15 thoughts on “Renowned Israeli Economist Predicts Economic Catastrophe for Israel – Tikun Olam תיקון עולם إصلاح العالم
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  1. What do people mean when they say the Palestinian sector ‘opts out’ of the ‘national’ educational system?

    It seems the Israeli government operates two separate school systems, one for Jewish children and one for Palestinian children. It is reported that three times more money per child is spent on Jewish schools than on Palestinian schools (I don’t know if these are the latest numbers) and the results are dramatic.

    Palestinian Arab children attend schools with larger classes and fewer teachers, frequently children have to travel long distances to reach the nearest schoo because of a bar on school construction in some Palestinian Arab communities (in line with government policies pressing Palestinian Arab populations to move out of some areas).
    Poor school facilities and schools requiring travel over long distances result in children dropping out of the education system altogether at a very high rate.

    1. @ Elisabeth: That was sloppy of me. I was really thinking of the false claim that Palestinian women opt out of the employment sector of their own choosing, so Israel isn’t responsible for low rates of employment among Palestinians. It was the ultra-Orthodox I was thinking of when I mentioned dropping out of the educational sector, not the Palestinians. The other argument used against Palestinians is that they refuse to pay taxes so therefore the state has no obligation to provide services to them. That’s what I meant about dropping out of the “social sector.” Again, these aren’t my views, just arguments worth keeping in mind to rebut.

  2. I can’t make sense of Ben-David’s remarks. Hever, however, offers something of an explanation in the Israeli focus on security and the settlements, economically hollowing out the core society to serve this periphery. I have never understood how Israel could sustain the occupation, the vicious blockade of Gaza, many prisons and a top notch army and still provide a decent life that ordinary folks can be satisfied with. For this small state, these costs are enormous and the result has to be a declining standard for the majority. This tangled web is Israel’s own doing, it derives from the self-definition of its “security needs” including the settlements (remember when they were all justified as security measures?) Does anyone see any sign that Israel recognizes that it is impoverishing one society in order to create another one of security engineers and nasty settlers?? Any hint?? They probably think they can string out this imbalance to secure its settlement of the WB and then, later, address the needs of the core. That’s pretty dicey…to go way way out and hope that you can get back. The future is just not that comfortably predictable.

    1. The top notch military is, indeed, an enormous burden. But it can defray some of that cost thanks to the largesse of the US taxpayer, and by exploiting European guilt over the holocaust.

      The USA *gives* Israel $3billion worth of military hardware each and every year, so the most expensive hardware costs aren’t borne by the Israel treasury. In addition, there are a huge number of one-off grants for such things as the Arrow and Iron Dome missile intercept systems, which the USA co-funds even though it has no interest in actually acquiring any of them.

      And European weapons are often “bought” at a greatly-subsidized discount e.g. the Dolphin submarines were sold at give-away prices, and until very recently the Israelis were still insisting on a 30% subsidy on new German-built patrol vessels.

      Indeed, the Israelis were greatly shocked when Merkel dropped that offer in retaliation for the failure of the peace talks, insisting instead that the Israelis had to pay full market value. Which, of course, the Israelis simply could not afford.

      It is much the same with the cost of the occupation, which has been underwritten by the EU since the Oslo Accords were signed.

      It’s a neat trick: the EU pays for the cost of Israel’s control over the Palestinians, and does so on the “understanding” that this is all part of Palestinian “state-building”.

      The result is “occupation on the cheap”, and Israel can keep that going for as long as they can keep the lie going i.e. for as long as the EU keeps deluding itself that all those euros aren’t being used to pay the running costs of this endless occupation.

      So, basically, Israel is indulging in an unsustainable enterprise, but that unsustainability has been disguised for some time by the Israeli’s world-champion ability to lift money out of other people’s pockets.

  3. As well as military-overspending, it may also be “conservatism” at work.

    In the USA, elites remove themselves from the great cities to suburbs (or live in cities and send their kids to private schools) and school-taxes are kept low. “Inner city” schools are woefully underfunded.

    In the USA, this is deliberate, a successful attempt by elites to keep the rabble down. I suspect that the same mind-set plays in Israel, a country which is officially at racist war (with Palestinians) and which thus practices violent racism without any moral qualms. Israeli elites (Ashkenazim) treated the Jews from Yemen and other Arab countries very badly originally and I’d guess they still do. And the African Jews. (And Africans who are not Jews.) And, again adn again, Palestinians and other Arabs. The racism is so builtin that Israel cannot even treat American visitors properly, not even Donna Shalala. we may differ as to whether this is a good system or a system rotten to the core (I’m a “core man myself) but I think the lousy education is consistent with endemic racism and discrimination-ism.

