Netanyahu Must Understand the World Has Changed Economically as Well

Everywhere you look, people are shaking off their torpor and realizing they've gone nowhere while the rich got richer.

Daphni Leef, Itzik Shmuli and Stav Shaffir got up one morning in Tel Aviv and decided to take action. But as authentic and original as the Israeli protest they drove may be, it's part of something much bigger, something happening around the world, a protest movement that's been gradually breaking into the citadels of capitalism.

Last Wednesday, the Financial Times, the newspaper of the economic elite, told its readers on the front page that the number of poor in the United States had reached its highest level in 50 years. Some 46.2 million Americans fell below the poverty line last year, the FT reported. The U.S. poverty line is $22,314 a year for a four-person family, or $11,319 for a single person.

A public protest

Whatever happened to America's economic growth? The technological revolution? What about globalization, the flat-world theory?

They aren't figments, but they aren't relevant either to your average Joe. The median income in the United States dropped from $52,500 to $49,500 per annum in the last decade. The median income of the American worker is, in real terms, back in 1969.

As for economic growth, it impacted mainly the uppermost percentiles. The FT elected to inform its readers that wages among the highest 2% of earners grew by 75% in real terms in the last 10 years.

In its article, which was actually about the poorest Americans, the FT also provided information about the other end of the rainbow - the uppermost decile. The number of American households making more than $100,000 per annum increased to 44.2 million. Their expenditure stayed about the same, at $1.4 trillion a year. It's business as usual among most of the wealthy: they're planning to travel, fix up the home and make investments as usual, according to a survey by the Ipsos Mendelsohn Affluent Survey Program, which researches "the media habits, lifestyles, behaviors, and attitudes of the affluent and luxury marketplaces in the United States."

On its second page, the FT reported that Italians were saying ciao to the dolce vita. A rather stereotypic headline, to be sure, but it captured the essence of the sentiment. The newspaper had a special logo for its article on the stresses felt by the middle class, in which the word "middle" is in the grip of a vise.

What does the FT have to say about Italy? That only 7% of Italians think their situation improved in the last three years, while 45% feel their situation got worse. That the middle class is going extinct. That it's heading for a country controlled by a thin layer of the rich and masses of neo-proletarians. That the middle class has been eroding for 15 years, that social mobility has ground to a halt, and that the purchasing power of the people has contracted.

What does it say about the Italian labor market for the young? That once upon a time, graduating from higher education was the finishing line. Now, it's the starting point.

Last Tuesday, the FT revealed secret negotiations between the government in Rome and the regime in China. Italy hoped to raise money from the rising Sino-empire. But within a day, the Chinese premier poured cold water on the concept that China would rescue Italy from financial crisis. No, the West can't count on China for a helping hand: It would have to get its deficits under control, Wen clarified at the opening of the World Economic Forum Annual Meeting of New Champions 2011, held at the Chinese city of Dalian.

Sharing the austerity

However affluent and busy its readers may be, the FT doesn't spare them. On Page 3 of the edition, it reports that the Spanish socialist party again raised the proposal to levy a special tax on the rich. The last time Madrid did that was in 2008. At the time, it collected 0.2% to 2.5% of the wealth reported by the million richest Spaniards, bringing in 2.1 billion euros. Now, the Spanish politicians are thinking of imposing a "wealth tax" on the super-rich - a move expected to bring in a billion euros a year.

Compared with the gargantuan dimensions of the Spanish deficit, that's small potatoes. But the public is fed up and wants to see Madrid cram its paws into the pockets of the ultra-wealthy. "Leaders should be aware that we are on the edge of the abyss," former Spanish Prime Minister Felipe Gonzales told the FT last week.

It's a toss-up between Spain and Italy which will be the next casualty of the economic crisis. Italy hoped Beijing would buy its bonds and rescue it from that black abyss. Spain tried its luck with Japan. A top-level delegation of Spanish finance officials visited Tokyo last week, hoping to recruit buyers for debt.

Then, on Page 8, the FT ran a story about Indian social activist Vinod Rai. Never heard of him? That's your problem. The newspaper, which usually errs on the side of caution, did not cavil at calling him "arguably the most influential man in India today."

Rai is India's accountant general, and since taking the job three years ago, he has spent his days fighting corrupt ties between big business and government. An "off-with-his-head" mood of activism has been sweeping through India, something akin to pre-revolutionary France, a top Indian official told the FT.

Over in China, rage has been building against elites - including high-ranking government officials - who scorn the law, reports the newspaper.

In case it isn't clear yet how high the rage can reach, on Page 15 of that September 13 paper, the FT reports yet again on the Rupert Murdoch scandal. Until a year ago, the media mogul had been untouchable. He had been the most powerful figure in the worlds of British and Australian newspapers, and had been a frightening rising power in the United States as well after the meteoric rise of Fox News, and thanks to his purchase of the Wall Street Journal. But Rupert the Terrible isn't so frightening any more. He's under attack in three continents, says the FT, and quotes from a class-action suit against him in America, claiming he has a history of structural corruption and has routinely failed to remedy illegal conduct.

Back home in Israel, the prime minister and finance minister have been preening about Israel's economic prowess, as the economies of the United States and Europe falter. They warn that breaking budget discipline will reduce Israel to a destructive cycle of economic crisis and budget cuts.

They are right. The United States and Europe have beautifully demonstrated the dangers of relying on debt and borrowing as an economic policy.

The prime minister is convinced that the Israeli protest is being fueled by left-wing elements seeking to oust him from power. He's right. There are a lot of people piggybacking on the protest - first and foremost, tycoons who would like to derail the prime minister's concepts about diluting economic concentration in Israel.

But the prime minister is missing the bigger picture. Benjamin Netanyahu and his finance minister, Yuval Steinitz, should raise their eyes from beyond the economic condition of the West and sniff the wind. The people of the West and in the developing world as well, are tired of seeing a handful of connected people accrue vast wealth by virtue of their ties in government. They could take it as long as they felt they were progressing together with the economic elites. But lately, the penny dropped. People began to realize they weren't progressing. They were marching in place and had been for a long time. And they won't take it any more.

If Netanyahu and Steinitz don't get the message that sentiment around the world has changed, they're likely to feel some mighty chilly winds blowing from the direction of the OECD club that they were so happy to join in 2010.