Taking Stock / Demagoguery Aside, This Is a Revolution

This first wave of social unrest could vanish with the next eruption of regional violence. But that just guarantees that the ones to come will be bigger, more violent and more desperate.

Five months have passed since the Tahrir Square protesters in Cairo brought down the Mubarak regime. Egyptians are beginning to realize that their standard of living isn't about to improve. Most still feel uplifted, mainly because, as Egyptian author Alaa Al Aswany recently explained, they feel the ouster of President Hosni Mubarak restored their dignity. The road to improving their social and economic well-being, however, remains long and wearisome.

Conversely, Israel's social revolution is just beginning. It's only a few weeks old and thus there's no telling what will happen. Israel is not Egypt. Our standard of living and quality of life are much better, overall. Yet despite the tremendous differences it is clear that Tahrir Square inspired many of the Israelis who are gathering in the streets and raising their voices in protest.

tent settlement - Eliahu Hershkovitz - 02082011
Eliahu Hershkovitz

The Israel's budding social revolution has deep roots, as well as many potential parasites who seek to exploit it for their own interests. Among the roots are inequality; the gargantuan salaries of CEOs; a leadership vacuum; the high cost of living, including the doubling of home prices and rents within five years; and the fact that a handful of families have seized control of the economy, the press, and democracy itself.

The revolution has many would-be hitchhikers - most of them manipulative cynics - and very few articulate leaders who understand the social and economic issues that Israel faces.

The cynics brim with demagogic slogans that will lead nowhere, in neither the short run nor the long one. Cut taxes, they scream, without pointing at the pork barrels into which most of the taxpayers' money is being poured. Reduce prices, they bellow, but fail to pinpoint the forces that are pushing them up. Take from the rich and give to the poor, they shriek. But they fail to distinguish between wealth earned through talent and entrepreneurship - wealth that is critical to Israel's future prosperity - and wealth accrued by tycoons, fixers and their cronies; squeezed from the public through cartels and monopolies, by corrupt ties between business and government; and by robbing the public's retirement savings in the capital market, abetted by weak, frightened regulators.

This is the stage of demagoguery and easy slogans, where everyone competes to cast the situation in a negative light and to blame political and business rivals, blinding the public with a smokescreen of verbiage.

This is the stage when some of the parties who are behind the deterioration of Israeli society in the past decade join the outcry, lest their responsibility be revealed to all.

Casting blame accurately

But if this new spirit of economic and social revolution persists, the real economic ills must come in for discussion. Who's to blame for shackling productivity? Who is preventing the streamlining of the public? Who is stifling competition and corrupting the government and the watchdogs of democracy? Which groups are bleeding the nation through public and private monopolies and cartels? Who are the people with the connections, who are made in the shade and would do anything to stymie any reform, any change to the status quo?

The tycoons who control the media are making a mighty effort to direct the protesters' arrows to "the taxes." They hope the public will forget that its heaviest tax burden is paid to the monopolies, the cartels, the business pyramids - private and public businesses that cost the people tens of billions of shekels a year.

The heaviest tax of all is invisible, like a deadly cancer. This is the tax of absent productivity that lurks in the uncompetitive structure of both the public and private economies. Low productivity strangles equality and economic growth. Who levies this invisible tax? The people who hold the true power in the public and private sectors.

We are at the start of the revolution, and presumably it will take a long time for it to produce leaders who can explain to the public how it is being robbed of its economic future. Yet for all the demagoguery, populism, spin and manipulation, revolution it is.

For the first time in years, maybe decades, a new public debate is taking form, centered around quality of life. The smokescreen of the "security situation," put up by the industries of defense and conflict who partnered with their connected buddies to robbing the nation of its future, has begun to lift.

For the first time tens of thousands, perhaps hundreds of thousands of Israelis have begun to realize that the political twaddle crammed down their throats all these years will not lead them, and especially their children, anywhere. Because in the meantime, education and health care are deteriorating, inequality is increasing, and violent gangs of the wealthy allied with government forces are looting their future.

