Israel's Shame

Israel looks and feels like a highly developed country, with a thriving economy.

This month's sale of 20% of Iscar to Warren Buffett for $2 Billion; the vast wealth newly discovered in off-shore gas reserves; and the billion-dollar sale now in negotiation for Israel's "Waze" navigation app by Facebook - all point to Israel's successful 'start-up nation' status.

Furthermore, Israel ranked a respectable 17th out of 194 nations in the Human Development Index (HDI) of the United Nations. Somewhat further down the list, Israel ranked 47 out of 194 nations in the Annual Standard of Living Index published by the International Living Magazine

Against such a background, the announcement by the OECD that Israel has the worst poverty index out of their organization's 34 member states is shocking.

Ha'aretz Chart of OECD Statistics

According to OECD over 20% of Israelis now (2010 - the newest survey) live under the poverty line, up from around 13% five years previously.

As Haaretz points out, it is important to note that the OECD uses relative poverty, rather than absolute poverty, as its bench-mark. The poverty line is half of half of the median income in that country. Which is to say a median level citizen of Mexico may have less wealth that a poor Israeli. 

Therefore, the OECD measurement is more useful as a measure of disparity - between the haves and have-nots - than a measurement of poverty per se.

This doesn't come as a total surprise, as the Bank of Israel Report last month found that the poverty rate among the Israeli working population has risen significantly in the last decade and living conditions for these families has worsened. "The Bank of Israel report shows that poverty rate in Israeli households with one breadwinner has grown to 29% from 18.6%, while rate in homes with two earners has nearly doubled from 2.6% to 4.68%".

The large scale public demonstrations last summer and the mounting discontent now surrounding Yair Lapid's budget cuts also point to an underlying inequality in sharing the individual wealth (the rich getting richer) and government cuts (which impact the poor and lower-middle classes). 

Israel's economic policy is a blend of socialism (welfare state) and free market (capitalist policies pursued by Binyamin Netanyahu and others). Most developed countries, such as the OECD members, have similar hybrid systems to Israel. 

So the fact is that both images are right.

Israel is a successful start-up nation. 

Our problem is that the beneficiaries of that wealth has floated up to further enrich the cream, rather than being distributed to all levels of the economy.

With the cut-backs already voted into the national budget, and the gas wealth about to hit our shores, it is critical that Israel's Government increase taxes on the wealthy, such as the higher levels of income tax, while also increasing (and certainly not slashing) the already meager benefits for the poor - such as income support (National Insurance), child support and cutting VAT on staples such as food and electricity. 

No Jew can be proud of an economy which has the worst disparity in the developed world between the rich and the poor.