Paul Krugman: Netanyahu used Iran to take focus away from Israel’s economic crisis

Writing in the New York Times this Monday, economist Paul Krugman asserted that the real reason Israeli prime minister Benjamin Netanyahu made Iran’s alleged nuclear plan the focal point of his campaign, was because he wanted to divert the Israeli public’s attention away from the widespread economic discontent within the Jewish State.

For a country that was built on the socialist philosophy of the kibbutz way of life, there is widespread economic inequality among Israel’s Arab citizens and even its orthodox Jewish community.

Krugman argues that even though Israel was mostly unaffected by the worldwide recession which began in 2008, the country’s own version of the “one percent” has grown disproportionately.

Israel has experienced a dramatic widening of income disparities. Key measures of inequality have soared; Israel is now right up there with America as one of the most unequal societies in the advanced world. And Israel’s experience shows that this matters, that extreme inequality has a corrosive effect on social and political life.

Consider what has happened at either end of the spectrum — the growth in poverty, on one side, and extreme wealth, on the other.

According to Luxembourg Income Study data, the share of Israel’s population living on less than half the country’s median income — a widely accepted definition of relative poverty — more than doubled, to 20.5 percent from 10.2 percent, between 1992 and 2010. The share of children in poverty almost quadrupled, to 27.4 percent from 7.8 percent. Both numbers are the worst in the advanced world, by a large margin.

And when it comes to children, in particular, relative poverty is the right concept. Families that live on much lower incomes than those of their fellow citizens will, in important ways, be alienated from the society around them, unable to participate fully in the life of the nation. Children growing up in such families will surely be placed at a permanent disadvantage.

At the other end, while the available data — puzzlingly — don’t show an especially large share of income going to the top 1 percent, there is an extreme concentration of wealth and power among a tiny group of people at the top. And I mean tiny. According to the Bank of Israel, roughly 20 families control companies that account for half the total value of Israel’s stock market. The nature of that control is convoluted and obscure, working through “pyramids” in which a family controls a firm that in turn controls other firms and so on. Although the Bank of Israel is circumspect in its language, it is clearly worried about the potential this concentration of control creates for self-dealing.

Krugman added that “Israel does less to lift people out of poverty than any other advanced country — yes, even less than the United States.”

Even after Netanyahu’s win this Tuesday, there’s a significant portion of Israelis who are sick of the status quo. Netanyahu’s desperate move of bringing his campaign into the U.S. Congress has only proved to endanger his political future even more.

[This post has been updated]

h/t The Raw Story

Sky Palma

Before launching DeadState back in 2012, Sky Palma has been blogging about politics, social issues and religion for over a decade. He lives in Los Angeles and also enjoys Brazilian jiu jitsu, chess, music and art.

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