Israeli Society: All together now...and always?

How American inuence has generated a breakdown of Israeli social collectiveness

14 November 2011

Israeli Society: All together now....and always?

INTRODUCTION In writing observations for this course, I identied at least seven of the Ten

Commandments of Israeliness, some of which appeared several times. With equal frequency, I observed examples of improvisation (Commandment VII), avoidance of hierarchy (Commandment VIII) and collective consciousness (Commandment X). Initially, I intended to write a focused comparison between American and Israeli cultures that pivoted on all three of these commandments. After conducting interviews, however, and hearing clear depictions of Israeli collectiveness, I decided that the Tenth Commandment alone would provide me with enough material for a rich discussion. Moreover, I realized that it would be far more interesting to write about what I perceive to be a current trend occurring in Israel. Although Israels founding mythology differs distinctly with American mythology regarding the issue of collectiveness, I will argue that this is no longer reects reality. The bulk of this discussion will describe neoliberal economic reforms that have been

implemented in Israel since about the mid-1980s. The assertions I present are based on Israels changing economic system because, as Kasser et al. phrase so well, it is the very nature of economic systems to motivate behavior, dene the role of participants and determine rules for many human interactions and exchanges.1 I contend that Israels adoption of market-oriented policies which so closely resemble American economic policy undermine the collective values instilled by the founders of the Israeli welfare state. In the beginning, the Israeli imperative was to create a Jewish utopia dened by equality, where all citizens received precisely the same allocation of resources and the object of concern was society as a whole. Following in the footsteps of their American counterparts, contemporary Israelis are only willing to guarantee the livelihood of their immediate family and friends.

PART I: OBSERVATIONS & INTERVIEWS

Kasser, T., Cohn, S., Kanner, A.D. & Ryan, R.M. (2007) Some Costs of American Corporate Capitalism: A Psychological Expoloration of Value and Goal Conicts. Psychological Inquiry, 18:1, p. 2

Israeli Society: All together now....and always?

Two shining examples of Israeli collectiveness that stood out to me since my arrival

in Israel involve new immigrants and the relationship between Israeli parents and children. For the sake of structure, I will rst discuss collectiveness on the part of the new immigrants. Being an anglo-phone who knew not a word of Hebrew less than three years ago, many of my friends here are new immigrants. Their level of zeal for life in Israel tends to vary from person to person, though I would say that most are excited to fulll the Zionist dream. An extension of this is the fact that many new immigrants immediately identify themselves as Israeli, completely discarding their native culture. That is, the moment a new immigrant receives his / her Israeli passport, Israeliness becomes the immigrants nationality. A new immigrant will condently state, Yes, Im Israeli. I just arrived this week. From the perspective of a non-Jewish outsider, this behavior is truly bizarre. How

can a conscientious adult so quickly abandon his / her native culture? One must only be able to do so if he / she arrives to the scene already instilled with the feeling of being part of the collective. Jews are famous for their ability to stick together and, at least in recent decades, for creating the sense that being a Jew meant being a member in a highly exclusive club. Obtaining an Israeli passport certies a new immigrants inclusion in the us of Israeliness. Another representation of Israeli collectiveness is the extent to which Israeli youth

remain dependent on their families. I have consistently observed that young Israelis remain nancially and emotionally dependent on their parents at least until their mid-twenties, if not later. True, mandatory military service does somewhat retard the progression toward independence, but it seems as though the pervasive attitude is, These kids work so hard in school, then are forced to spend precious years in the army. We (the family) will provide them with everything during that time. If after military service, the kids want to take a year or two off, they deserve it! They have risked their lives for us! We (the family) will continue to provide them with everything. When the time is right, the kids can go on to college. How can they support themselves while they are studying? We (the family) will continue to

Israeli Society: All together now....and always?

