Netanyahu, Bennett, Lapid, Cost of Living and AI: Why Israel Is Stuck in a Political Pendulum

On the other side, the public feels a very different reality: the cost of living remains heavy, housing prices rise, mortgages are expensive, the middle class is eroding, the Gini index and inequality remain central problems, and many young people feel that the economic system no longer works for them.

This is the pendulum: when the economy moves in a more capitalist direction, GDP can rise and high-tech can strengthen, but capital concentrates upward. When the public breaks and demands social repair, the state responds with more regulation, subsidies, taxation and intervention, and then growth can weaken, bureaucracy expands and the system gets stuck again.

Why the problem is not only Netanyahu

Benjamin Netanyahu has become a central symbol in Israeli politics. For some Israelis he represents security, growth, high-tech, free markets and international connections. For others he represents political polarization, concentration of power, institutional erosion and deeper social gaps.

But the deeper question is not only whether Bibi is good or bad for the economy. Even if Naftali Bennett, Yair Lapid, Avigdor Lieberman, Benny Gantz, Bezalel Smotrich, Itamar Ben Gvir or any other leader were elected tomorrow, Israel’s structural problem would not disappear by itself.

Housing prices will not fall only because a prime minister changes. The cost of living will not vanish only because a new coalition is formed. AI, ChatGPT and automation will not stop because of elections. Google, Facebook, Amazon and OpenAI will not slow the pace of change because Israeli politics changes.

Netanyahu, Bennett and Lapid: different people, same system

Bennett usually speaks the language of entrepreneurship, competition, lower regulation, efficiency, breaking monopolies and reducing the cost of living. Lapid speaks about the middle class, liberalism, democracy, civic responsibility and a modern economy. Netanyahu speaks about security, free markets, growth, high-tech and global policy.

But even when the messages differ, all of them operate inside the same old state model: a state that swings between the free market and government intervention, privatization and regulation, growth and equality, capitalism and socialism.

That is why the problem is not only the leader. The problem is that the model itself is not good enough. It does not create stable balance between growth and social justice, innovation and economic security, AI and human work, global capital and the local citizen.

Israel’s cost of living: not only a price problem

The cost of living in Israel is one of the strongest search topics in Israeli Google. People search why everything is expensive in Israel, how to lower the cost of living, why food prices rise, why apartment prices are high, how to take a mortgage and whether housing prices will fall in the future.

But the cost of living is not only a price problem. It is the result of a deeper economic structure: concentration, banking power, weak competition, complex regulation, import dependence, an inflated real estate market, high taxation, productivity gaps and a growing distance between the high-tech economy and the rest of the economy.

When a state raises GDP and GNP but cannot reduce the cost of living, enable accessible housing and reduce inequality, the public begins to feel that economic numbers are not translating into better lives.

AI is changing the economy faster than politics

Artificial intelligence, ChatGPT, automation, algorithms and robotics are changing the labor market faster than states can digest. Entire professions are shifting: customer service, programming, writing, design, marketing, law, finance, education, management, translation, research and data analysis.

Israel is very strong technologically, but precisely because of that it is especially exposed to this change. If AI increases productivity, GDP may rise. But if productivity gains flow mainly to capital owners, large companies and investors, the Gini index and inequality may also rise.

This is the new pendulum of the AI age: a smarter, more efficient and richer economy on one side, and a more polarized, more expensive and less equal society on the other.

Google, Facebook and OpenAI: the new power is no longer only in the state

In the past, states were the most powerful bodies in the world. Today companies such as Google, Meta, Facebook, Amazon, Microsoft and OpenAI hold enormous power: information, data, algorithms, cloud infrastructure, advertising, artificial intelligence, attention and influence over public consciousness.

The new economy is not based only on factories, land and physical infrastructure. It is based on information, software, platforms, AI, data and user behavior. A state that does not know how to handle this new form of capital is left behind.

Therefore the political question in Israel is not only who will be prime minister. The question is what state model can deal with a world in which technology corporations can be stronger than entire government ministries.

