israel wealthy families inequality tycoons

Creating The Generation We Want
rich and poor concentration

Protests Force Israel to Confront Wealth Gap

An accumulation of wealth at one end of the pole of society indicates an accumulation of misery at the other – Marx. But what’s the solution? Surely not collectivism. We trim, blend, and append two 2011 articles from (1) New York Times, Aug 11, on Israel by E. Bronner, and (2) CoExist on Great Britain, Aug 14, by P. Bartolotti.

by Ethan Bronner and by Pippa Bartolotti

The handful of wealthy families who dominate the Israeli economy are the chief targets of tent-city protesters who have shaken Israel in the past month with the goal of “minimizing social inequalities.” Daphni Leef, a 25-year-old filmmaker, began this protest movement with a Facebook posting.

The “tycoons,” as they are known even in Hebrew, are suddenly facing enraged scrutiny as middle-class families complain that a country once viewed as an example of intimate equality today has one of the largest gaps between rich and poor in the industrialized world.

The ruling families -- the Ofers, the Dankners, the Tshuvas, the Fishmans and others -- account for the 10 biggest business groups in the country and together control some 30 percent of the economy.

Although Israel’s economy is strong, the data published by the Bank of Israel reveal wealth concentration. A small group of family-owned companies control banks, supermarket chains, and media, cellphone, and insurance companies. They borrow heavily, posing risks for the larger economy and, through a web of interconnecting enterprises, make it harder for others to get into the markets they dominate.

“These are called pyramid schemes because through shares in one company they take control of a second company and, through that, of another one on down a chain of holdings,” said Eytan Sheshinski, an economist at the Hebrew University of Jerusalem.

The Bank of Israel study shows that while the United States, Britain, and Germany have much less concentration of wealth than Israel, it is not so different from several other democracies. Based on the holdings of the 10 largest business families, Israel is in about the same situation as Switzerland, France, and Belgium, and its wealth is far less concentrated than is the case in Sweden.

Daniel Doron, who directs the Israel Center for Social and Economic Progress, a pro-market research organization, said privatization of failing state assets in the 1980s and ’90s led to dangerous consolidation, just as it did in the former Soviet Union and some Arab countries, like Egypt and Syria. Banks, construction and mining companies, all owned by agencies of the state and all in varying degrees of trouble, were sold to those who could afford to buy them. “It was basically selling assets to cronies,” Mr. Doron said.

A television journalist, who spoke on the condition of anonymity, said his station would probably not do a program on wealth concentration to avoid upsetting the station’s owners.

“It used to be politically impossible to go after the cartels, but now that 300,000 people have gone out in the street, we have a mandate,” an aide to Prime Minister Netanyahu said.

To see the whole article, click here .

JJS: From the problem in Israel to a possible solution in Great Britain.

We need the confidence to pursue a new approach to inequality and social strife. The education system has failed a large proportion of young people. Prison only teaches offenders to be better criminals. Many parents have thrown in the towel. Feral children haunt every neighbourhood.

Could the following be a solution?

Put an emphasis on setting boundaries, understanding discipline, being an instrinsic part of the community, and leaning how to learn. Tick boxes would be abolished, practical skills encouraged. Individual assessments would guide young people towards jobs for which they show a natural aptitude. A vast system of apprenticeships would have yearly graduation points where income would increase with performance. Monthly wages could start from 14 years of age where learning would dovetail with employability. Those with a more academic preference and ability would be similarly channeled, but with more emphasis on learning and opportunities for free university places.

Those entrenched in disrespectful and destructive behavior would be channeled to appropriate terms of 'boot camp' style activities, and filtered back into the mainstream system when appropriate. Older children would learn good parenting skills.

Mopping up bad parenting has to be a crucial step, but overcoming the root causes of our ills is essential. Clamping down brutally on those whose life options are rapidly diminishing is not the answer. Facing up to and taking radical imaginative action toward a progressive and more equal society is.

To see the whole article, contact Pippa Bartolotti: coexist at To introduce Land Value Taxation, an annual tax on the rental value of land, as the chief source of government revenue in the UK to replace existing sources of taxation including income tax, VAT, and Council Tax, click here .

JJS: We could address this problem with sound public revenue policy.
* First, end corporate welfare; by giving handouts to the rich and powerful, we stifle small business and self-starting entrepreneurs.
* Second, quit taxing people’s efforts -- their wages and earnings -- so people will have more to show for their useful contributions.
* Third, gather up all the money that society spends for the nature (land and resources) and privileges (corporate charters, bank charters, etc) that now concentrates in undue fortunes. And ...
* Fourth, share that social surplus as a dividend to citizens.

Receiving their fair allotment, people will not only feel worthy and a respected member of society but will also have a cushion needed for taking time off to explore their talents and self-actualize and eventually offer their fellow citizens new goods and services as yet undreamed of.

There’s no need for any redistribution; just predistribute the commonwealth, before the elite or state can corral it. This policy grows out of geonomics, a new way of understanding how economies work, why they often break down, and what we can do about it.


Editor Jeffery J. Smith runs the Forum on Geonomics.

Also see:

Can Cyberspace Liberate Us from Earthly Space?

5 Ways GE Plays the Tax Game

Need versus Greed -- Inequality and the Right

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