THE ISRAELI REVOLUTION - 14-Apr-95

(Article by Sever Plocker, "Yediot Ahronot", 14.04.95)

OVER THE PAST 20 YEARS, WE HAVE GONE FROM BEING A POOR COUNTRY WITH A MINUSCULE ECONOMY TO BEING ONE OF THE WORLD'S TWELVE MOST DEVELOPED ECONOMIES. SO WHY DO WE CONTINUE TO COMPLAIN?

Israel is in the midst of a revolution. The daily bother of events hides this from our eyes, and the inherent Israeli tendency toward melancholy removes it from our consciousness. It is ignored by the opinion-makers, many of whom were raised on the old Israel; the expanse of their speech and attitudes remains rusty, lodged somewhere in the late-1970s.

After all, what has changed since then? Rabin and Peres are running the country, just as in 1975. Hussein rules Jordan, Assad governs Syria, and Arafat heads the PLO. The three of them held the same titles and positions in 1975 as well. There are terrorist attacks, Gush Emunim demonstrations, exporters complaining of a frozen dollar exchange rate, and Arik Einstein singing "Drive Slowly". Same thing, right?

No. The 1970s are over, and nothing about Israel-1995 is like Israel-1975. A stormy revolution has changed our entire lives. Am I exaggerating? A revolution, here? No, I am not exaggerating. The Israel of today is a different country than the Israel of twenty years ago, and the changes that have taken place here between 1975 and 1995 are worthy of being called revolutionary.

I will start with one basic fact that encapsules the economic strength of the country the GDP of its residents. In 1975, Israel's GDP totalled $12 billion, only 50% of the combined GDP of the surrounding Arab countries (Egypt, Syria and Jordan). All three were at war with Israel.

Israel's GDP in 1995 stands at $85 billion. Seven-fold growth in 20 years. Today, Israel's GDP is 50% larger than that of our same three Arab neighbors. Two of them have already signed official peace treaties with us, and Israel is conducting direct negotiations with the third toward achieving such an agreement.

In 20 years, Israel's "dollar product" has increased by about 600%. This is no mistake: 600%. Even if we account for the erosion in the dollar's value, we are still talking about an economy that has grown by 2.5 times from a minuscule, tiny and unimportant economy into a Middle Eastern power and one of the world's twelve most developed countries. Israel's 1995 ranking is good, not somewhere in the middle of the ladder, but among the top 20.

Three factors brought about the Israeli revolution massive immigration, peace and growth.

In 1975, 3.5 million people lived in Israel. In 1995, there are 5.6 million people in Israel. More than in Denmark or Norway. A serious country. Between 1975 and 1995, over one million immigrants arrived in Israel, and stayed. One million immigrants, mostly from the former Soviet Union. One million immigrants who changed, and will change, the Israel's socio-economic mix beyond recognition.

The immigrants have been successfully integrated. Today, the pool of educated people in Israel is considered the world's most advanced. Almost all the new immigrants are employed. They live in their own apartments and are active and influential in Israeli society (as well as influenced by it). A new Israeli identity is thus being forged, and the new Israeli republic is being created.

The second factor behind this success was, and remains, the peace process which began immediately after the Yom Kippur War, continuing even today. It should be remembered that in 1975, 20 years ago, 75 United Nations member-states voted in favor of a resolution equating Zionism with racism. This was, without a doubt, the low point in Israeli history. Last year, this miserable resolution was overturned. 65 of the 75 nations that supported this resolution 20 years ago have already established full diplomatic relations with Israel, and another five have established partial relations.

And here is the most important fact. In 1975, Israel dedicated 33% of its GNP to defense. In 1995, this figure dropped to 9%. 20 years ago, weapons imports consumed 15% of Israel's GNP; this year, it will constitute 1.5%. Only 1.5% of Israel's GNP. If we had to dedicate this same 15% chunk of GNP to national defense today, as we did 20 years ago, our socio-economic development would be profoundly retarded and the developed world would pass us by.

The resources that had been earmarked in defense have since been diverted to investments and exports. Thus, we have grown.

20 years ago, GDP in Israel was about $3,400 per capita GDP per capita

(in dollar terms) being an accepted yardstick for measuring the overall economic capability of a nation. In 1975, when we looked overseas, we saw a rich Western Europe with a per capita GDP three times higher than ours: $9,000-10,000. The distance between us and the West was so great that returning to Israel from abroad was likened to landing in a remote province.

Twenty years have passed, and Israel's per capita GDP will reach $15,000 this year a growth of 450% since 1975. Accounting for the erosion in purchasing power, per capita GDP grew by 50%. Today, when we look overseas at those same countries we envied, we see a per capita GDP that is larger than Israel's by (at most) only one-third; the estimated per capita GDP of countries like Germany, Denmark, Sweden and Belgium is $18,000. The distance separating us has been greatly reduced. One more growth spurt and we will surpass them. Incidentally, Britain's current GDP per capita is already like Israel's.