provide them with everything. Recalling that Israelis do not begin university until the age of 23 or 24, this dizzying support can easily last until the child reaches 30. The apparent thought process is that a child cannot possibly manage alone. The family must stick together to survive. Furthermore, it seems as though Israeli parents have little interest in teaching

children how to manage by themselves. In her commentary on American society, Margaret Mead noted that American parents [merely train] their children for a race they will run alone. 2 Israelis do not imagine acting in a unit smaller than the immediate family, especially not as individuals. When an Israeli nally does choose to stop sharing a roof, and everything else, with his / her parents, the Israeli will frequently try to nd a home that is very close by so that he / she may continue to visit the family several times per week. Together is better. This truth was not lost on my interviewees. Nira Ashkenazi, an Israeli mother of four

in her mid-50s, stated from the outset that Israelis are family-oriented. She added that there is nothing like an Israeli family, saying, Togetherness is very important...I think that what unites Israelis, and maybe Jews, in all the world is family. It is notable that Niras afrmation of Israeli collectiveness is focused solely on family closeness. She does not extend her sentiments to broader society. Nisim Ashkenazi, Niras husband, described Israeli collectiveness as friends helping

friends. He explained that Israelis are very generous among themselves, and love to help and take care of each other in times of need. He says, Thats how it works here! Why? We are a small country. We are in social groups that are very clique-y and close. Nonetheless, he says this closeness is beginning to break down. Nisim described that Israeli society was once unied at the macro social level, but today collective concern exists only at a micro level. Contemporary Israelis are reluctant to make sacrices for those that

Mead, Margaret. (1942) And Keep Your Powder Dry: An Anthropologist Looks at America. New York: William Morrow & Co.

Israeli Society: All together now....and always?

they do no know personally. He closed the interview with the thought, I would make society how it was a few years ago, when we acted together as a group and people didnt only think about themselves...That profound unity is missing today. There is too much fracturing in society. The next part of this discussion will detail why Nisim is right.

PART II: CAPITALISM REPLACES COLLECTIVISM Israels economy has changed drastically over the decades. In its roots, the Jewish national movement and the rst pioneer communities were mainly socialist in nature. Since then, the Israeli economy has become a liberalized and open economy, with strong tenants of capitalism... - The Israeli Economy, Ministry of Finance, Summer 20113

The nascent State of Israel pursued highly socialist policies, placing great emphasis

on the Jewish collective working together to build and protect their new nation. A primary economic goal for the early Israeli government was to maintain full Jewish employment. This was achieved through the rapid absorption of new immigrants and prevention of emigration, even if it meant utilizing very inefcient methods.4 In spite of the long-term weakness of these economic policies, Israel was especially disciplined in its economic planning and experienced almost immediate growth. The growth was facilitated by large waves of destitute Jewish immigrants and monies sent from abroad, including German reparations and foreign gifts. This dynamic ushered in a very strong central government which directed all political, social and economic decisions. Political will to continue forcing full employment eventually waned and by 1966, Israel decreased government intervention through implementation of recessionary policies, though this was to be short lived.
3

The Israeli Economy: Fundamentals, Characteristics and Historic Overview, Israeli Ministry of Finance, International Affairs Department. http://eng.mni.gov.il/FinanceIsrael/Docs/En/ The_Israeli_Economy.pdf (accessed 08 November 2011)
4

For example, Jewish labor and industry was forcibly protected from Arab competition creating an ideal yet unsustainable labor market conditions.

Israeli Society: All together now....and always?

