Israel doesn’t need social democracy

Israel, like all countries, faces economic and social challenges but, whereas it has handled these problems relatively well in past years, its security problems are severe, unlike those faced by any other nation on earth.

Moshe_Arens_cropped-150x150By Moshe Arens

The recent encounters with Hezbollah in the north were a stark reminder, for those who preferred to forget, that Hezbollah has over 100,000 rockets and missiles emplaced in Lebanon and pointed at Israel. And let us not forget that Hamas in the Gaza Strip also has thousands of rockets aimed against Israel. Israel’s entire civilian population, from north to south, is under threat, a threat that could be unleashed at any moment. Some would like to believe that Israel can deter Hezbollah and Hamas from launching these weapons. Past experience in both the north and the south calls for caution. The next government will have to deal with this hostile environment and bring about a change in this anomalous situation.

In the election campaign, Herculean efforts are being made by some of the parties to convince the public that the real problem facing Israel is not security but rather economic and social issues. Israel, like all countries, faces economic and social challenges but, whereas it has handled these problems relatively well in past years, its security problems are severe, unlike those faced by any other nation on earth.

Does it really need repeating that Israel has weathered the years-long world economic crisis far better than any Western country? That healthy growth continued throughout the crisis years, and that the Bank of Israel did not have to resort to quantitative easing, like the central banks of the Britain, the United States and recently the European Union, or to turn to the International Monetary Fund to bail it out, like Greece? That, unlike most Western countries, we have for a number of years had almost full employment?

Of course one can still aspire to do better, and those in Israel advocating the adoption of the social-democratic model, whatever that may be, claim they can do better. But watch out: They may not fully comprehend the workings of high-tech economies. High technology ventures depend on highly skilled employees who command high salaries throughout the world. It is the high-tech sector that has been propelling Israel’s economy these past years. It is this sector that is primarily responsible for increasing inequality. This has happened in the United States and it is happening in Israel. Engineers and scientists here receive American-level salaries and the entrepreneurs, if they are successful, make millions and sometimes billions. The creators of this wealth have attached to themselves a coterie of lawyers, accountants and bankers who have also managed to attain astronomic salaries. Shrinking that inequality without killing the goose that lays the golden eggs is no easy matter.

An obvious step would be to provide incentives that would encourage the successful entrepreneurs to resist the temptation of selling their enterprises to foreign buyers for millions and to instead keep them here and develop them further in order to provide jobs at all levels as they grow. Outstanding examples are Teva Pharmaceutical Industries and Check Point Software Technologies, two great enterprises whose control and management are centered in Israel. Unfortunately, they are the exception and not the rule.

The salaries of bank managers, lawyers and accountants is quite another matter. Where they officiate in public companies, a start has been made on returning their salaries to normal levels.

In the final analysis, economic inequality will begin to shrink when broad sectors of the population are given the opportunity to acquire the skills that are in high demand in modern society. The Israel Defense Forces, Israel’s greatest educational institution, plays an important part in meeting this challenge through the professional courses it provides to soldiers during their military service. The ultra-Orthodox Jewish and the Arab communities, for many reasons, do not take full advantage of the opportunities offered by Israel’s educational institutions. Progress is being made but much more still needs to be done.

 Of course there is need for welfare payments to the needy, but in the long run that is not the solution — the children of the needy need to be given the opportunity to acquire modern skills.
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