Lack of full and proper information about Israel has not only limited American Jews’ ability to defend Israel in the international arena. It has also caused a serious misapprehension of Israel’s internal problems and what must be done to solve them.

Ever since the 1920’s, when Chaim Weitzman’s pro-Socialist camp wrested control of the American Zionist Organization, and later of the Jewish Agency, from the pro-private enterprise camp of Justice Louise Brandeis, most of the aid donated by American Jews was spent on collectivist settlements and on Labor Federation enterprises that supposedly represented the pioneering spirit of the New Israel. That these enterprises failed repeatedly, going bankrupt practically every decade since the twenties, did not deter their supporters from pouring more and more aid into them, despite repeated warning issued by expert commissions that investigated these failures.

Funds donated by well-intentioned American Jews helped underwrite the economic failure of Zionism; the Yishuv (Jewish community) in Palestine remained economically underdeveloped throughout the period of the British mandate. This provided the British with the excuse to limit pre-Holocaust Jewish immigration into Palestine, with all the horrendous consequences. Economic weakness has had, of course, other damaging political, demographic and social consequences.

After the establishment of the State of Israel, American Jewish aid continued to be channeled mostly to Labor’s collectivist sector, whether as assistance for the absorption of immigrants or as “development” aid. But gradually, as Labor’s collectivist institutions collapsed under the weight of their growing inefficiency and corruption, aid was redirected to a bureaucratic welfare establishment, both “public” and governmental.

The establishment of the UJA, and the almost total emphasis put in the American Jewish community on charitable fundraising, has accelerated the trend of considering Israel solely as a charity ward, as an object of pity that occasionally makes Jews stand taller by performing military stunts such as the Entebbe rescue. Israel’s late Prime Minister Levy Eshkol quipped that Israel was considered a Nebichdike Shimshen (“Pitiful Samson”), its citizens a bunch of schnorers.

Since it is much easier to raise funds by pulling at the heart strings, the Jewish Diaspora establishment persists in treating Israel as the poor and less capable relative, largely ignoring the great talents and ability, even the relative success, many Israelis exhibit. In a two-year course the Jewish Agency holds for promising young Diaspora leaders, all they see and learn about is welfare Israel, with almost no acquaintance with Israel’s productive side.

Huge amounts of money poured by The Joint, The UJA and dozens of other welfare associations have arguably done a lot to alleviate the short-term suffering of the destitute. But long-term they have not had been a major factor in building a damaging welfare lobby in Israel that perpetuates a culture of poverty. Its institutions churn out dubious statistics (like the ones based on a fictitious “poverty line”) that distort the issue of poverty and how it can be resolved by focusing on the marginal problem of hunger and ignoring the widespread problem of destitution caused by the fact that hundreds of thousands of Israeli families cannot make ends meet because of low wages caused by low productivity. Such distortions lead to policies that hold a third generation of Israelis in a poverty trap with no exit in sight.

Despite all the enormous resources poured into welfare by government, more and more Israelis fall below the (problematic) poverty line. 55% of GNP is devoted to public expenditures, compared to an average of 41.3% in OECD countries. Over a third of the government’s bloated $70 billion plus budget goes to transfer payments, the highest proportion in the Western world!

Between the years 1990 to 2003 the population of Israel grew by 43%, but the number of people receiving guaranteed income from the government grew by 600%, namely by 15 times the rate of the population growth. Yet the modest efforts of Finance Minister Netanyahu to cut the bloated welfare lists were characterized by his political enemies, and by some Diaspora leaders, as “cruel”! Focusing on welfare, many Diaspora leaders fail to grasp that the only way to liberate the poor from their continuous predicament is to generate economic growth by liberating the Israeli economy from the stifling hand of government and the monopolies that rule it. During a transition period, those capable of working should be helped to acquire the skills that will enable them to replace the almost 300,000 foreign workers now employed in Israel. Getting those people who can work off the welfare rolls will enable the government to better support those who really deserve help: the sick, the old and the incapacitated.

American Jews can greatly help Israel in making the transition from a low productivity society that forces so many Israelis to live on measly salaries of $1,200 a month, making hundreds of thousands of families unable to make ends meet. They could help them advance from a welfare dependent society torn by radicalized political strife over the distribution of government handouts to a highly productive society, yes, even a rich society. They can share with Israelis the secret of their own success; their ability to compete in a highly dynamic and productive free enterprise system; they can treat them as productive partners rather than as beggars.

But to do so they will have to overcome old ingrained habits by getting a better understanding of what really ails Israel, and how it can be cured.

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