The 1967 Six Day War caused the rst major shift in Israeli economic policy,

introducing a military industrial complex. Though the economy remained centrally planned, government efforts became focused in a new area. Michael Shalev writes that the basis for this shift was a potent combination of government-subsidized local military procurement, the burgeoning world market for arms, and (from 1970) US government nancing of Israels foreign arms purchases. 5 Given the occupation of the West Bank and Gaza Strip, growth was also encouraged by the suddenly expanded domestic consumer market and readily available cheap labor. The introduction in 1970 of American nancing for arms procurement was the United States rst step to becoming an unmistakable inuence on Israeli economic policy. As in the pre-1967 regime, the Israeli economy of the 1970s depended heavily on

large government subsidies, many of which went to bodies that the state was increasingly unable to control (e.g., big banks, conglomerates, the Histadrut). The state found itself increasingly indebted to these powerful interests, and unable to assert its will and extract benets in return for the rising tide of subsidies. 6 This reality, the prevailing global economy and earmarked US aid led to progressively undisciplined economic policy, prolonged stagation in the 1970s and hyperination by 1980. Naturally, this dire situation facilitated the speedy passage of sweeping reforms

known as the Emergency Stabilization Plan (ESP) of June 1985. The plan marked a clear move away from socialism and laid the groundwork for liberal capitalism that would come to characterize the Israeli economy. Shalev states that the plan...constituted a frontal attack on mechanisms that had previously protected societal interests, directly or indirectly at the expense of the state.7 The ESP was implemented under the supervision of Israeli

Shalev, Michael. (1999) Have Globalization and Liberalization Normalized Israels Political Economy? In D. Levi-Faur, G. Sheffer & D. Vogel (Eds.) Israel: The Dynamics of Change and Continuity. (p. 126) London: Frank Cass.
6 7

Shalev, p. 126 Ibid.

Israeli Society: All together now....and always?

academics, the Ministry of Finance, the Bank of Israel and the US Government.8 In the same year, Israel signed a Free Trade Agreement (FTA) with the United States. Eckstein and Ramot-Nyska assert that the process of Israel becoming a fully market-

oriented economy occurred over the twenty year period between 1987 and 2007. They note that during this time the share of directed credit in total bank credit dropped from 60.5% in 1985 to 5.7% in 2004. Additionally, defense expenditure fell from a high of 37% of GDP in 1975 to a steady level of 8% of GDP beginning in 2004. The state took clear measures to liberalize capital ows and the foreign exchange market, as well as create a more independent central bank. According to the authors, the sequence of the liberalization process was designed to integrate Israel into the global markets.9 The 1990s saw a dramatic increase in foreign direct investment ows to Israel and

the signing of FTAs with several major economies.10 Additionally, buffered by policies encouraging entrepreneurship, a mass immigration of engineers and skilled labor from the former Soviet Union helped create a roaring hi-tech sector. During the second half of the decade, privatization of state-owned enterprises (SOEs) that had begun with the passage of the ESP increased to a new high. Much of the activity was concentrated in big banks and Histadrut conglomerates. In 1995 alone, the Koor conglomerate was sold to the American Disney family and the Israeli government sold its 43% share in Bank Hapoalim to US investor Ted Arison. By the end of the decade, the state had transferred to private hands SOEs that in 1994 had employed over one-third of state employees and contributed more than 50 percent of total SOE sales. 11

Eckstein, Zvi and Tamar Ramot-Nyska. Twenty years of nancial liberalization in Israel: 1987 2007 BIS Papers No 44. p. 294.
9

Eckstein and Ramot-Nyska, p. 299 Israel signed FTAs with the EFTA (1992), the EU (1995) and Canada (1997).

10 11

Hanieh, Adam. (2003) From state-led growth to globalization: the evolution of the Israeli economy, Journal of Palestine Studies, 17:4, p. 13

Israeli Society: All together now....and always?

Israels transition to a capitalist society was given a boost by then Finance Minister

Binyamin Netanyahus 2003 economic recovery package. Netanyahus reforms incorporated all recommendations offered by the neoliberal International Monetary Fund (IMF), including: a NIS 11.4 billion cut in government spending; an 8% cut in public sector wages; layoff of approximately 4,000 state employees in 2003; a freeze on national insurance benets; a 5% rise in water tariffs, public transportation and municipal taxes; raising the pension age to 67; canceling immigrant benets, mortgage grants, aid to needy university students and payments to families with ve or more children.12 The plan also introduced the Wisconsin programme: a welfare-to-work scheme named after the US state that pioneered it.13 Indeed, the Israeli government would have been loathe not to pass such dramatic measures, as approximately $10 billion dollars of American aid was contingent upon the plans implementation.14

PART III: AMERICAN CAPITALISM Privatization of industry and deregulation of capital markets continues in force.

