Wealth Gap

06.12.13

Under Lapid, Israel's Poor Get Poorer

Israel’s newest golden boy, Yair Lapid, is lurching through his first few months as Finance Minister, and losing quite a bit of sheen as he goes. As Haaretz reported last month, the budget he’s presenting to the government this week will cut deep into the everyday lives of the middle class and poor alike, and grand governmental plans (such as new limitations on budgets to the ultra-Orthodox and Arab sectors) are running into brick walls.

The most onerous items [in the budget] include a 1.5 percent increase in income tax rates, a [$2 billion] cut in government spending in the remaining months of 2013 and another [$4 billion next year]. VAT will rise 1 percent in June and children’s allowances will be cut to [$39] a month per child.

VAT, for instance, is just about the most regressive tax around: An extra 1 percent tax on life’s essentials will hardly be felt by the wealthy and will sting those in the middle—but the poor will find themselves struggling to choose between healthy food and cheap food, clothes for the kids or the electricity bill. As Ynet reported last month, another 40,000 Israeli families are likely to find themselves living under the poverty line if Lapid’s budget is passed, and the poor will simply, inexorably, grow poorer. Given that just last month, the Organization for Economic Cooperation and Development found Israel to have the highest poverty rate among all its 33 members, additional burdens on the poor seem particularly cruel.

And all of that is, frankly, awful. But you know what makes it worse? This, reported just last week:

An analysis of the list of the 500 wealthiest Israelis reveals that the past year has been one of the best ever for the rich here. The value of their collective assets has climbed from [$23.2 billion] a year ago to [$26 billion] this year—a new record. The number of billionaires here has risen to 67—another record. Why is that? Most of the billionaires did absolutely nothing that would explain their bonanzas. For most of them, the money was like a gift from the heavens, just another manifestation of an extraordinary period for the global markets.

…Plain and simply, if you were rich 12 months ago, now you are richer—even if you never left home or took a year-long vacation from your business affairs.

Also reported just last week:

The Bank of Israel on Monday published a report on the banking system, exposing figures that had been kept secret for years… showing that the banks have tens of thousands of workers who earn five and ten times as much as the average wage. It isn't just the top executives at each bank…. Billions are going to an entire caste. Call it the banking caste.

In the last two years, under pressure from the social justice protest and campaigns led by this newspaper [Haaretz], Israelis became aware of economic concentration: the ways that a handful of powerful connected people and thousands of their cronies bilk the public of millions each year. En route they have trampled the press, politics and the other watchdogs of democracy and the free market. But the true distortions in the Israeli economy are far deeper and wider. Alongside the economic-concentration clique is a long list of organized pressure groups, who through decades of lobbying organized the economy for their own greater good.

The banking system is one such giant pressure group.

And, on a much smaller scale, there was of course this, about which I wrote last month:

Per Prime Minister Benjamin Netanyahu's office's request, a special "rest chamber" was installed in the airplane which took the PM and his wife to Margaret Thatcher's funeral in London.

… The airline received $427,000 for the flight, $127,000 of which were paid for the chamber and its complex installation, which required electricians, engineers, porters and additional workers.

A lot has happened since the Jewish State was established in 1948. Television, for instance (even in Israel). Peace with Egypt and Jordan. A virtual end to the original idea of the kibbutz. Israel even won the Eurovision Song Contest a few times, once led to the win by a transgender pioneer. Things change, is what I’m saying, and I don’t think we should be shocked that the social support and communal identity that once marked Israel’s particular form of socialism has essentially passed from the world.

But this? Literally forcing more children to go hungry while Bibi travels in style and bankers and billionaires add to their wealth by doing nothing?

This is not just a repudiation of musty notions of “from each according to his ability, to each according to his need”—this is a shanda of the first order. Yair Lapid, and this entire government, should be ashamed.