Jewish Post & News Article: "Income Inequality Among Israelis A Growing Problem"

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Michael ShalevThe two poorest groups in Israeli society are the “Charedim” (ultra-Orthodox) and Palestinian Arabs.

Yet, even if those two groups were to disappear, “Israel would still have a very high poverty rate.”

That was one of the observations made by Prof. Michael Shalev during a talk given at the Centro Caboto Centre, Tuesday evening, October 25.

Shalev, who is a Professor of Sociology and Political Science at the Hebrew University of Jerusalem, was in Winnipeg to launch a cross-Canada lecture tour. His appearance was to be the first of a series of three visits by different Hebrew U professors to Winnipeg, the second of which is scheduled to occur in November.

Speaking before a small crowd (Unfortunately Shalev’s tour also coincided with an event sponsored by the Canadian Friends of Magen David Adom at the Asper Campus), Shalev nevertheless offered a fast-paced and articulate exposition on some of the major social problems facing Israel.

Although Shalev didn’t delve into the recent spate of protests in Israel that at times saw hundreds of thousands of people take to the streets until towards the end of his talk, he did offer some fascinating insights into those protests.

“Over 80% of the Israeli public supported those protests,” Shalev noted.

While a good many of the protesters were young, there was an “alliance of generations” taking place.

“The children of the middle class are not succeeding in attaining what their parents attained,” Shalev said, “but their parents want, as much as their children,” for their children to enjoy the level of lifestyle from which the parents have benefited.

Yet, “what was the result of the protests,” Shalev was asked, to which he responded: “At this point there is no result.”

“The government appointed a committee to make recommendations” as to how it should respond to the demands of the protesters, but “the government never funded the committee.”

Further, when the committee did hand in a series of recommendations, “the government voted down” those recommendations.

The ramifications emanating from the summer of protests, however, will be profound nonetheless, Shalev predicted.

“We have crossed the line because we are talking about economic issues as the primary issue” in Israeli politics.

What are some of the facts about income inequality in Israel? According to Shalev, the two countries in the Western world that have the highest degree of income inequality are the United States and Israel.

Americans, however, are far less troubled by this fact than are Israelis, Shalev noted later in his talk. In fact, according to polls, Israel has in common with citizens of Russia, Hungary and Poland this trait: “A longing for an egalitarian past.”

The truth, however, is that Israel has not been an egalitarian society for a very long time if, indeed, it ever was. “The problem is that Israel was as unequal as the United States” as far back as 1979, Shalev noted.

Why then, this noticeable attention being paid to a phenomenon that has long been a part of Israeli society?

According to Shalev, a probable explanation is the “Americanization” of Israeli society.

This “culture shift” has taken the form of Israel becoming a “consumer, materialist society” as opposed to the “old days when people didn’t show off their wealth,” he suggested.

Of all the groups in Israeli society who are stuck at the bottom of the economic ladder, the Charedim and Arabs have long been the ones that show the least upward mobility.

There are 1.6 million Israeli Arabs, Shalev noted, among a total population of 7.7 million,  and while there are approximately 480,000 Jews who would be described as “Charedim”, those two groups have by far the highest birth rates.

In fact, “of all the children starting Grade School this year, 50% were either Chasidim or Arab,” Shalev observed.

There is also a much lower rate of participation in the labour force among those two groups, although in the case of Israeli Arabs, Shalev pointed out, it’s for “lack of opportunity”.

Shalev delved into the various options governments have to lessen inequality among citizens, including direct cash transfers and other benefits, such as health care and housing. Israel, he noted, has long maintained a system of preferential treatment for certain members of society, especially soldiers and new immigrants – at a cost of fewer benefits for other members of society.

While that uneven treatment of different groups had long been accepted by most Israelis, a combination of other factors has led to a dramatic reshaping of the very fabric of life there, to the point that large scale dissatisfaction erupted in the form of the kind of social protests that we have just recently witnessed.

Certain government policies, moreover, were key to what has been a deliberate transformation of Israeli society. Included among those policies, according to Shalev, has been:

  1. A reform of the tax system, instituted by then-Finance Minister Bibi Netanyahu in 2001, following the Second Intifadeh (which took a huge toll on Israel financially, not to mention militarily and psychologically). Netyanyahu’s tax cuts, which benefited primarily the most affluent members of Israeli society, resulted in a dramatic decrease in transfer payments to less affluent members of society.
  2. The government drastically reduced its role as an employer – it used to own entire “industries”, Shalev explained. Further, the Histadrut (Israel’s general organization of labour unions), “used to account for between one fifth and one quarter of Israel’s economy,” he noted. Everything previously owned by the Histadrut has now also been privatized.

    What has happened, according to Shalev, has been a massive “outsourcing of public services” to the private sector. “The name of the game is ‘cost cutting’,” he noted.
  3. Unions have lost much of their clout. “Unions in the public sector used to be quite powerful,” Shalev observed. “Employees used to have job security.” Now, however, “the low-wage labour market has mushroomed.”

Ultimately, though, the storm of protest that reached its apex this past summer in Israel, has yet to coalesce into a unified political movement. While politicians would dearly love to capture the support generated by that social movement, “the Israeli political system is very unfriendly to an NDP-type movement,” Shalev explained.

The reason, he went on to say, is that “the Labour Party was very unfriendly to the proletariat” in Israel. Why? Because “it was  largely Arab”, Shalev explained.

Further, Jewish members of the working class largely enjoyed a high degree of “upward mobility”, thus distancing themselves from rank and file Labour Party members.

Still, if a political party were to emerge in Israel that could truly harness the enormous tide of social dissatisfaction, it would do fabulously well in an election, Shalev predicted.

A recent poll showed the following percentages of voter support, according to Shalev:

Undecided: 25%

Any of the five major political parties (that received the most votes in the last general election) – all five together: 25%

Hypothetical protest party: 25%

While income inequality has always been huge in Israel, in comparison with other countries in the OECD (to which Israel was recently admitted as a member), it is only now that the fact that “the rich are getting richer” has emerged as a dominant issue in Israel. Shalev, however, made no predictions as to whether the profound social unrest we witnessed this past summer will continue, nor what its long-range effects will be.

What he did do is provide a clear understanding of just how unequal Israeli society is and how that inequality developed.

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