Israels status as a developed, open market economy was galvanized in 2010 by its acceptance into the Organization for Economic Cooperation and Development (OECD), an international non-governmental agency committed to furthering market economics and international trade.15 The extent of the countrys entrenchment in the global capitalist economy is easily found on the Ministry of Finances website: Israel has the second largest number of startup companies in the world (after the United States) and the largest number of NASDAQ-listed companies outside North America. Clearly, Israel has joined the US in the international arena of capitalist players and much of the founding welfare system has been
12 13

Hanieh, p. 17

Miracles and Mirages, The Economist. 03 April 2008. http://www.economist.com/node/10909908 (accessed 10 November 2011).
14 15

Hanieh, p. 17 For further information on the OECD, go to www.oecd.org.

Israeli Society: All together now....and always?

abolished. By accepting the United States as its primary political ally and nancier, Israel has adopted the American mold. The nation has traded policies which support society as a whole for an economic system emphasizing individual choice and self-interest. Though the Israeli economy has consistently grown by about 4% over the past two

decades, the percentage of families below the poverty line16 has consistently hovered around 20%. Wealth in Israel is highly concentrated, as evidenced by the countrys steadily climbing Gini coefcient, a measure of income inequality (0 = perfect equality, 1 = perfect inequality). According to a 2010 OECD report, Israel is the ranked fth amongst developed countries for the worst income inequality. The United States is fourth. Moreover, the OECD report highlights that the poverty rate for the general Jewish population is about 10% (on track with the OECD average) and has in fact decreased slightly in recent years. However, poverty rates among Arabs and Haredim are approximately 50% and 60% respectively, increasing by nearly 20 percentage points since 2000.17 Accordingly, Israel surpassed the US in 2005 as the country with the highest instance of child poverty among Western nations.18
19

Transfer payments in OECD countries reduce poverty by an average of 60%.

In Israel, the few tax-and-benet instruments that remain reduce poverty by approximately 25%. Finally, as noted in a report published by the National Insurance Institute in response to the OECDs ndings, the gap between the overall standard of living [in Israel] and that of the lowest decile was three times as high as the average for that ratio in OECD member countries. 20 Are these the results of collective values?

16

The poverty line is dened as any person making less than 50% of the median net income per capita.
17 18

OECD(2010), Israel: a divided society (http://www.oecd.org/dataoecd/0/40/44394444.pdf)

The rate of child birth is signicantly higher among Arab and Haredi demographics when compared to the birth rate of secular Jewish Israelis.
19

Chason, M. (2005) Israel leas the West in child poverty, Ynet (online edition). http:// www.ynetnews.com/articles/0,7340,L-3124397,00.html (accessed 09 November 2011).
20

Poverty and Social Gaps: Annual Report 2009. National Insurance Institute. http://www.btl.gov.il/ English%20Homepage/Publications/Poverty_Report/Documents/poverty%20report%202009.pdf (accessed 09 November 2011).

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Table 1: American Israel Israel

Incidence of poverty among individuals Incidence of child poverty 19.90% 36.30%

US
17.10% 20%

OECD (average)
10.90% 13%

Poverty among elderly 23% 23% 13.30% Gini Coefcient (0 = perfect equality, 0.37 0.38 0.31 1 = perfect inequality) Prevalence of low-paid 24.30% 23.30% 15.90% work Public Social Spending 15.80% 15.90% 20.50% (as a percentage of GDP) Sources: OECD (2008), Are we growing unequal? (http://www.oecd.org/dataoecd/48/56/41494435.pdf OECD (2011), Society at a Glance 2011 - OECD Social Indicators (www.oecd.org/els/social/ indicators/SAG) NII (2010), Poverty and Social Gaps - Annual Report 2009 (http://www.btl.gov.il/English %20Homepage/Publications/Poverty_Report/Documents/poverty%20report%202009.pdf)

