It Isn't anti-Zionism That's Causing Israelis to Leave

In the summer of 2011, without warning, hundreds of thousands of Israelis left their homes and went to demonstrate in the streets. It was the biggest protest in Israeli history and one of the biggest in the world, relative to the population.

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Foreign reporters in Israel were confounded. Their editors in London, New York, Berlin and Rome wanted explanations. What was going on? Why? But they didn't know.

There had been only four Israeli stories: war, territories, Haredim and Startup Nation. Suddenly Israelis were in the streets. It was a new story and the foreign reporters were at a loss. One called me asking for an urgent meeting. Who were these tycoons everybody was suddenly talking about? What had happened to those protesting Israelis?

We talked and I had a question for him too. You've been in Israel for more than 10 years; you even speak Hebrew; why didn't you ever file a story about the structure of Israel's economy? The sky-high cost of living? The raging crony capitalism, the vested interests of the security establishment?

Truth is, he said, nobody had ever brought up those topics. Not the politicians, certainly not the diplomats or the people of the security establishment. Or the reporters. Anyway, he said, it didn't exactly pique his editors' interest.

Thus in the summer of 2011, the global press started reporting a new story from Israel, a story even the local press wasn't really covering – that the Israeli economy is horrifyingly concentrated.

They started reporting that a handful of tycoons controlled most of the public's money, that inequality is dreadful, that the economy serves a small clique all too reminiscent of the state of affairs in Greece. And that the cost of living is insane.

Generally speaking, people hit the streets when they feel they have no other way to make their unhappiness register with the powers that be, the politicians and press alike, and business.

Protest takes time to have impact, but this one had some immediate repercussions. One was to amplify the people's disgust with crony capitalism and back-scratching ties between politicians and big business, issues that had been marginalized (at best) until the people took to the streets.

The summer of 2011 was the moment non-establishment ideas proved to have power against the interest groups, forcing the establishment to listen to the unorganized masses, not only to big money.

And last week we had another little victory for democracy, when the people responded en masse to remarks by Finance Minister Yair Lapid and lottery chairman Uzi Dayan, excoriating Israelis who leave the country for financial reasons.

Biter is bitten, to the bone

Lapid had been a media personality, writing a weekly column in the papers and appearing on television. Then he rode the horse of the protests into politics. He and his newly formed party, Yesh Atid, won a stunning 19 out of 120 seats in Knesset. As for Dayan, he chairs the Sderot Conference on society and economics.

It's no coincidence that the public ire focused on these two last week. And just like in 2011, the people in power seem completely isolated and insulated from the word in the street.

There were thousands of posts, some explained at length and backed by statistics, in response to Lapid's and Dayan's anti-emigration remarks, from young and old alike. Their message: You have no clue what's going on.

Lapid and Dayan both tried the same old thing that had once always worked before – start with Zionism, mix in a dollop of Holocaust, sprinkle with "We have no other country" and dish up. What they didn't get is that the Israelis packing to leave the country know all that. They're not anti-Zionist. Most would rather not leave the country. But they despair of making a decent living in Israel.

What? Isn't Israel stronger and wealthier than ever before? It also has huge foreign currency reserves and a wealth of natural gas (albeit still mostly at the bottom of the Mediterranean Sea). Unemployment is low, too. Yet Israel also has a whole generation of people who feel lost and helpless. They feel that unless they have rich parents or contacts in the right places, they can't make it.

Lapid and Dayan (and a lot of others like them) don't get it. They originate in wealthy families with roots that go deep into the Israeli establishment. Their wealth doesn't disqualify them from stating their opinions and taking action. But it does seem to distort the way they perceive reality.

Soldier man, poor man

Here are some statistics that you may not know, and may not grasp: The average pension of high-ranking officers retiring from the Israeli defense establishment, at age 45 to 50, is NIS 5 million ($1.4 million) to NIS 10 million ($2.8 million). It's not just a few - thousands of people retiring each year are eligible for these pensions.

Now take your average high-tech worker. He has no tenure. The second he loses his cutting edge, his timer starts to run down. At age 45 his average pension rights have accrued to NIS 500,000 ($140,000), maybe a million shekels.

Yes, that's a tenth of his brother retiring from the army. Even the well-paid technology workers have a problem – they lose their edge and find themselves on the street, their savings eroding fast, and no income for their pension savings.

Here's another stat: The ratio between the average wage in Israel and the average cost of housing is the highest in the world, double the U.S. ratio and three times that of Sweden. And that calculation includes the highest pay levels in Israel. The median pay in Israel is NIS 6,000 a month; the average home costs more than a million shekels.

The collapse of the tycoons and the establishment of the economic concentration committee helped highlight the warped structures in the capital market and the way a clique of cronies lives high on the hog, at the expense of everyone else's pensions. Yet the public doesn't yet see that the tycoons defaulting on debt is just a sideshow in the greater scheme of the pension crisis. The real three reasons retirees won't have a decent standard of living are low pay, a labor market structured to protect only favored groups of workers (leaving everyone else unprotected), and tattered safety nets and public services that could well get even worse.

Most Israelis leaving the country aren't expecting to live in clover right away. They know that in Europe unemployment is rampant; they know American healthcare is a broken and unaffordable system; they know the locals will frown on immigrants, let alone Israeli ones.

But that's the point – they aren't leaving because they're optimistic about their chances outside the country. They've despaired of their chances within it. They feel the state doesn't want them.

Most stay. The barriers to migration are still too high for most people. The problem is that the people who up and go are the very ones we need most to stay. Israel can't afford what other nations can. But remember this: None of this is some natural order of things. We don't have to have such glaring inequality, or such an insanely high cost of living. All these things and more attest not to some force of nature, but allocation of resources that isn't guided by the general good, but the good of narrow interest groups; they attest to a weakened people and elites who have betrayed their country and the next generation, which is now reduced to seeking its fortunes elsewhere.