And what about America? In 1975, the average wage in Israel was $350 a month. The average wage in America was then $700 a month. In 1995, the average wage in Israel will reach $1,500 a month, a growth of 330% over two decades. The average wage in America will reach $1,550 a month, a growth of 120%. Israeli workers have much better social benefits than their American counterparts. The conclusion is that, in 1995, the average Israeli worker will earn more than an American one.

There is one area that characterizes the success of the Israeli revolution. This is the urban sprawl which has combined western Rishon Lezion, eastern Holon and southern Bat Yam. Twenty years ago, there were only dunes there. I know; I grew up in the dunes. A large city of malls and parking lots has risen from nothing. A city of cottages and country clubs, high-rises and low-rises, McDonald's and Pizza Hut, and night clubs and buyers' clubs. Here, the Israeli middle class broad-shouldered, educated, thrifty, strong, and able to quickly climb the socio-economic ladder lives, eats, relaxes and shops. A class spurring, and enjoying the fruits of, the Israeli revolution. Wage-earners and the independently employed (of diverse origins, cultures and ethnic groups) living together in comfort. America is in Rishon Lezion.

In 1975, a private car was perceived as a dream. Only one-third of Israeli families owned their own car; there were only 280,000 cars on the country's roads. In that year, Israelis bought 20,000 new cars.

In 1995, the car is a common household product. 1.1 million private cars traverse the country's roads. Over 130,000 new cars will be sold this year. Israelis now take six weeks to buy as many cars as they did in all of 1975. And what cars! With all the accessories, and with more toys than in Europe.

In 1975, there were 800,000 telephone lines. People waited an average of two years for a telephone line. This year, there are 2.3 million telephone lines in Israel, or 1.5 telephones per household. Waiting time is negligible.

In 1975, 280,000 Israelis 8% of the population travelled abroad. They paid a travel tax, had to present exit permits, bought very expensive plane tickets, and took along a $300 "currency allowance." Only a privileged few were allowed to use international credit cards.

This year, about 2 million Israelis 36% of the population will travel abroad. The price of airfare has been cut in half. There is no travel tax; there is no need for an exit permit; one can take $7,000 out of the country, and; anyone can carry an international credit card in his wallet.

The gaps between prices here and abroad have been reduced to a few percent. There is nothing worth smuggling into Israel, nothing. We have everything here, things that we did not have 20 years ago 40 channels on color television and a television in every home, personal computers in every third home, vacations, charter flights, swimming pools, giant supermarkets, Benetton, Esprit, laser discs and videos.

Such accelerated growth which rests on mass migration generally leads to increased gaps in incomes and standards of living, especially among salaried workers. Where can one million new jobs be created if not at very low wage levels?

This did not happen in Israel. Income gaps in Israeli society have not widened. Each decile has preserved its portion of the national pie. This is not an achievement, but neither is it a failure. Other gaps have indeed been narrowed in housing, education, health and the ownership of consumer goods. The Israeli revolution has not left many wounded by the wayside.

What else has changed in the past 20 years? The face of labor has changed. Women have gone to work. 20 years ago, only one-third of working-age women wanted to work. This year, almost half of all women are working. Workers have become smarter and more educated. According to new data from the Bank of Israel, the Israeli industrial worker's level of education worker has risen by 60% since 1975, reaching 12 years of schooling. The proportion of engineers and technicians among industrial workers has jumped to 18%, as opposed to the 4-5% of 20 years ago. As a result, the productivity of industrial labor has doubled.

In 1975, Israel exported $1.8 billion worth of goods abroad. Exports covered 40% of imports at best. Israel's foreign currency reserves then bordered on slightly more than $1 billion. In 1995, Israel will export $18 billion worth of goods abroad, a ten-fold increase (a real growth of 250%). Exports now cover 75% of imports. Our foreign currency reserves stand at almost $9 billion.

Israel has become a significant factor in world trade, mainly in more advanced sectors like communications, electronics and computers. And still, according to the Bank of Israel, the human capital inherent in the recent immigration has not reached its full expression; this is yet to come. By the year 2000, our GDP per capita will reach $20,000.

These are the material and political facts. Surprisingly, they have not led to a better self-understanding of Israeli society. The material Israeli revolution has not merited study by Israeli sociologists; it is neither reflected upon nor discussed in the Israeli media except in the context of a bitter wail over the loss of values that has accompanied this fever of trips and purchases; it has not stimulated Israel's philosophers or found expression among Israel's authors and artists. The self- consciousness of Israeli society has hardly changed since 1975.

Long-held fundamental principles are, therefore, carried from generation to generation. The basic ideology of the mid-1970s is trying to exist in the Israel of the 1990s as if nothing has changed, when everything has changed. In the end, the new Israeli republic will sprout its own world-view. Our children will do this.

The historical mission of Israelis who are now in their 70s was to establish a state and provide it with peace and security. They redeemed the dunes of Rishon Lezion and developed the city. The mission of Israelis who are now in their 40s and 50s was to create an advanced, strong, open and thriving Western economy. They built the mall and hi-tech industry on the dunes of Rishon Lezion. The mission of our children, now in their teens and 20s, will be to transform all this into new ideas, a new culture and a new social story.