Despite Finance Minister Binyamin Netanyahu’s courageous economic reforms, the Israeli economy remains mired in low productivity and growth. High unemployment, low wages, and the inability of hundreds of thousands of families to make ends meet create serious social problems.

For some 60 years of socialism and then statism, our economy has been choked by heavy government regulation and red tape, by inefficient monopolies, and the misallocation of investments by a banking duopoly.

For decades, Israel has been saddled with “progressive” labor laws and unemployment benefits that have diminshed the incentive to work. This is why a nation with arguably the best human capital, a country in which more than 100 billion foreign dollars have been invested, cannot provide most of its workers with more than a $1,200 average monthly wage.

But instead of drawing the obvious conclusions and working on pro-market reforms that will unleash Israel’s enormous potential, powerful ideological groups and vested interests – peopled by our university-educated elites – are fighting tooth and nail to preserve the status quo. They fight to make Israeli workers even more dependent on welfare and political handouts.

Generously funded by Diaspora Jews who ought to know better, such NGOs as The New Israel Fund (with an annual budget in excess of $20 million) are spawning hundreds of shell organizations run by Marxists.

In a Social Activism Day at Hebrew University, almost all the booths enlisting student volunteers were New Israel Fund, pro-Palestinian and anti-capitalist fronts. These “social action” organizations, pursuing the double agenda of anti-Zionism and anti-capitalism, reflect the teaching of many of our professors, especially in the social sciences and humanities. Protected by academic tenure, they teach Marx as a great economist, but barely mention market economics, and if yes, only negatively (from a long litany of market failures to the “fact” that Milton Friedman – an ally of Pinochet – has not only ruined the economy of Chile but also Israel’s, as adviser to Menachem Begin).

A search of the Hebrew University library catalog reveals hundreds of citations for Marx, but only three for Smith, Friedman and Hayek. In 30 years, Friedman’s Capitalism and Freedom has been borrowed 12 times – an indication of how often he is mentioned by our liberal and pluralistic professors. Most graduates of economics know only economic “technology,” but nothing about the ideas that underlie a free-market economy. There is no course offered on the history of economic ideas.

The well-funded welfare lobby never rests. In the recent Sderot Social Conference, it assembled various groups from academia, the government and other “social agency” bureaucracies (such as the Jewish Agency) with NGO advocacy groups to promote what they call “a civil agenda” – as distinct from the economic and security agenda that they claim dominates two other famous gatherings, the Herzliya and the Caesarea conferences.

And what is this “civil agenda”? You guessed it: poverty, the income gap, minority “rights” – anything that calls for more government intervention and expenditure. Poverty’s root cause – our anti-productive system – was not even mentioned.

By appealing to politicians and top bureaucrats with the populist tactic of holding the conference in a development town rather than in a posh hotel, the conference managed to draw quite a few of them to its panels. But poor organization and an attempt to touch on all the pet peeves of the welfare lobby – from advocacy of greater government involvement in economic “development” and employment, in education, health, and welfare to feminism, protest movements and anti-establishment films, to “who is a Jew,” to mourning (an “anti-military” issue) to feminist issues and to discrimination against minorities – made this a very confusing event lacking any focus.

But perhaps a focus was not even intended. Maybe the main purpose of the conference was to advance a radical leftist agenda to center stage. The telltale sign that this is so was the partial funding of the conference by The New Israel Fund, and the granting by the conference of its Social Prize to two of the fund’s most radical organizations.

But more about the conference.

On a building at the entrance of the impressive Sapir College campus in Sderot, a huge sign read: “Education will prevail.” The questions that sprang to mind were “When?” and “In what manner?”

For more than 60 years, Israel has been spending on education as much as, if not more than, any Western country. The results, however, are dismal.

Not only do Israeli elementary school pupils lag behind those of many less-developed countries in language skills and mathematics, but our higher education is also in grave trouble. Admitting ever more ill-educated students, the universities do very little to help them catch up on the educational basics that must underpin all learning.

Instead, in most humanities and social science classes, they get indoctrinated in crypto-Marxist ideas, “post modernist” nihilism, and a hostility toward markets and enterprise.

Consequently, most university students graduate with a Third World statist-welfarist orientation. They believe that the national income somehow descends from heaven like manna, and that the only problem is how to divide it equitably according to the mantras of “social justice.”

Since most of the Israeli elites are university trained, this acquired mind-cast has had a harmful effect on public debate and policy, and on Israel’s economic performance and the state of its society.

Permalink: