has seemingly nothing to do with the coronavirus crisis but in fact has everything to do with it.

An acquaintance of mine who was until recently serving in the army was assigned an office on his base. When he arrived he discovered that the walls and furniture were plastered with animal droppings. A gaping hole in the roof allowed the beasts to come and go, he realized as he met face to face with an angry rock hyrax in his office. He set about cleaning up the space and then “acquired” building materials from an unused army installation to patch the hole.

"Couldn’t you get the roof patched by the base maintenance staff?" I asked naively.

Yes, but it would have taken weeks or months for them to get around to it, he explained. The mess he inherited was evidence enough that the hole had been there for some time. If he wanted an office with a roof, he’d have to do it himself.

And there you have the army, and for that matter, all of Israel in a nutshell. The Israel Defense Forces may be one of the world’s most powerful armies. It regularly trounces its enemies and employs technology creatively and effectively in way that is the envy of the world. But when some poor NCO wants to get his office roof fixed, he’s better off doing it himself.

What does any of this have to do with the coronavirus? Quite a bit, actually.

We're already seeing around the world how the pandemic has brought about a surge of big government unimaginable just a few months ago. States are monitoring their citizens’ activities in unprecedented ways; they're ordering them to stay at home and wear masks and they're spending money at a rate far exceeding the 2008 global financial crisis. Their brief ranges from public health to avoiding economic catastrophe.

Naturally, there has already been some pushback, like the protesters who have gathered in a handful of U.S. state capitals or in Tel Aviv this week. It’s understandable because all across the political spectrum there are a lot of suspicions about the big state. Conservatives hate high taxes, spending and regulation; liberals and leftists may appreciate big government but hate the intrusion into civil liberties.

Right now, we're getting a heavy dose of the big state. The problem is that it's probably here to stay long after the coronavirus is behind us. The protesters are 21st-century Luddites fighting a hopeless rearguard action against an irresistible phenomenon. The big state is here.

Riding the bigger wave

In the medium term, we can expect some form of coronavirus-related lockdowns and other policies to be with us for months and perhaps years. Longer term, modern life will almost certainly involve more and more government involvement.

Crises such as world wars and the 2008 financial crisis speed up the process, but they're just riding a much bigger wave. The world is too tightly bound by interconnective technology, supply chains and the crowdedness of urban life for rugged individualism to flourish.

Unfortunately, as the story of the hapless NCO and the hyrax shows, Israel isn’t quite ready for the new era of big government.

Israel certainly has some key assets that will serve it in the new age. The most important one is our impressive expert class of scientists, engineers, economists and the like. People of that caliber are an important element of big government: Policymakers face complicated issues and, as Donald Trump has amply demonstrated, political instinct and ideology are no substitutes for expertise.

We also are good at developing and adapting to new technology. As the coronavirus pandemic has demonstrated, the ability of countries to get a handle on the crisis hinges as much on technology (smartphone tracking technology, medical gear) as it does on policy prescriptions (lockdowns).

But, on balance, Israel’s government deficits are bigger and more worrying. Trust in government isn't particularly strong and has been in decline for some time. Dominated by unions and neglected by politicians, the public sector is hidebound and revolves around a system that rewards seniority over merit.

By measures of global competitiveness, Israeli governance gets consistently low marks that stand in sharp contrast to its high scores for technology and human capital.

Israelis excel during emergencies, probably because we have so many of them. But we do less well in day-to-day management. Tell the IDF to fight a war and it will do so expertly. Tell it to make sure the facilities on its bases are being maintained and it falls victim to a deep cultural distaste for the demands of discipline and organization, as do many Israelis in and out of the army.

Not surprisingly, therefore, Israel flourished in the era of small government. As the state withdrew from involvement in the economy starting in the late 1980s, the high-tech sector was free to take off and economic performance in other sectors improved too. The Israeli standard of living rose.

Unfortunately, what was left for the state to manage – mitigating the widening inequality, ensuring quality education of the young, building good infrastructure for everyone, and providing strong government services – it managed badly. Until the lockdown kept everyone home, Israeli roads were jam-packed with cars because public transportation is so scarce. Israeli student performance is extraordinarily low. A future where the government is managing even more than it does now doesn’t look at all promising.

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