Israel – Poverty Amidst Plenty

We should examine the causes of the growing economic inequality that characterizes Israeli society at this time.


By Moshe Arens

(A version of this column appeared in Haaretz on January 11, 2011.)

For years it has been said that Israel has no natural resources below the ground and that the country’s natural resources are above ground – its population. Even though it now turns out that Israel does have natural resources below the ground, or more correctly under the sea, for years to come Israel’s economy will still have to rely primarily on the talents and skills of its population. It is they that have propelled the Israeli economy to record heights in recent years.

Even the usually not Israel-friendly weekly, The Economist, in last week’s issue applauded Israel’s achievements in advanced technology. An article by its business commentator stated that adjusted for population, “Israel leads the world in the number of high-tech start-ups and the size of the venture-capital industry”.

Israel has become “a high-tech superpower,” he writes. The result of these high-tech achievements is that Israel, as a country, is growing wealthy. And yet, as Israelis rightly insist on reminding themselves, while many Israelis may have become richer, there is poverty amidst plenty in Israel. The gap between rich and poor is growing yearly, and inevitably the attendant social stresses are bound to follow.

Before we jump to the conclusion that this distortion in the social fabric of Israeli society is the result of capitalism running wild in Israel and can easily be rectified by a more progressive fiscal and welfare policy, we should examine the causes of the growing economic inequality that characterizes Israeli society at this time.

It turns out that it is the direct and inevitable result of the growing high-technology sector in the local economy developing in an age of world globalization. In a world in which there are essentially no borders for scientific and technological activities and the businesses that develop from them, the pay scale for those engaged in these activities tends to be more or less uniform throughout the world. The high level of pay in the high-tech sector of the economy drags along with it the pay of the many sectors associated with its business development – attorneys, accountants, investment bankers, analysts and stockbrokers.

Everyone else – from physicians to unskilled workers – is pretty much left behind, though raised somewhat by the rising tide. This situation is exacerbated by the massive import of foreign workers who provide the economy’s needs for manual labor at a pay scale considerably lower than that appropriate for Israeli workers. They, in turn, are either driven out of the labor market or forced to work at lower wages, further increasing the economic inequality in Israeli society.

On top of this, two large sectors of Israeli society – ultra-Orthodox Jews and Arabs – are barely represented among the population of skilled workers who participate in the high-technology industry. Much of the poverty in Israel is concentrated there. We need to look no further for the causes of the large degree of economic inequality that exists in Israel today.

Welfare payments can only partially alleviate this problem. The importation of foreign workers needs to be stopped once and for all. Ultimately, the solution lies in an educational framework that will make it possible for those sectors of Israel’s population that lack the skills needed in a high-technology economy to acquire these skills.

Fortunately, such a framework already exists. It is the IDF. It performs its primary function of defending the country, while also serving as a melting pot, contributing to nation-building in Israel. But in addition it is an excellent school in which soldiers acquire skills. The Economist points out that the IDF “is more than a high-tech incubator, it sifts the entire population for talent … and inculcates an ethic of self-reliance and problem-solving”.

This is nothing new to Israelis. That Israel’s economic development owes a great debt to the IDF is well known. What has been missing until now is the participation of ultra-Orthodox Jews and Arabs in the army. Whereas the ultra-Orthodox community and many Arabs seem to think that Israel is doing them a favor by exempting them from military service and some see in civilian national service a proper substitute, by not serving in the IDF they are actually being deprived of the best education that Israel can provide.

The road to creating greater equality in Israeli society leads through compulsory military service for all. Military service in Israel is not only a burden but also a great benefit. It is also part of the equality of obligations that any democratic society demands of all its citizens.

Translate »