Social and Economic Inequality in Israel

Israel's militarization has deepened the ill-distribution of social goods (ironically, as it happened in the former Soviet Union).

Notably since the early 1980s, neoliberalism began replacing New Deal/Great Society values to the detriment of millions harmed. It means markets know best so let them, liberating enterprise to move capital, goods and services freely, benefitting the few at the expense of the many.

Britain’s Thatcher and America’s Reagan were pivotal figures, endorsing elitism, class power, and private enterprise unconstrained by rules, regulations or taxes, producing [massive] inequality and social injustice.

It plagues Israel like the West, notably since the mid-1980s when power shifted from various government agencies to the Finance Ministry and central bank (the Bank of Israel), similar to American financialization that empowered Wall Street, the Fed, and US FIRE sector overall (finance, insurance, and real estate).

The hard policies against Palestinians—besides being a drain on the economy— are fast eroding European (and especially German) guilt over the Holocaust.

A race to the bottom followed, especially since the 1990s by mass privatizations, welfare and social benefit cuts, and, like America, shifting wealth to the rich. Predictable results produced social injustice and inequality, harming Jews as well as Arab citizens.

Various studies show it, including annual Latet ones, its latest saying 1.77 million Israelis are poor. About 850,000 children live in poverty. As a result, 75% of those affected miss meals, a 21% increase from 2009. Moreover, 83% of poor children lack proper dental care, most getting none. Some beg for money. Others steal to eat.

On May 31, Israel’s Taub Center for Social Policy Studies explained “a marked increase in the share of poor families headed by an employed person,” defining poverty as:

Households with “income of less than half the national median household income, adjusted for family size.”

In terms of net income (after taxes and diminishing welfare payments), Israeli poverty is high, “among the highest in the developed world.” In fact, rates have risen sharply in the last decade, including in working households.

According to Central Bureau of Statistics data, the percent of poor households headed by a wage earner rose from 43% in 1997 to nearly 58% in December 2009. The trend reflects government policy to encourage work by reducing public assistance, the objective being to elevate people from poverty.

In fact, however, many families moved from “the idle poor to the working poor,” little better off than before. Though mainly an Arab problem, increasing numbers of Jews are also affected.

Moreover, employed Israelis work more weekly hours than counterparts in most other OECD countries, while “the country’s average standard of living is lower” by comparison, a testimony to a failed system like America’s after decades of shifting wealth upward to the top few percent.

As a result, Taub sees trouble ahead for Israel’s economy based on three measures:

— its standard of living;
— poverty rate; and
— extent of social inequality.

When “a major problem” exists in one or more of these variables, “the society is in danger of a potential crisis.” Moreover, when their root causes aren’t addressed, it’s “on an unsustainable long run trajectory.” Compared with other Western countries, Israeli income inequality and poverty “are among the highest….” A growing crisis exists from failure to deal with them.

In May 2011, the Adva Center discussed Israel’s society and economy from 1948 to the present, saying:

“Israel is a classic case of a country whose macro-economic indicators are good but most of whose households are not invited to the end-of-year celebration,” citing:

— high poverty compared to other OECD countries;
— high inequality;
— low achievement performance in international school tests;
— 75% of workers earning one-third or less than high-tech salaries (on average, about $20,400 annually);
— eroding social benefits and safety net protections; and
— a minority business, political and professional class benefitting at the expense of Israeli workers.

For example, through the 1950s and 1960s, union membership was 70%. It’s now from 25 – 30% and declining. Women fare worst, earning about 60% of their male counterparts.

To achieve economic improvement overall, Adva believes “three major transformations” are necessary:

— ending the Israeli/Palestinian conflict;
— allocating more for education for all Israelis, not just those well-off enough to afford better schools; and
— investing in all sectors of society to create more opportunities for more people, as well as new labor policies “based on workers’ rights and strict, universal implementation of labor laws.”

On May 14, the Association for Civil Rights in Israel (ACRI) discussed “social and economic rights in Israel in 2011,” saying:

Since 1985, race-to-the-bottom neoliberalism significantly reduced social service spending. “The result has been a marked decline both in the quality and quantity of the range of services offered to the Israeli public,” accompanied by sharply rising poverty and inequality.

Social gaps fall mainly along religious, ethnic and national lines, exacerbating tensions among those left out. Arabs and ultra-Orthodox Jews comprise the weakest fifth of the population. Others most affected are elderly people, single-parent families, and children. Gaps also exist between Jews of European and African/Asian descent, as well as among immigrants since the 1990s.

As a result, one-fourth of Israelis are impoverished, double the average OECD rate. Israel, in fact, has the second highest poverty rate among OECD countries.

“Israel’s level of economic inequality is one of the highest among developed countries.” Among 34 OECD states, it ranks fifth. America is fourth and Chile first, testimonies to failed policies.

Israeli education is way under-funded. Per student expenditures are 36% lower on average than in OECD countries. As a result, teacher salaries are low. The profession is declining, and student performance suffers. As in America, education is being privatized, putting bottom line priorities ahead of teaching and learning, producing mediocre results.

In 1994, Israel enacted its National Health Insurance Law. Since then, services steadily deteriorated for lack of enough funding. As a result, Israelis are paying more out-of-pocket costs and getting less, and for many, expensive services and medications are unaffordable. For example, about one-third of Israelis forgo dental care. As a result, an estimated 50% of elderly citizens are toothless.

Budget cuts also impact housing, making it unaffordable for growing numbers. Large expensive apartments are emphasized. Nearly half of construction starts are for private investors, buyer groups and organizations, not working Israelis.

Moreover, with no in place controls, 20% of Israelis spend over half their disposable income on rent. At the same time, public housing is in short supply, less than one-third the amount available in 2002.

While official unemployment is 6.7%, average salaries are low, especially for women, earning around 60% of their male counterparts. Moreover, social benefits are eroding. As a result, 39% of Israelis say they can’t subsist on what they’re earning, and conditions are worsening, not improving.

In addition, social safety net protections are weak. Unemployment insurance is one of the poorest among Western countries in terms of eligibility and what’s provided. In 2010, only about 25% of unemployed Israel’s qualified for benefits. Budget cuts also nearly eliminated professional training programs that once existed.

Moreover, in the past two decades, social services declined. Many, in fact, have been privatized to the detriment of recipients. As a result, complaints are common, especially for vital services no longer provided or only available privately at high cost, unaffordable for growing numbers, Jews as well as Arabs.

ACRI explained that “social, economic, and cultural rights are not recognized in (Israel’s) constitution nor (its) Basic Laws, (unlike) some civil and political rights.” Moreover, some “anchored in law” rights are only partly provided, including health care and education.

Like America, Israel prioritizes military and business spending. As a result, wealth and power interests are served at the expense of vital social services eroded or denied.

Senior Contributor Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.  Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

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