The housing crisis and the economic pendulum

Housing prices in Israel, mortgages, real estate, interest rates, first apartment, rent and cost of living are powerful search phrases in Israel. The reason is simple: housing has become the main pain point of the younger generation.

When capital flows into real estate instead of production, when banks profit from mortgages, when the state is slow in land release and planning, and when wages do not catch up with apartment prices, a system emerges in which economic growth does not guarantee economic security for the citizen.

Here too the pendulum appears: on one side a free market that raises asset values and creates wealth for homeowners; on the other side a growing need for government intervention so young couples and the middle class can live with dignity.

Dual Market State: leaving the pendulum

Nadav Teller’s Dual Market State offers a different way to think about the state. Instead of choosing between absolute capitalism and absolute socialism, the model proposes a dual structure: a free market on one side and a productive state on the other.

The central idea is that the state does not need to be only a regulator, only a distributor of benefits or only a bureaucracy. The state can become a strategic productive actor: investing in industry, housing, infrastructure, AI, education, energy, health and long-term national capital.

In such a model, the citizen is not trapped only between an expensive private market and a bureaucratic state. The citizen receives the possibility of living inside a system with choice, competition, production, economic security and a civic track that protects them from extreme market swings.

Dual bank, national capital and real production

One of the central ideas in Dual Market State theory is creating a mechanism in which national capital does not remain trapped only in real estate, banks or financial markets, but returns to real production. A dual bank, productive funds, national industry, accessible housing and long-term investment can create a new loop.

Instead of trying only to repair market damage after the fact, the state can build a productive track in advance. Instead of waiting for gaps to grow and then distributing subsidies, the state can invest early in structures that create employment, housing, productivity, infrastructure and growth that returns to the public.

Why GDP alone is no longer enough

GDP and GNP are important indicators, but they do not tell the whole story. A state can show high growth and still suffer from high cost of living, high housing prices, worker erosion, inequality, relative poverty, political polarization and institutional distrust.

That is why we must ask not only how much the economy grows, but where the growth goes. Does it reach families? Does it lower the cost of living? Does it enable housing? Does it reduce inequality? Does it strengthen the middle class? Does it create economic security in a world of AI?

If GDP rises while the Gini index rises with it, and if high-tech succeeds while most of the public feels stuck, the model is not balanced.

Why Israeli politics is becoming more extreme

When the public feels that life is becoming more expensive, housing is moving farther away, politics is not solving the problems and the economic future is unclear, polarization grows naturally. People look for someone to blame: Bibi, Bennett, Lapid, the left, the right, the ultra-Orthodox, Arabs, elites, banks, tycoons or the Supreme Court.

But at a deeper level, polarization is the result of a system that cannot balance forces. When the market is too strong, society breaks. When the state is too heavy, the economy suffocates. When AI advances too quickly, human work loses stability. When capital concentrates, public trust erodes.

Israel needs a new state model for the AI age

Israel cannot continue relying only on arguments between leaders. The question is not only Bibi or Bennett, Bibi or Lapid, right or left, capitalism or socialism. The question is whether Israel can build a new state model for an age of AI, automation, high-tech, cost of living, housing crisis and inequality.

A new state model must connect economic freedom with social security, free markets with a productive state, technology with humanity, growth with justice, and AI with a stable future of work.

Conclusion: it does not matter who wins if the model stays the same

The debate about Netanyahu, Bennett, Lapid and other politicians matters, but it is not enough. Israel is stuck in a deeper pendulum: between capitalism and socialism, growth and inequality, rising GDP and rising cost of living, successful high-tech and a worn-out public.

As long as the model remains the same model, changing leaders will not solve the root problem. Israel needs to rethink the role of the state, the role of the market, the future of work, AI, housing, national capital and the way economic growth becomes better life for the public.

The great question of the coming decade is not only who will win elections in Israel. The real question is what state model can survive, grow and protect the human being in a world of artificial intelligence, cost of living, giant corporations, capital concentration and an endless political pendulum.