Playtika Shows Israel Has a Truly Open Economy; Pity About the Racism

Israel 2016 is globalized, but denying equal access to school, jobs and chlorinated water is suicide.

Jews and Arabs protest racism in Israel in October 2015.
Olivier Fitoussi

The $4.4 billion sale ofthe Israeli online gambling startup Playtika made news this week because it was the biggest ever sale of an Israeli tech company. Yet nobody said a thing about how another diamond in the Israeli high-tech crown was being sold to foreign investors.

Actually, Playtika is being sold by an American company, Caesar's of Las Vegas fame, to a Chinese consortium. But neither did anybody object when Keter Plastic, the iconic plastics maker, was sold to an overseas private equity fund the week before. Nor did anyone object when another Chinese company bought out its Israeli partner in the Israeli agrochemicals company Adama.

All were $1 billion-plus deals involving major companies in Israel.All in all, it’s a remarkable statement about the openness of the Israeli economy, at a time when America and much of Europe is going the opposite direction.

Local drawbridges up

The rise of Donald Trump, the Brexit vote, the growing strength of France’s National Front and authoritarian governments in Poland and Hungary prompted The Economist this week to analyze what it called the “drawbridges up” phenomenon – the growing opposition in the West to immigration, globalization, and multiculturalism.

Israel has its share of domestic “drawbridges up” attitudes, but they’re local ones.

As the details of the Keter deal were being sewn up last week, Matti Dotan, head of a local council in the Galilee, told a radio interviewer he didn’t want Israeli Arabs using his community’s swimming pools, claiming they had lower standards of hygiene, and would be dangerously aroused seeing women in bikinis. (The next day, he apologized.)

The sad thing is, this kind of “drawbridges up” politics is probably going to get worse, because a lot of it has to do with economics.

Not so long ago, the swimming pool question wouldn’t have arisen – because Israeli Arabs were too impoverished and non-mainstream to be thinking about spending an afternoon doing laps. But that’s changing.

Incomes are rising. More are attending university. They not only want their turn at the diving board, but are competing with Israeli Jews for places at universities and for jobs. Their towns are getting more money from the central government. Reactions like Dotan’s will inevitably grow among the resentful losers.

Brainpower inside

Globalization cost us our textile industry 25 or 30 years ago, but Israel has gained much from its openness to the international arena. Few jobs have been lost to outsourcing or imports; rather, foreign investment and deals like Playtika have been a boon for the economy.

That’s because Israel deals in knowledge. Playtika and other tech companies, and to a good degree even Keter, are valuable not because Israel is a particularly good  place to do business but because of the brainpower inside them.

None of these companies are going to be leaving Israel under their new owners because it would mean giving up their most valuable asset.

Israel has a limited supply of people and brainpower, and we should be marshalling all of our resources by creating a society that offers everyone equal access to education, jobs and chlorinated water. Israel’s Dotans should shut up, not just because what they say is hateful - but because it will cost us economically.

A Playtika billboard in Herzliya, where the company is based.
Moti Milrod