The well-connected versus the rest of us

Respondents were deeply worried by corruption, violence, poverty and the growing gap between rich and poor. In particular, many worried about their own ability to support their children, save for the future and grow old with dignity. And when asked what primarily determines a person’s financial status, the top response, at 24 percent, was “being born to the right family”; in second place, at 17% apiece, were “having the right connections” and “God.” In short, this is becoming a country where people who lack “the right family” or “the right connections” doubt their ability to give their children a better future.

And when you consider events of the past two weeks alone, it’s hard to argue that they’re wrong.

Just last week, for instance, it was reported that the Finance Ministry has agreed to give 140 maintenance workers at the notoriously nepotistic Ashdod Port raises of NIS 3,500 to NIS 5,000 a month, in exchange for vaguely defined reforms aimed at improving the port’s productivity. Dockworkers are already among the country’s highest paid workers; their average monthly salary, NIS 24,000, is more than 2.5 times the economy-wide average (about NIS 9,000). And this new raise alone is worth as much as many Israelis’ total paychecks: The minimum wage is NIS 4,300 a month.

Is all this because the dockworkers are super-productive? Clearly not, or the treasury wouldn’t be offering lavish bribes in an effort to coax a bit more productivity out of them. Indeed, last year’s Trajtenberg Committee Report on socioeconomic reform concluded that “poor service and low output at Israel’s ports” costs the economy “hundreds of millions of shekels a year” directly, alongside indirect damage stemming from “labor disruptions and delays in developing new port infrastructure.” Nor are such payments recompense for specialized skills that require long years of education, as with cardiac surgeons or top engineers.

These exorbitant raises stem solely from dockworkers’ ability to shut down Israel’s main gateway for trade at will: With no competition and no law barring employees of public-sector monopolies from striking, dockworkers have the country by the throat. And they have no compunction about using their power to extort money from the rest of us. There’s one law for the well-connected, and one for everyone else.

Or take last week’s disgraceful bailout of Channel 10 television – the fourth in less than a decade. Channel 10 hasn’t turned a profit since it opened in 2002; it has serially violated the terms of its license; and its debts to the state (for royalties, taxes and license fees) currently total NIS 65 million, not counting NIS 45 million in interest. Even if one thinks the license terms were excessively onerous, the businessmen who acquired the franchise accepted them; if they considered the terms unviable, they shouldn’t have bid.

Any private-sector business in such straits would have been shut down long since, and government agencies would be hounding it to repay its debts. Instead, the Knesset was convened in special session to pass legislation that extends the current owners’ franchise by two years, grants the station a NIS 65 million government loan and cancels its obligation to pay royalties. So rather than auctioning off the frequency to someone who might run it better, the government is letting the station continue operating under the same failed management and putting taxpayers on the hook for its debts.

Is this because no new station could possibly arise to replace Channel 10? Of course not. It’s because as a media outlet, Channel 10 enjoys the unreserved backing of its fellow journalists, who filled the press and airwaves with spurious claims that denying it a government bailout would “endanger Israel’s democracy.” With elections one month away, the government couldn’t afford to antagonize the entire media; nor could it afford the international fallout: Israel’s thriving democracy is a vital asset in the Western world, and Western officials have proven distressingly eager to swallow any nonsense about this democracy being “endangered.” So the government had no choice but to capitulate to extortion. There’s one law for the well-connected, and one for everyone else.

Then there’s my personal favorite: a deal signed two weeks ago that gives Israel Railways workers a 25% raise plus bonuses of NIS 42,000-NIS 52,000 apiece, in exchange for agreeing to structural reforms and signing a three-year no-strike pledge. The bonuses alone are worth roughly what minimum-wage workers earn in a year – and railway workers weren’t underpaid to start with. But the crowning glory is that even though the money is ostensibly in exchange for reforms, workers were collectively guaranteed about NIS 100 million even if the reforms don’t occur.

Needless to say, private-sector workers don’t get exorbitant raises and bonuses whenever their employer implements reforms. But they don’t belong to a union with the power to shut down a vital transportation network and no qualms about using it to extort money from the rest of us. There’s one law for the well-connected, and one for everyone else.

Israel currently faces numerous serious external threats. But the internal threat is no less grave. This is a country that demands enormous commitment from its citizens in both tangible matters (like military service) and intangibles (like enduring constant international opprobrium); such commitment can’t be maintained if ordinary citizens feel their children’s future is being sacrificed on the altar of outrageous perks for the well-connected. 

This threat has been ignored by successive governments for far too long, and it’s vital that the next government finally start tackling it. The divide between the well-connected and the rest of us just keeps growing. And ultimately, as Abraham Lincoln once warned, “a house divided against itself cannot stand.”

The writer is a journalist and commentator.