Israel's Challenge of Inclusive Growth
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Israel's Challenge of Inclusive Growth

Reut is at the frontier of addressing the crisis of Israel’s middle class through our conceptual work in recent years, and the pilots in Tsfat and the Western Galil. With our partners – Raya Strauss Ben-Dror, UJA Federation of NYC, the Russell Berrie Foundation, and others – we are exploring new approaches to generating high economic growth, which is inclusive and sustainable in order to realize the ISRAEL 15 Vision. Over the past three years, Reut has traveled Israel, meeting and working with government officials, local leaders and social entrepreneurs who are successfully confronting the challenges facing our society. Our approach has been shaped by these experiences.

Based on this journey, Reut believes that the most appropriate vision for Israeli society is to become a network of prosperous and resilient communities. We believe that such a network will support social cohesion, enhance transformative local leadership and vibrant local identity, Jewish and other, catalyze high and inclusive growth on the national level, and poverty alleviation and prosperity on the local levels, and increase resilience in time of crisis.

The broader picture is that high, sustainable and inclusive growth necessitates that a large section of society participates in growth and benefits from it. Meanwhile, in recent years most economic growth came from a relatively small group. For example, in Israel, an estimated five percent of the labor force has been driving the remarkable Start-Up Nation phenomenon. The rest have been struggling, albeit to different degrees, until the explosion of the wide-spread social protests in the summer of 2011.

The middle class around the world suffers from a fourfold-whammy of stagnating salaries, decreasing quality and quantity of public services, rising cost of living in real terms, and shrinking employment opportunities. Consequently, societal gaps have been growing, between the small minority that enjoys a cycle of affluence at the top and a growing number of people that are unemployable at the bottom.

Effective resolution of this crisis requires creating new societal knowledge, which builds not only on cross-disciplinary academic knowledge, but also on local and practical experiences and experiments. Its focus should be on rebuilding societal capital – human, social and economic – in the middle class, which will improve competitiveness and productivity. This requires a diligent analysis of the driving trends and a brutally honest discussion of relevant solutions. Failure to do so and to address the fundamental causes of the present crisis may result in grave consequences to social, political and economic stability.

Israel’s network of interconnected communities must have strong local institutions and civic leadership. Reut believes that community-building is not only the DNA of the Jewish world and a powerful legacy of Zionism, but also crucial to Israel’s prosperity, resilience and Jewishness. Therefore, Reut has identified eight local community ‘platforms,’ e.g. community centers (Matnasim), early childhood centers and youth centers, which are pillars of every successful community, in which households, individuals and small businesses are empowered.

Reut’s focus on development at a local level stems from the confluence of two powerful and consistent trends: the continued decline in the capacity of the Government of Israel to deal with complex issues such as inclusiveness and poverty, and the rise of local leadership, which assumes greater responsibility by collaborating on a regional level. In short, we believe that the vibrancy of local communities and their leadership will be the most powerful engine propelling Israel to greater prosperity and security.