Opinion

Wealth Trickles Down, Poverty Thrives

Only a welfare state, which provides adequate education, health, housing and employment to all, together with a fair, competitive economy, will enable both growth and dignified living to all.

Israel has failed to tackle the problems of poverty and social inequality. The picture shows the mattress and bedding of a homeless person on a sidewalk in front of thedisplay windows of a trendy clothing store,
Moti Milrod

In a scene that could have been taken from the Theater of the Absurd, the prime minister and finance minister announced festively last week that “growth is trickling down to the lower and middle classes.”

When I dared to rain on their parade and said the obvious – that the cost of living in Israel is soaring, the middle class is disappearing and workers don’t enjoy the fruits of their labor – I got an especially hostile response in article by Nehemia Shtrasler (“Why was Zehava angry,” Haaretz in Hebrew, February 24).

Shtrasler argues in the article that the high growth rate in Israel trickles down more effectively to the poor, and that those who really care about social causes are those who support the free market, calling to lower taxes and cut state spending. Shtrasler is the mouthpiece of the “trickle-down economy,” an erroneous, obsolete theory claiming that the more we give the magnates and the corporations, the more some of it will trickle down at some point and reach the poor and needy too.

Let’s assume Shtrasler is right. If the wealth of the top 0.1 percent flows down faster to the middle and lower classes, how come Israel consistently stars at the top of the OECD’s poverty and income inequality rankings? If Yitzhak Tshuva and Shari Arison’s extreme wealth contributes so much to the public welfare, how is it that even in 2017, one in five Israeli families subsists below the poverty line?

The main “trickling down” the Finance Ministry points to stems from the growing participation of the poor in the labor market. High employment rates are, of course, an important component of a healthy economy, but it’s important to remember that a growing number of the employees in Israel are personnel agency workers, employed in partial or temporary jobs. These workers have no rights or social benefits and earn minimum wages and less than that. The trickling down Shtrasler boasts of means turning poor unemployed people into poor workers.

The fact that the poverty rate growth is as fast as the economic growth in Israel brings to mind the saying “the operation was a success, the patient died.” Only a welfare state, which provides adequate education, health, housing and employment to all, together with a fair, competitive economy, will enable both growth and dignified living to all.

In fact, the budgets necessary to revive the social services are already in the state coffers. But under Netanyahu’s government the money flows to extortive pressure groups, headed by the settlers and ultra-Orthodox.

In contrast to my views, which are compatible with most developed states’ economic policies, Shtrasler represents an outdated approach, calling for an austerity policy and complete liberalization of the capital market. Today important economic organizations are of the opinion that this approach has made millions of people miserable worldwide, created financial crises and deepened inequality.

Bodies like the IMF and OECD, which Shtrassler wouldn’t dare call “neo-Bolshevik,” corroborate these arguments, and call to expand social services in Israel and narrow the gaps by means of tax reforms.

Shtrasler represents economic views that were relevant at the beginning of the previous century. Perhaps he should wander around the country a little, get to know real flesh-and-blood workers, and see for himself to what extent growth has trickled down.

The writer is the head of the Meretz party.