…I found myself talking to a Jewish woman who works in the US government. “I don’t understand,” she said with dismay. “In America, Jewish people are upstanding citizens. What is happening in Israel?”
The woman was referring to the massive growth of organized crime in Israel over the past ten years, as well as the fact that Israel has become one of the world’s leading exporters of investment scams, stealing an estimated $5 billion to $10 billion per year from victims worldwide.
Despite the fact that Israeli police recently announced that these investment scams are largely run by organized crime, which has grown to “monstrous proportions” as a consequence of little to no law enforcement for years, the Israeli government, parliament and authorities have to date proved unwilling or unable to shut them down, in part because these fraudulent industries have a powerful lobby in the Knesset.
“Most Israelis are good people,” I told the Washington woman in Israel’s defense. “It’s just the system that is broken.”
Indeed, Israel’s democratic system has become riddled with corruption of late. Analysts who study Israel’s high-tech sector (and who were unwilling to talk on the record for fear of angering their colleagues) told The Times of Israel last year that an estimated 25 percent of the revenue of Israel’s lauded high-tech sector comes from shady or fraudulent industries, including online gambling, binary options, forex, downloaders/injectors (companies that put malevolent software on your computer without your knowledge), and the payment, affiliate marketing and adtech companies that service these industries.
Israel’s Finance Ministry recently issued a report showing that the cost of nearly every consumer product, with the exception of education and produce, is significantly higher in Israel than the OECD average. Analysts attribute this high cost to monopolists and rent seekers who pull strings and lobby the government to block competition in industry after industry.
Meanwhile, apartment prices have risen 118% in the last ten years, for reasons economists cannot fully explain. Recently, the sale of new apartments has slowed, which a report in The Marker by Nimrod Bousso attributes to a recent crackdown on money laundering in Israeli banks ordered by the Bank of Israel’s Supervisor of the Banks. The report suggests that rampant money laundering was a significant factor in the rise of apartment prices in the first place.
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