The first wave of this social revolution could vanish into the ether with the next eruption of regional violence. But that just guarantees that the ones to come will be bigger, more violent and more desperate. That is because every year the number of Israelis who are not well-connected, who didn't want to or didn't have the sense to link up with cartels or monopolies, grows. Every year, thanks to the Internet, the number of those without connections who understand that the system is screwing them and will screw their children is growing.

Every year more people realize that the glorious story of Israeli high-tech, the "startup nation" of excellence, the meritocracy told all over the world a decade after the event touches only a tiny fraction of Israelis. And in any event, that glorious story is jeopardized by destructive processes within Israel's society and economy.

Some will realize that we have no other country, and that sitting back and watching "Kochav Nolad" won't change the future.

And they will take to the streets. They will take their future and that of their children into their own hands. They will demand real change from the country's leaders and will no longer swallow the drivel being pushed down their throats about the dangers facing Israel.

Kahlon the savior?

The mounting stress in the Prime Minister's Office at the mounting public unrest gave rise last week to leaks and denials about intentions to fire Finance Minister Yuval Steinitz and replace him with Communications Minister Moshe Kahlon.

How did Kahlon morph, in under a year, from being an unknown politician to a powerful brand, so powerful that Prime Minister Benjamin Netanyahu and just about everyone else believe that Kahlon is the only one who could restore the public's faith in the government's economic policies?

Here's how it happened. Kahlon did one big thing. He opened Israel's cellular communications market to competition. He became Israel's top political and economic brand because he was the first politician who is seen as not being afraid of the gang that seized control of the nation, of democracy, of the press.

Kahlon became the No. 1 economic brand not because he did or will reduce the price of mobile minutes. It happened because he challenged the owners of the big cell phone carriers.

Kahlon is the first politician who not only talks the language of economics and competition, but also walks the walk. He isn't cuddling up to the powers who could give him a cushy job in the private sector, the people who lavish goodies on politicians, regulators and journalists who are willing to serve them and sacrifice the greater good.

Steinitz had an opportunity to be a mega-Kahlon. The committee to examine economic competition and concentration, which he and Netanyahu appointed a year ago, could have led historic structural reforms that would have dwarfed Kahlon's reform of the cellular market. But Steinitz's advisers, some of whom work for the tycoons, deterred him. Don't go there, they counseled. They explained to him that the press is largely controlled by people who could get hurt if the economy becomes more competitive and less concentrated.

Steinitz and Bibi have spent the last six months sitting on the fence, and with every passing day the public's anger grows - over the cost of living, the robbery of its retirement savings, the inequality and the way the monopolies and cartels are allowed to gouge consumers.

An opportunity for business

If the present wave of protest does not die down, Steinitz and Bibi will have no choice. They will have to vacate their posts as captains of the economy to the only politician the public trusts, the only one they trust not to be in the employ of the tycoons.

The buds of the revolution bring not only opportunity, but also threats. The revolution could get ugly, populist and dangerous. It could turn the public against the wealthy, against business in general.

Most Israeli businesspeople, and many of its wealthy people, got to where they are by merit, by virtue of their talent, commitment and entrepreneurial spirit.

But in recent years the face of Israeli business and wealth has become that of the handful of businessmen and financiers whose wealth and power comes not from building competitive companies, not from creating jobs, but from financial sleight-of-hand and friends in high places.

Israel's business sector needs to quickly create a new leadership that can differentiate itself from the gang that depends on unholy ties. The public must be able to distinguish between the gang that is stifling competition and the industrialists, the technology workers, the owners of small and medium businesses, the hundreds of thousands of professionals - everyone who succeeds by virtue of their talent. These are the people who create jobs, who are behind Israel's competitiveness.

Until now the public has watched the ugliness spawn more ugliness with apathy. It is time to shake off that apathy before the ugliness washes over it, too.