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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Israel’s ‘scrambled’ economic system
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National Center for Policy Analysis
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Institute of Economic Studies Europe
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Manhattan Institute
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Liberty Fund
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Hudson Institute
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Heritage Foundation
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Hoover Institution
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Milton and Rose D. Friedman Foundation
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Fraser Institute
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Foundation for Economic Education
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Cato Institute
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Competitive Enterprise Institute
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Atlas Economic Research Foundation
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American Freedom Center
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American Enterprise Institute
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Adam Smith Institute
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Acton Institute
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Ministry of Finance
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Central Bureau of Statistics
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Bank of Israel
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Adam Khan as Webmaster
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David Levin as Research Assistant
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Aviram Pulvermacher as Accountant
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Iri Rikin as Media Relations
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Tal Badt as Research Assistant
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Ziva Rabani, Esq. as Legal Advisor
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Gaby Kaminsky as Co-Director, University and High School Seminars
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Barak Goldstein as Co-Director,University and High School Seminars
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Nili Fish as Office Administrator
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Dan Giladi as Consulting Economic Historian
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Shay Yitzhak Lior as Director of the High School Project and Legal Advisor
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Oren Frieder as Director of University Programming and Internal Auditor
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Vadim Zeitlin (Adam Zeit) as Director of “Talkback Team”
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Yossi Tamar as Policy Programming Consultant
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Eran Bartal as Deputy Director
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Ben-Zion Levy as Editor, Kivunim
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Eran Bartal
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Aviram Pulvermacher
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Adam S Khan
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David Levin
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Iri Rikin
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Ziva Rabani
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Tal Badt
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Barak Goldstein
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Gaby Kaminsky
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Nili Fish
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Dan Giladi
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Shay Yitzhak Lior
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Vadim Zeitlin (Adam Zeit)
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Yossi Tamar
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Oren Frieder
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Ben-Zion Levy
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David Levhari as Director of Research, Emeritus
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David Levhari
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Daniel Doron
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“miracle” - Milton Friedman
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opinion-shapers
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the Israeli public
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students
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Organizations
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policy-makers
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The economy: look to the future
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Reform: prospects and pitfalls
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Big government? Yes, but there’s a reason
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To bail or not to bail
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Mideast peace can start with economic growth
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ICSEP’s mission
ICSEP helps Israel realize its enormous potential by freeing its economy from the shackles of its regressive system.
Israel has the potential to become one of the most successful countries in the world, providing prosperity to most of its citizens.
Yet it is still plagued by painful social, economic and political problems rooted in its socialist-statist system.
ICSEP’s mission is to help Israel realize its enormous potential by freeing its economy from the shackles of this regressive system.
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Warning cries from Herzliya
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A lesser economic evil
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Spinners and cheaters
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Precipitating the next collapse
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The panic-mongers’ one-note chorus
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Policy-Related Work
ICSEP has identified crucial areas in which reform is most urgently needed, such as land use, housing, small business regulation, de-monopolization, government structure and function, financial markets, the tax system, labor markets, education and health care. ICSEP studies these problems and holds seminars and conferences to discuss its findings. It then designs concrete plans for change.
ICSEP mobilizes decision makers, and public opinion shapers, in order to encourage coalitions in support of such reform.
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Distinguished Guests
ICSEP periodically brings leading foreign experts to Israel to share their knowledge and experiences.
ICSEP’s distinguished guests have included Nobel laureates, senior diplomats, Supreme Court judges, renowned editors and prominent businessmen.
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??Kivunim?? Website
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.
A sound economy is crucial for Israel's future. Since its inception in 1984, ICSEP has helped shape the country's consensus towards economic liberalization and deregulation.
Daniel Doron Director
Daniel Doron helped found Israel's Shinui (Change) Party, serves on various economic advisory boards, and publishes regular articles in the press.
The Israel Center for Social & Economic Progress
an independent pro-market public policy think tank since 1984
Winner of the 2006 Templeton Award for Student Outreach and the 2005 Award for Institutional Excellence
Kivunim
And visit our Hebrew-language online magazine featuring translations of articles from leading English-language publications