Hating the rich

The Jerusalem Post
6 Dec ’01

The anti-capitalist demonstration at the recent Israel Business Conference was mounted by the usual crew: leftist youth and student groups, the Communist Hadash party, gay leftists, the Greens, etc.

But it was also sponsored by supposedly “mainstream” organizations such as the New Israel Fund and the Israel branch of the US Reform Movement.

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The (one and only) Israel Electric company

It was probably an excess of testosterone that drove some of the youthful demonstrators to violence (copycatting fashionable anti-globalization happenings) as they rammed home their hopelessly confused messages. But their adolescent proclivity to simple-mindedness and hysteria was obviously inflamed by the intense indoctrination they receive in high schools and youth groups from teachers and leaders brainwashed by the neo-Marxist academic fads dominating our universities’ social sciences and humanities departments. Their ideological mentors turned understandable anger at Israel’s state-controlled regressive economic system, with its glaring inequities and chronic unemployment, into rage against what they label as Israel’s Reagan- and Thatcher-like neo-conservative depraved economic system. As if the centralized, bureaucracy and monopoly-ridden Israeli economy resembles a market economy; as if its tightly knit network of political favoritism and privilege allows for true competition, the lifeblood of capitalism.

So while the young people’s rage is perhaps justified, it is totally misdirected. And the solutions they advocate ן�½�’ן�½�€ן�½�” more transfer payments (which already exceed defense spending!) requiring higher taxes and yet greater state control of the economy ן�½�’ן�½�€ן�½�” are in fact prime causes for the lack of economic growth and for the unemployment disaster. They will make things even worse.

Israel’s low productivity and inflated costs that drastically reduce purchasing power, create the growing gap between the rich, including workers belonging to the powerful monopoly unions, who through their political connections get an excessive share of the pie – and the mass of workers who cannot make ends meet. This is not the result of free markets, but of the extraordinary concentration of politico-economic power in the hands of a few families, their allies in the bureaucracy and the powerful unions, all of whom extract immense benefits from the government.

One Israeli bank alone controls 80 percent of savings (because of bank-favoring tax privileges) and 40% of financial assets, an unparalleled concentration. This enables banks to grant almost unlimited credit to their cronies, often without proper collateral (a fact now coming to haunt them) while starving small or peripheral enterprises.

Israeli monopolies exact a “rent” of between 30% and 50% on all consumer goods, food, clothing, housing, credit, water, transportation, among others. Their inflated prices are responsible for the low purchasing power and for low growth. Government’s huge wasteful bureaucracy consumes more than 50% of GNP, providing shoddy services for which wage earners pay exorbitant taxes. A distorted allocation of resources further blocks growth, cutting employment and wages.

But instead of addressing these real problems, the do-gooders who agitate for “social change” simply advocate more palliatives that have already disastrously weakened the poor: more handouts that made them fatally dependent on government bureaucracies, destroying their sense of self-reliance and worth, and theirs and their children’s prospects of ever extricating themselves from the culture of poverty.

Consider the Forum of Organizations Fighting Unemployment that the aforementioned New Israel Fund sponsors through its “Shatil” (seedling) subsidiary. Shatil organized and subsidized 700 organizations, many of marginal radical leftist (but “sexy”) groups, that form and survive only with cash and organizational help from the New Israel Fund. They have no real grass-roots support for their anti-capitalist and anti-Zionist agendas. Without NIF help they could not have attended the recent Durban Conference to defame Israel as “a slave-exploiting state,” nor could they organize anti-business incitement, such as Saturday night’s demonstration.

The forum sponsored by the NIF agitates for the state to ”... fulfill its obligations as a welfare state? creating employment for the unemployed” no less (as if it can)! The state, it continues ”... must also strengthen” government organs serving the unemployed “contrary to the prevailing view… for the privatization of social services.” It ignores the massive and costly failure of monopolistic government labor exchanges to assist the unemployed.

The fund has devoted millions out of the $100 million it spent on “social change” advocating such failed policies. Its efforts accomplished nothing for workers; they probably made their lot worse.

Now that the fund is raising money not only from US Jewish capitalists – who probably do not understand what it precisely does – but also from Israeli hi-tech entrepreneurs, there is hope that it will finally discard its academic-inspired socialist notions and learn to deal with realities in an economically effective way.

As for the “reform” movement, enjoying little popularity in Israel, it seems so anxious to ingratiate itself that it will even join anti-business demonstrations though it solicits contributions from capitalists.

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