    1. The underachieving of the Haredi sector may be self-inflicted, but your state spends one third of recources on Palestinians sompared to Jews, and then you say they are underachievers who have themselves to blame?
      ***k you!

      1. Elisabeth, why are you getting so anxious ? have you examined the data ?
        for example, this article dated back to 2010 shows community payment of municipal taxes based on Social class percentile.

        The lower class in Israel sectors 7 – 10 do not pay any municipal taxes
        in the 1st bracket, 79% of the Jews Pay their fair share, while only 16% of the Arabs do.
        in the 2nd bracket 49% of the Jews Pay their fair share, while only 30% of the Arabs do.
        in the 3rd bracket 41% of the Jews Pay their fair share, while only 32% of the Arabs do.
        in the 4th bracket we have a tie of 52%
        in the 5th bracket 63% of the Jews Pay their fair share, while only 26% of the Arabs do.
        in the 5th bracket 73% of the Jews Pay their fair share, while only 47% of the Arabs do.

        As i’m sure you are aware, municipal taxes cover part of the cost for services received by the local community.
        when you don’t pay your taxes, you will get less educational services, because your local government can’t afford as much, when you don’t receive as good of an education you are going to acquire less tools that will enable you to compete in the job market etc, etc etc.

        The research was conducted by an Israeli-Arab Dr. Rafik Haj. who works for an Israeli-Arab NGO.
        entire research is available here:

        1. What comes first, the chicken or the egg?

          Israeli-Arab communities receive less than 5% of government development funding each year. With such massive discrimination, you should be thankful so many more than 5% are still willing to pay their taxes, subsidizing the development of Jewish communities.

        2. I find this argument both false and patently offensive. It’s also been tried before here several times and failed. You are done in this thread. I hate repetition & regurgitation. But I’m impressed that the Hasbara Library provided such efficient research.

          This is a case, as Elisabeth wrote, of which came first–the chicken or the egg. You claim the State simply can’t offer services to citizens who don’t pay their fair share. While most of the rest of us who aren’t hasbarists realize that the State never offered services to Arabs from the first moment it came into existence. In fact, the State wished they would simply go away and treated them & their communities in this way.

          Tell me this–can their communities, businesses, infrastructure grow? This is the way communities create value, which in turn creates a tax base. No building permits, no jobs, no investment by the public or private sector. Hence no growth, hence no wealth and no taxes. That’s it in a nutshell.

          Reminder: do not reply. This subject has been hashed out here before & it would bore me to tears to read anymore from you on the subject.

  4. I was rather surprised when Secretary of State John Kerry emphatically called for a two-state solution and Israel did not take what I deemed bait to a strategic life-extension to the Zionist project. The two-state solution was, to me, a formalization of the Israeli entity, although terribly spurious given that the new Israel would operate with the same fiction-based paranoia and myths of the last 66 years.

    After giving it good thought, I then realized that this was the same nation that created a political climate that fostered the assassination of Rabin, and very likely, Arafat.

    Whenever a political leader of that magnitude is decapitated from the seat of power, I try to examine the era that follows and who fills the newly created power vacuum. In Israel’s case, it was Sharon, Netanyahu et. al. The Likud charter itself clearly explains Palestine doesn’t have a right to exist.

    But, even worse, the production of the “Clean Break” document by Richard Perle for Netanyahu’s government in 1996, which partners with the “Project for a New American Century” (PNAC) campaign among Neocons in America, calls for Palestine to be “wiped from the map” (a Zionist propaganda colloquialism), for the invasion of Iraq, and the take-down of Iran. See http://en.wikipedia.org/wiki/A_Clean_Break Since even the Clinton era, we began to see the implementation of this strategy in full effect.

    However, while there were initial successes towards it execution, the same age-old tale of overreach and inability to adapt to changing circumstances has occurred. There seems to be no political capital to steer Israel away from doom other than a massive regional (and very potentially global) war. Israel’s peril, like with threats of the Samson Option, becomes humanity’s greatest nightmare.

    Given the lack of opposition to steer the ship away from the cliff of catastrophe, plans more abound than ever to rebuild the Temple, to capture more land for “Greater Israel” (no longer a closely held secret), I am pessimistic about our collective futures. The obvious solution here would be to reverse all of the negative underlying policies that can no longer be hidden, hedged by the fact that Israel’s long-arms provide it a form of global strength at this juncture. But, no political capital exists among the fanatic and determined to walk away while the going’s good. That would require replacing hate with love as a basic component of the modus operandi.

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