Former MK explores paradoxes in Israeli society

Ten days after his resignation from the Knesset, economist Manuel Trajtenberg said of Israel, 70 years after its founding: “Yes, we managed to create a vibrant state, but we have yet to forge a nation.”

At an Oct. 10 talk at Princeton University, the former Zionist Union MK, who has now returned to academia as a professor of economics at Tel Aviv University, explained that “a nation [is] a cohesive collective” based on three shared elements — values, identity, and vision of the future. 

Trajtenberg went on to explore paradoxes within three realms of Israeli society that, he said, must be resolved to forge an enduring nation. The first encompasses a thriving economy in a country among whose population there is serious social discontent. The second is Israelis’ identification with the state in the context of the fragmentation of its society. The third is the challenge to maintain a democracy in the face of growing populism.

Despite Israel’s flourishing economy — including growth in gross domestic product and a low rate of unemployment — there is civil discontent. In 2011 Israel experienced its largest protest demonstration ever, with half a million people in the streets demanding social justice and economic equality. “These were our sons and daughters, middle-class kids that did everything by the book,” he said. 

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So how has Israel gone from being a country that was one of the closest to equal income distribution in the Western world to one with the largest disparity? The same factors are responsible for both growth and inequality, according to Trajtenberg. 

To combat the hyperinflation of the 1980s, Israel enacted “a stable set of policies meant to enforce fiscal discipline, reduce the size of government, open up the economy, privatize,” and other moves, he said, that “brought these great results at the macro level.” 

But, Trajtenberg said, these policies were carried too far, to the point that the government kept reducing funds for education, health, social services, and welfare in the name of fiscal responsibility. As a result, responsibilities previously assumed by the state were thrown onto the public, particularly young families. 

Trajtenberg lamented the vacuum of leadership regarding Israel’s social realm; the prime minister takes care of security and foreign relations and the minister of finance oversees fiscal issues, he said, but nobody seems to be responsible for social policies.

The tension created by the social discontent, he said, is not sustainable, because “social issues come back to haunt you. If you have wide disparities, you have difficulty creating human capital.” 

Resolving this issue, he said, requires a complete change of approach — not just fine-tuning policies but looking at the economy and society in a different way.

The second paradox involves fragmentation that gets in the way of a sense of national identity. Beyond its significant income gap, Israel’s population is split — 80 percent Jewish, 20 percent non-Jewish; even its non-Jewish minorities are varied, with “completely different sets of populations and issues.” And of course the country’s Jews range from secular to charedi, and include myriad origins within the Sephardi-Ashkenazi divide. Other divisions, he said, stem from the implications of the geographic split between the center and the periphery of the country and differences between veteran Israelis and new immigrants. 

Quoting President Reuven Rivlin, who said that Israel is “a country made of minorities,” Trajtenberg noted that lacking a majority identity can have serious consequences, as minorities often feel threatened and behave defensively. But despite fragmentation, he said, surveys regularly report that Israel has “one of the highest levels of satisfaction, happiness, and identification.” 

“One explanation,” he said, “is that, precisely because Israel is fragmented, people have a sense of belonging to the tribe, which is nearby, and something they can feel and touch, like an extended family, and through that group they have a sense of belonging to the country as well.” 

But because particularistic identities can clash with a more general one, he said, this situation, though seemingly positive, is unsustainable.

The third unresolved paradox is political. He warned that Israel is a society moving toward populism and cited “attacks on the judiciary, the press, key institutions of democracy, [and] attacks on the elites.”

“In the longer term,” he continued, “we cannot have a vibrant democracy as we have it today still, and a process that leads to populism.” 

Trajtenberg said he has been exploring the weekly Torah portion for insight. “We live in a world where the market economy has created evils it doesn’t know how to deal with, so we need to look elsewhere for inspiration,” he said. 

He cited, for example, the requirement set out in Ki Tetze — which had been read several weeks before — to return an individual’s lost oxen or sheep; this concept, he said, is “one of the keys to building a better society.”

He was particularly moved by the law’s demand that “you cannot remain indifferent,” that the animal must be returned, even if no one is watching. And, for him, this provides guidance on creating the trust necessary to build social capital.

“You can’t ignore it. You have to go day in and day out and look at injustice, inequality, inequity, no equal opportunity, and say, ‘I’m going to do something about it — about the ox, the donkey, or its equivalent in this world, and I’m going to build trust in that way.’”