Its the economy, stupid

Eitan Tzafrir

More and more politicians and intellectuals have been expressing their concern over the prospect of mass emigration by well-to-do Israelis. These observers claim that should Iran acquire a nuclear bomb, many of those who are able to leave Israel would do so. The demographic problem and the struggle against the Palestinians also give rise to fears that those with means would leave elsewhere.


The concern over emigration is justified, yet the reasons for it are found elsewhere: Those 30-40 year old well-to-do Israelis, engineers, doctors, lecturers and others, who constitute the beaten, worn out, and fatigued middle class, would not be folding in the face of a nuclear mushroom threat or millions of Arabs threatening our borders. Mass emigration would be the result of a completely different kind of unconventional bomb – the made-in-Israel bureaucratic bomb, which has been causing casualties ever since the start of Zionism, suffocating human liberty, and paralyzing private initiative: It’s the economy, stupid!


The well-do-to Israelis have not tired of fighting for their country or defeating their external enemies. Jews have not left Israel because of the great Arab revolt in the 1930s and have not fled in the face of the horrors of the War of Independence and the wars that followed; even in the 2002 operation Defensive Shield we found them fighting at the front. Existential threats not only failed to make Israelis leave, they even brought back those who left. Those who left because they did not have the personal connections that would enable them to make an honorable living, but knew they had the talent to make it overseas, returned order to fight wars they had a chance of winning.


On the other hand, economic crises were followed by large emigration waves: The recession on the eve of the Six-Day War, the years of huge inflation during the 1980s, and in the beginning of this decade, when the Israeli economy was on the brink of collapse.


The world’s great emigration movements are from economically weak countries to developed countries. On the other hand, when it comes to countries boasting a robust and free economy, we almost never see emigration numbers overtaking immigration numbers. The main threat of a wide-scale middle class departure from Israel has to do with the semi-socialist regime still in place here. In recent years efforts were made to create a country with the characteristics of a free market, but we are still light years away from countries such as Australia, Canada, and the United States. It is no wonder that these countries are the main destination of emigrating well-to-do Israelis.


Government is the problem
A study by Wall Street Journal and the Heritage Institute that looked into the level of economic freedom in 2007 in 157 countries showed that Australia, Canada, and the US are in the top 10. The study showed a clear link between standard of living in terms of income per capita and the level of economic freedom in the country. Israel was ranked 37th. We are not talking about income indexes alone, but also the extent of growth, investments, environmental conditions, and levels of corruption. In order to defuse the bomb and keep well-to-do Israelis in Israel, we must minimize the gaps between Israel and attractive destinations overseas – that is, we should enhance the level of economic freedom so it matches that in Australia, Canada, and the US.


How do we do that? First we must understand what they understood 20 years ago: Government is the problem and not the solution. We should lower taxes, deprive the government of missions that the private sector can do better, cut down government expenditure, boost competition, sell land to citizens, engage in an all-out war on corruption, dismantle monopolies, and upgrade the job market. We should do it fast, full steam ahead, and push the economy to higher growth rates. As a result, the standard of living will rise and the quality of life will improve.



Once all this happens and we find ourselves in the top 10 Western countries, emigration concerns will dissipate. After all, if there is one thing that can break well-do-to Israelis, it is the endless war for their economic future and the welfare of their families. They are tired of fighting the bureaucracy and therefore some of them have already left, while others are considering doing the same, regardless of what’s happening in Gaza or Teheran. As to the other dangers, Israelis are used to them and are willing to bear with them – as long as life here is not merely tolerable