Taking Stock / Keep Out (That Means You)

America is the land of opportunity, they say. Hollywood and the press have been drumming that concept into our awareness for decades.

It’s a great story. But the biggest bluff in America is the American dream. The belief that anyone can.

U.S. snowglobe

It isn’t true. Study the empirical data and you will find that when it comes to social mobility, to climbing the ladder from low socio-economic status to high, America is near the bottom of the list.

To the best of my knowledge, no parallel studies have been conducted in Israel. Nobody has studied the real chances of somebody realizing their potential and climbing from the bottom of the socio-economic ladder to the top. We will have to settle for reading and ruminating about the list of the super-rich of Israel.

First rumination is that great wealth is certainly one measure of success, but only one measure. Secondly, the list of the super-rich represents the state of affairs only at the very top of the top, not of the general population or of the broad economy. Third, if we study the dynamic within that top thousandth percentile, we find that it’s trending down.

An evil wind blows

The 1990s and second half of this decade were golden years for high-tech, globalization, and economic dynamics. The process of exposing the Israeli economy to the world, the process of privatization, of encountering competition, reforms of the Israeli capital market and the blooming high-tech sector created a whole new club of rich entrepreneurs.

In the last five years, something bad has been happening to that list and to the economy at large.
The number of entrepreneurs who grew enormously rich from high-tech, industry and other competitive sectors has been dwindling. Yet some of the same faces appear in the list year after year − people engaged in finances, who control the cartels and monopolies created over the last 10 years, who control companies that had been government-owned but were privatized.

Meanwhile, the public sentiment has been changing. Israelis still appreciate initiative, success and innovation, but they aren’t stupid. When wealth is created from financial acrobatics, government handouts to sweetheart tycoons or from uncompetitive companies, they do not applaud any more.

Happily, the Israeli economy is still growing and unemployment is low. Therefore, inequality in Israel − which is among the worst in the world − has yet to engender social unrest.

But come the next economic crisis, the deterioration of social solidarity and the conquest of the political echelon and much of the public space by a handful of tycoons will exact a heavy cost.

The great private philanthropists, who donate huge amounts of money far from the public eye, are already feeling it. They are burned by the rise of cynicism. They are angry, and justifiably so. They just want to help, yet a group of cynical tycoons has turned philanthropy into a tool to dig for more power, public relations and ultimately, wealth.

The only solution is leadership. Donating money isn’t enough. Values need to be reinstated in the public debate. The philanthropists cannot shy away from painful subjects such as the nasty ties between those with great wealth and those who wield political clout, the all but nonexistent social mobility in Israel, the decline of competitiveness, and the inequality that serves the top thousandth percentile at the expense of all the rest.