Israel is nearing the end of its seventh decade. The beginning was promising – but the future, as Yogi Berra once quipped, ain’t what it used to be. An abyss has grown between the vision of the leadership today and the vision that enabled Israel to become not just a beacon of hope and a sanctuary for those who had lost everything but also a beacon of inspiration and ideas for others abroad. Today, Israel is at a crossroads.
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In its first decades, the country that absorbed exiles arriving with only the clothes on their backs and rationed food to keep everyone alive also found the wherewithal to build a human and physical capital infrastructure that helped it grow at a phenomenal rate and narrow its gap with the world’s leading economies. However, in the 1970s the national priorities had shifted away from this kind of investment, which benefitted all citizens, and toward narrow sectoral interests and political expediency.
The primary engine for a country’s living standards is its total factor productivity, which reflects the part of gross domestic product growth that is determined by the qualities rather than the quantities of labor and capital. Within just 25 years of its founding, Israel had managed to almost completely close its productivity gap with the United States. However, following the Yom Kippur war in 1973, the country’s productivity went into free fall. In 1977, Israel moved to a new path, one that has been pulling us further and further behind the U.S. Its education system has become one of the worst in the developed world while its roads and hospitals have turned into some of the most congested.
Other countries have recently entered the haze that Israel has been in for years, one that obscures the beacon that makes it possible to distinguish between populism and policies based on facts and knowledge. For Israel, getting it right, or not, will eventually mean the difference between physically existing – and the alternative. The longer the country’s leaders refuse to look reality in the eye, continuing with the shallowness, the demagoguery and the messianic blinders, the further Israel’s productivity will fall behind that of the U.S. If the leaders won’t act, then young and educated people with options will – particularly those who understand where the terminal vision underlying our trajectory is taking the country.
We are not there yet. Israel still has a large majority with a strong sense of commitment to the dreams of its founders. The younger generation doesn’t just place life and limb at risk to defend Israel; they also choose to delay college and careers even further by volunteering in record numbers to spend a year or more helping the less fortunate in Israel’s poorer communities.
The catalyst for the young generation’s decision of whether to stay or leave may be a major crisis – external or internal – accompanied by a loss of hope that Israel’s leadership will internalize the gravity of the direction that its current policies are taking the country. Demography is not just an issue of fertility. In the final analysis, the ultimate determinant of whether Israel will exist or not is if it will be the next generation’s country of choice.
Prof. Dan Ben-David is an economist at Tel Aviv University’s Department of Public Policy and heads the Shoresh Institution for Socioeconomic Research.