The clearly unequal distribution of resources shown above illustrates that the Israeli

economy is becoming increasingly similar to American free-market capitalism. American capitalism promotes nearly unfettered competition, in which all parties act in self-interest, to achieve optimal results. To the contrary exists coordinated market capitalism, in which the ideal outcome is sought through strategic interaction between competing parties. Unsurprisingly, American capitalism fosters values that directly oppose and undermine Israels egalitarian, collectivist foundation. Rather, the values cultivated in a market-driven economy encourage hierarchy, social power and material wealth.21 Moreover, American capitalism entrenches social inequality and discrepancy

creation.22 Ones self-worth is commensurate with the extent to which he / she is more powerful and wealthy than his / her relative surroundings. Not only are individuals discouraged from relinquishing personal gain for the greater good of society, but they are

21 22

Schwartz, pp. 53-55 Kasser et al., p.13

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11

almost necessarily always seeking more. As long as there is someone more wealthy or powerful, there is always someone to beat. The Israeli development toward other-directedness, or the pursuit of external

validation of ones worth, is similar to the period that began in the US immediately following the industrial revolution. In the US experience, the industrial revolution led to mass production (accompanied by labor laws) and the almost immediate emergence of a middle class. What was once a few very wealthy individuals and a mass of poor became a stratum of social classes. Israel, on the other hand, changed from a society exhibiting (and promoting) relative equality, to one that distinctly resembles the United States (Table 1). Though concern for society as a whole is in decline, it appears that what has actually

occurred is a re-denition of the in group. The belief that Israelis must work together to ensure the welfare of all members of society has been replaced by the desire to support only ones closest circle of family and friends. Recalling the aforementioned interviews, Nira and Nisim Ashkenazis perception of Israeli society corroborate this claim. Nira repeatedly emphasized Israeli family unity, not the closeness of broader society. Nisim specically highlighted the rising importance of social groups, juxtaposing such cliqueiness with the universal closeness that once dened Israeli society. This too is supported by American capitalism. In his exhaustive cross-cultural study

of capitalist countries, Shalom Schwartz shows that although free-market, competitive capitalism apparently undermines concern for the welfare of those outside ones close circle (Universalism values), it affects pro-social motivation toward members of the in-group (Benevolence values) only weakly, if at all. 23

CONCLUSION In recent months journalists have asked themselves, What came rst: occupy Wall

Street or the tent city protests in Tel Aviv? Many speculated that the events in Tel Aviv
23

Schwartz, p. 56

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12

inspired the 99% to speak out on Wall Street. What started as a cry against sky-rocketing housing prices quickly became a protest against Israels esoteric clan of powerful, ultrawealthy tycoons. 24 Shortly after protests started in Tel Aviv, New Yorkers took to the streets under the same banner. Two nations with very different histories seem to be headed down the same path. The aim of this discussion has been to show that Israeli society has morphed from

one driven by collective responsibility for broader society to one marked by American selfintereset. Instead of maintaining a welfare safety net strong enough to prevent any Israeli citizen from falling into poverty, Israelis have redened their scope of concern to include only members of their innermost circles. The state has relinquished its power to signicantly redistribute wealth. Society has abandoned the credo of taking according to ability and providing according to need. The shift began in force with the Economic Stabilization Plan of 1985 and the appearance of vital US aid that came with strings attached. It continues in an environment of globalization that requires participants to conform to neoliberal American standards. Israeli collective values did not survive the coercive forces of the world market.

24

Bronner, Ethan. Protests Force Israel to Confront Wealth Gap, The New York Times (online edition) http://www.nytimes.com/2011/08/12/world/middleeast/12israel.html?pagewanted=all (accessed 12 November 2011).