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Is Welfare State Kaput?

by Gad Nahshon

Recently, the Israeli media published non-stop reports and statistics about poverty in Israel. There are 850,000 Israelis who suffer, today, from poverty. Most of them are children. Israel has been a country with a permanent process of better and better standard of living. Israel has produced, in the last decade, a tribe of multi-millionaires. But some experts argue that in reality, the discrepancy between poor and rich in Israel has been increased in this decade. Indeed, there was a feeling that many Israelis are well-to-do, enjoying a high quality of life which is higher than the average American one. Around two million Israelis traveled abroad in 1998. Each year one can see an increase of selling of cars in Israel. New models!

There were other indicators of a good healthy economy thanks to Jacob Frankel, the reigning chief of the 'Bank of Israel.' He was the great architect of Israel's successful war against the beast of inflation. Well, Israelis were surprised, suddenly, to learn about the jaws of poverty in Israel and about the economic plight of the Israeli middle class. Also, Israelis learn about the increase of unemployment in the Israeli economy. (How is it that Israel supplies jobs to 250,000 foreign workers who came from countries such as Romania?)

Israelis were also surprised by the response of their new Prime Minister Ehud Barak. He responded: "The Israeli citizens themselves should be responsible for the fate of those Israelis who are hungry. I do not know about the existence of an Israeli who will not share his food with a needy hungry person." This is a very strange response. Barak's quest is to succeed in external issues such as the peace with Syria. Domestic issues are not his strong side. The key to understanding the Israeli reality has to do with the concept of privatization: Likud and Labor believe in small government in the economic world. They support the idea of economic liberalization and the integration of Israel with the globalization process. It is a belief of free 'in' and 'out' movements of the foreign capital and investment. It is also a belief that Israel's road to economic success is based on its high-tech economy. Israelis dismantled the real power of the Histadruth, the trade unions. Many new Israeli employes are not members of unions, anymore. It is an Americanized free economy. The Israeli governments followed this message and cut the social budgets. Even the education budgets were cut. The outcome is a death sentence to the old Israeli welfare state which was based on the socialist idea. Does the dismantling of the welfare state mean the dismantling of social justice?

Many argue that the Israeli middle class is the real victim of this new tendency. Middle class? 60% of the Israeli society belong to this class. The people of this class are afraid that they might join the lines of poverty. Why? For example, the state reduced its involvement in supplying services: Education, Health, Housing, and Absorption of Olim. The Israeli national medical insurance does not cover any person 100%. So people must buy private medical insurance in order to be on the safe side. Education: many parents have to hire private teachers because the quality of the class has declined.

We must remark that Israel has a tradition of social justice and a progressive system of taxation. So the Israeli citizen is still looking for the state to help him and defend his social benefits. The reason that many Israelis are frustrated because of the change that the transfer of Israel from a welfare state to a cold cut-throat capitalist system in which the individual stands along trying to challenge the free private enterprise horicans, if he cannot fly with them.