http://www.icsep.org.il - The Israel Center for Social & Economic Progress

Israel’s dysfunctional political and economic system causes high unemployment, low productivity and slow real wage growth. Basic structural reforms would reduce the number of Israeli poor and free the tremendous productive potential of the Israeli worker.

Israel’s dysfunctional political and economic system is perpetuated by an iron triangle of oligopolistic businesses, militant labor unions and huge unaccountable government bureaucracies. It is supported by a strong leftist ethos and a belief in big government.

While Israel has a number of successful, globally-competitive enterprises operating on market principles, many of the locally-oriented industries are monopolies or cartels that face little or no competition. These businesses lack the market-induced discipline that comes from competition and from accountability to shareholders. Instead, they focus on trying to curtail competition by keeping government bureaucrats “satisfied” and buying labor peace by “feather-bedding” and paying inflated salaries.

As a result, Israel has suffered from high inflated costs, high unemployment, low productivity and slow real wage growth. In the past decade, Israel’s productivity growth has been a paltry 0.6% per annum. Had this rate averaged the same 3% annual average achieved by market-oriented economies, Israel’s cumulative GDP would have been $100 billion higher—the equivalent of over 50 years of US military aid to Israel!

A competitive business environment could reduce by about one third the cost of all consumer goods. Competition-generated lower prices that would considerably increase purchasing power would enable millions of Israelis, now dependent on government supplementary income, to make ends meet. It would, in turn, enable government to cut welfare-related costs and taxes. All these changes would greatly reduce the number of Israeli poor.

Basic structural reforms will also enable market forces to free the tremendous productive potential of the Israeli worker and entrepreneur (evident in its hi-tech industry), propelling Israel into the ranks of the world’s most prosperous countries. Economic reform must therefore become a top national priority.

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In order to expose Israeli readers to a wider range of thinkers and ideas than is available in the mostly one-sided Israeli media, we established in 2003 a website of ideas, Kivunim.

The site features translations of articles from publications such as Commentary, The Wall Street Journal, The Weekly Standard, The Hoover Review, and National Review.

In 2003 we established a website of ideas, Kivunim, which features translations from Commentary, The Wall Street Journal, The Weekly Standard, The Hoover Review, National Review, etc., to expose Israeli readers to a wider range of thinkers and ideas than is available in the mostly one-sided Israeli media.

Among its contributors are:

Francis Fukuyama
Samuel Huntington
Alan Dershowitz
Jean-Francois Revel
Fouad Ajami
George Will
Charles Krauthammer
Paul Johnson
David Pryce-Jones
Martin Wolf
Hernando de Soto
Michael Novak
Irving Kristol
Robert Bork
Frederick Forsyth
judge Abraham Sofaer
Mortimer Zuckerman
Roger Kimball
Sadik Al-Azm (a Syrian intellectual)

Tarek Heggy (a leading Egyptian intellectual)
Kivunim also publishes original works by Israeli writers. Its audience includes leading public and intellectual figures. In a short period it has gained over 10,000 steady visits a month.

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High School Courses

Since 1998 ICSEP has held economics classes at several Israeli high schools in which over 2,000 students have participated.

The courses teach the students basic economic concepts and theories, and how economics affects their daily lives and career prospects.

The students also go on at least one field trip to an Israeli enterprise.

In the early 1990’s, ICSEP held workshops and courses with grants from George Soros’ Foundation “The Open Society” for over 9,000 young immigrants from the former Soviet Union. ICSEP helped them integrate into a western-style economy.

In the mid-nineties, at the request of the Ministry of Education, ICSEP held enrichment courses for high school economics teachers to bring them up to date on new developments in the field.

Since 1998, ICSEP has been holding classes in economics in several Israeli high schools in which over 2,000 students have participated to date. In order to make the lessons attractive ICSEP produced a series of short films that are episodes from the students’ lives that illustrate economic issues. As a result of the great enthusiasm shown by students for these classes, additional school principals have asked to have the courses open in their schools. We have many schools waiting and need additional resources to meet the demand.

The courses teach the students basic economic concepts and theories as they impact on their daily lives and on their career prospects. The courses are made relevant by the use of examples from the students’ own experiences and from what is happening in the Israeli economy. The students also acquire skills in public speaking and self-expression.

The courses integrate varied materials from the world of business, financial markets, communications, and developments in the Israeli and world economies. The students also participate in at least one field trip to Israeli enterprises.

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“Irreplaceable” -Benjamin Netanyahu

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“Fresh air” -Milton Friedman

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“Riveting” -Shimon Peres

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“Beacon” -Mark Kenny

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Economic reforms and ICSEP

Since its inception in 1984, ICSEP has led the effort to create a consensus for economic liberalization and deregulation. Indeed, the Israeli economy has been transformed in the ensuing years, but not nearly enough.

Despite efforts by several government and public commissions recommending basic reforms over the past decade, progress is painfully slow. Powerful vested interests possess huge political clout. They are supported by Israel’s media oligopoly which promotes a statist ethos and deprives the public of information needed to understand and support reform.

It is ICSEP’S crucial role to facilitate reforms, and to reduce resistance to them. ICSEP also provides a compelling alternative to the prevailing ethos of a government-dominated welfare state. It is almost alone in undertaking these tasks.

Since its inception in 1984, ICSEP has led the effort to create a consensus for economic liberalization and deregulation. Indeed, the Israeli economy has been transformed in the ensuing years, but not nearly enough. ICSEP is continuing to push reform forward by all the means it can employ within its mandate by providing concrete tailor-made reform proposals in many markets—and facilitating their implementation.

ICSEP is also the chief spokesperson and educator in market economics. Through its extensive contacts and cooperation with other institutions, it acts as a major catalyzer and facilitator of reform. The challenges facing ICSEP are daunting and require considerable resources for their implementation. Friends of Israel are addressing these problems as a high priority through their assistance for our work.

In the words of Prime Minister Netanyahu: “ICSEP is essentially alone in undertaking these tasks.”

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The banks are bamboozling us again

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An Irish-style banana republic

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Israel still doesn’t get economy

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US charity to Israel reconsidered

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Israel’s no-win strategy

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Dangerous infatuation

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What’s ‘public’ about their broadcasting?

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A year without Milton Friedman

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International Contacts

ICSEP is regularly consulted about the Israeli economy by foreign study missions, such as the US-Israel Joint Economic Development Group and US Congressional and White House study missions, by foreign journalists and television networks, and by economic think-tanks from Europe and the USA.

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