Israel 2013-Time to Bury the Sacred Cows

By most measures Israel’s economy is doing very well, but the average Israeli is not. As I have written before, one of the major problems in this country is the exceptionally high cost of living. I will not rehash the story of a country that claims to be a “strong believer in the free market”– yet creates all sorts of barriers to entry into that market, ensuring that importers cannot bring down the prices charged by Israeli monopolists. I will not spend time here discussing the virtues of re-imposing price controls once imposed on many of the basic items in the supermarket, or why the price of chicken is higher in this country than the cost of an Empire Kosher Chicken in Supermarkets in Scarsdale, N.Y. For the moment, I think I have written enough on those subjects (despite my deep fear nothing will be done to change these realities).

The issues I am exploring is our inability to challenge some of our founding principles. As a result, I believe we fail to formulate and implement policies that will truly serve our nation today. While this is an overarching ideological (and possibly psychological) problem, the effects have been particularly paralyzing in the areas of housing, infrastructure, and higher education.

The early Zionists held three main objectives. They struggled to create a homeland for the Jews  while at the same time endeavoring to remold “the Jew”. The aim of Zionism, for many, was to take the city dwelling Jewish businessmen and craftsman, and turn them into “new Jews”, who farmed the land and defended themselves. Most of the early  Zionists were also socialists, who believed in a greater social equality than existed in Europe of the early 20th century. Finally, the pre-state Zionists also recognized that settling the land made imperative establishing Jewish settlements on as much of the land as possible. They instinctively understood that the future borders of the state would be determined by where the Jews were settled. This principle certainly proved itself correct in 1947-1948. At the creation of the State, our borders were set – by-and-large – based on where we had settled and where our citizen-army defended our place against the invading armies.

After Israel was established, we continued the settlement policies that worked before the state’s creation. We directed hundreds of thousands of new immigrants to development towns on Israel’s periphery. Some immigrants were also steered toward farming – primarily as members of Moshavim. After the Six Day War, those committed to Israel keeping all of “the Land of Israel” adopted the early Zionist ideal of “settling the land” to bind Israel to the West Bank and Gaza.

Fast forward to today … as we live with the consequences of these earlier policies, we must ask.  How have these strategies been working out? Since the Likud came to power in 1977 we officially have left behind any of our socialist economic goals. There can be no question that Israel has prospered in many ways during this time. However, we have also moved from being one of the world’s most egalitarian societies, to being a society with the greatest gaps between rich and poor.

In the area of defense, the Zionist goal of “remaking the Jew” has worked out just fine. Today, many of our key military personnel, be they pilots or software engineers (for our latest missiles or our cyber defense–and offense) are no longer citizen-soldiers, but professional soldiers. Still, the backbone of the I.D.F. remains conscripts and reservists. However, outside of the military, following the ethos of the pre-state years has been much less successful.

The average age of the Israeli farmer is 60 years old. When was the last time you heard an Israeli parent say? “I hope my son or daughter grows up to farm the land.”  We do have some successful farmers, but most are the members of highly mechanized kibbutzim, that look more like American corporate mega farms, than the “socialist ideal” dreamed of by our founders. As to “settling the land”, while David Ben-Gurion has always been my hero, in this area, he and the early Zionists, (as well as some of today’s more right wing ideologues) have it wrong– both economically and politically. For the purpose of this article, I will ignore political issues and concentrate on the economic effects of maintaining the policies set in place at the founding of our State.

The 21st century has become the century of the urban complex. Ironically, at a time that the high speed internet has made communication and access to entertainment available wherever you live, the greatest economic and creative success stories have been taking place in a few select key cities around the world (such as, New York, London, the Bay Area and Tel Aviv). Our strength as a country comes from a combination of a strong military,  whose might today is largely the result of our technological advantage, and our economic strength (which comes almost exclusively from our high-tech prowess). Most of Israel’s high tech industry is located in the Tel Aviv metropolitan area, with a modest segment located in Haifa as well.

That being said, where does the Israeli government currently offer economic incentives to create jobs or build housing? Answer: incentives are presently limited in the periphery. Mind you, I believe we cannot abandon all of the people who have moved to the peripheral areas over the years – either as a result of government edict or ideology. However, it is baffling why we continue to build major roads and other infrastructure in the periphery (and even plan to construct a railroad to Eilat), while the subway in Tel Aviv (worked on by a friend of my father in 1975) is yet to be built. The I.D.F. is engaged in a multi-billion dollar project to move a number of major army bases to the Negev, including the bases that house some of our most advanced technology units. What is going to be gained by that transfer? Do we really think the I.D.F. will be able to attract more of our most talented people to stay in the army because they get to live near Be’ersheva, instead of the Tel Aviv area?

We worry about the cost of housing. Yet, on numerous short bike rides from my apartment in the center of Tel Aviv, I pass orange orchards. How much land exists in the area between Hadera and Gedara that remains unpopulated? I do not have an exact figure, but one look at Google Earth shows that hundreds of thousands of housing units could be built in that area – without filling all of the open spaces. If we want to bring down the price of housing (in places where people actually want to live) there is only one choice– construct massive amounts of housing in the center of the country.

A recent survey revealed that we, in Israel, have the second highest percent of college graduates in the world. That number is even higher among the younger generation. However, our younger generation will only be able to find work here at home if we develop an even larger high-tech sector. Hopefully, the tech sector will not always remain the center of multi-billion dollar “exits” (but that is another story). We also must begin teaching students at a younger age the tools they need to compete for jobs in a global economy, whether it’s programming or leaning the Chinese language.

It should be obvious that we need to invest in that future in order to make it a reality. The money we have been spending on roads in places we do not need should be spent investing in our Universities. Investing in Israeli higher education is imperative, both for our existing universities, as well as some of our colleges– to turn them into full-fledged research institutions. Israeli universities do not have the alumni base that Harvard or M.I.T. have to provide their endowments. Yet, in this global world, they need to be able to compete on the same level. The Israeli government must step up in their place. We also need to understand that the college graduates that we are turning out, will have a much easier time finding jobs in a thriving urban center than in a town in our periphery.

We must also understand that the responsibilities and functions of government here have to be different than governmental obligations in a country like US. There can be those in United States (such as the Tea Party) that call for a more limited role for government (that has always been an important part of the American political dialogue). However, this is not America. If we lived in America, we would not be required to serve in the military for 2-3 years, for practically no pay … nor would we be obligated to do reserve duty until age 45. We can strive, or take to the streets to be like America or Sweden, but until true peace is achieved, we live in a very different reality– a reality in which the government has a much greater responsibility to its citizens.

Zionism transformed the Jewish people by creating the Jewish state. However, it failed at transforming the Jewish person. Jews have traditionally been, and remain an urban people. Most of us are okay with that fact. The 21st century is the century of urban success. Now is the time to leverage our success, and turn Israel into one the most successful urban centers in the world. Let us use our strengths to become even stronger. Let us leave behind our failed ideologies. We must invest in building our future, rather than blindly reliving our past. Oh, and by the way… let’s not give up on lowering the price of cottage cheese.


About the Author
Marc Schulman is the editor of -- the largest history web site. He is the author a series of Multimedia History Apps as well as a recent biography of JFK. He holds a BA and MA from Columbia University, and currently lives in Tel Aviv. He is also a regular contributor to Newsweek authoring the Tel Aviv Diary. He is the publisher of an economic news App about Israel called DigitOne