MR. KOJO NNAMDIThis weekend, 250,000 mostly young people took to the streets of Tel Aviv, Israel's financial capital. It was the biggest outpouring yet in a simmering popular protest movement, a movement mostly missing from international headlines. For four weeks, a unique coalition has built impromptu tent cities in public places, organizing in ways that seem to transcend old political divides in Israel.

MR. KOJO NNAMDIThe protests center around, what seems to be, an economic paradox. Israel has one of the world's fastest growing dynamic economies, a hotbed of software and medical innovation. But the benefits of that growing economy haven't filtered down to many young Israelis. Some see echoes of the Arab Spring and other protest movements in Europe. Some also believe this could signal a new kind of alignment in Israeli politics.

MR. KOJO NNAMDIJoining us by telephone to discuss all of this is Bernard Avishai. He is a professor of business at Hebrew University and author of "The Hebrew Republic: How Secular Democracy and Global Enterprise Will Bring Israel Peace at Last." He's a former editor of the Harvard Business Review. Bernard Avishai, thank you for joining us.

PROF. BERNARD AVISHAIA pleasure.

NNAMDIOn the surface, Israel seems like a strange place to have an economic protest. Its economy seems to be booming, making it unique in the region and, really, unique in the entire global economy with a growth around 4 or 5 percent. But this weekend, more than 200,000 young Israelis took to the streets of Tel Aviv to protest the high cost of living. Why are these people protesting?

AVISHAIWell, it's a complicated answer, of course. But the most superficial answer is that, in fact, even though, you know, the economy is apparently growing at a nice clip and there's only 4 percent unemployment, the truth is that the vast majority of the people in the streets can't finish the month with their salaries.

AVISHAIAnd their -- you know, the rough statistics are that about 60 percent of Israelis who are working are earning more than -- are earning less -- excuse me -- than $22,000 a year. And they're paying very high taxes. And the question is, where are their taxes going to? Social services have been cut tremendously over the last 10 years. Health care budgets have been cut. Education budgets have been cut.

AVISHAIAnd I think a lot of the people in the streets are thinking, okay, this place has all the reason -- has all the resources to be a kind of paradise. We could live like Silicon Valley. Why are we living like Greece?

NNAMDIUnemployment is at around 4 percent, so most Israelis have jobs. The major issue here seems to be whether those jobs can pay them enough to keep up with the cost of living.

AVISHAIExactly. And so when you look at the structure of their monthly budgets, the first big piece goes to the state. I mean, taxes, income taxes are very high. I'm not making a brief now for lowering income taxes. That's not what I'm saying. But it -- I am asking, where is the government spending this money?

AVISHAISo if you're earning, you know, $30,000 a year and a third of that goes to the government, and then the government turns around and spends, you know, one-fifth of that on defense and a whole bunch more on the settlements, which get locked into the defense budget, and you look at the amount of money that goes to the Haredi, the ultra-Orthodox population that are being supported in an Orthodox school system, so that only about 58 percent of the people in the country or -- excuse me -- 56 percent of the people in the country participate in the workforce as compared as to, say, you know, 60 and 68, 70, 72 percent in the more advanced OECD countries, you have to ask, you know, is the government spending this money wisely?

AVISHAIAnd then there's the whole question of, you know, the opportunity cost, that is to say, the cost of not making peace. So many people in the streets are thinking, you know, health care is in crisis now. But we have some of the best hospitals in the world. Why are our doctors earning what babysitters earn?

AVISHAII mean, in fact, if you look at what interns in hospitals earn over the first five years of their careers, they're earning what, you know, what babysitters are paid. But these same doctors could be turning around and providing health tourism for the whole region, and this could rejuvenate overnight the Israeli health care system.

NNAMDIYou know, it's funny because we reflexively seem to view any story in Israel through the lens of the Palestinian question. And maybe that's why we're not hearing so much about this protest movement. But what you seem to be saying right now is that the Palestinian question and the peace process is a part of the story that is just kind of lurking under the surface.

AVISHAIIt is under the surface. And one of the interesting questions that we have to be asking going forward is, how long will the leadership of this protest movement try to keep it under the surface? Because the way in which they've been able to take 250,000, 300,000 people into the streets is by focusing on, you know, pocketbooks issues, which create the largest -- you know, which creates the largest possible coalition.

AVISHAIBut the truth is there's no way, ultimately, you're going to be able look at pocketbook issues without taking into account the opportunity cost of not making peace. And also, the cost that's being -- you know, the price of maintaining the occupation and supporting the settlement project.

AVISHAISo, you know, the young leadership of this protest movement, who nobody has ever heard of -- I mean, I can throw out names. But nobody's ever heard of them. That's what makes them so popular, I think...

NNAMDIBernard Avishai is a professor of business at Hebrew University and author of "The Hebrew Republic: How Secular Democracy and Global Enterprise Will Bring Israel Peace At Last." He's also a former editor of the Harvard Business Review. He joins us by telephone to discuss protests currently taking place in Israel. You, too, can join the conversation by calling 800-433-8850.

NNAMDIDo you see any comparisons between these protests and the Arab Spring or what's currently taking place in Europe? 800-433-8850. Bernard, I put the same question to you. Any parallels here?

AVISHAIWell, I think the parallel, the big, broad parallel is you can always bring out people to the streets when you're talking about very simple things. I -- you know, I think the parallel is more to what's happening in Spain right now, for example, where, you know, people or householders are coming to the streets, or what happened in Brazil years ago and, you know, people were coming out and banging on pots and pans.

AVISHAII think the difference, in this case, to what went on in Cairo is probably important because in Cairo, people came out for a kind of radical democratic program to confront a tyranny. That's not quite the case here. People are coming out to confront what they consider to be an old guard and tired ways of thinking, you know, business monopolies, people who believe in privatization, sort of Thatcherite politics.

AVISHAIAnd they want to change "the system." But they're not yet coming out for what, I think, is a radically democratic program, which I think has got to be on their agenda because the real question that they haven't answered, this young leadership hasn't answered yet is, is this coalition really big enough to include the 20 percent Arab population whom they would like to bring out into the streets?

AVISHAIBut in order to keep them in the streets, they're going to have to address the Palestinian issue. And I think the democratic tinge to this movement will only become apparent, if at all, if that coalition with Israeli-Arabs becomes a big deal for the leadership. Right now, it seems to be something they're kind of soft-pedaling.

NNAMDIWell, we've been reading your blog. And you do highlight how consolidated economic power is in Israel. And that, in a way, seems similar to the situation in Egypt before the revolution.

AVISHAIYes. There -- one of the results of the sort of Thatcherite politics is that there have been, by bowing to the free market, a very high concentration of capital in a number of families. Something like 20 of the -- 20 families in Israel control a very good part of the largest 20 corporations, and so you have -- you know, you do have, in this concentration, a tendency towards monopolies.

AVISHAIAnd the government has been going along by putting very high tariffs on things like dairy goods, making the banks basically a local monopoly, by creating internal monopolies in telecommunications. And, you know, in that part of what's left of your monthly budget going to consumer goods -- cottage cheese, cell phones, et cetera -- you are paying monopolistic prices.

AVISHAISo this is part of the problem that young people are worried about, and, in fact, it's sort of the easiest target.

NNAMDIBernard, some people are calling this the biggest test yet to Prime Minister Benjamin Netanyahu. How does this shake out politically?

AVISHAIWe don't know yet. The truth is we just don't know yet. You know, he's trying desperately to reposition himself as a kind of Jack Kemp Republican, you know. He's trying to get himself into the populist mode and get back to the traditional (word?) posture of rallying the poor against the Ashkenazi establishment, you know, the old European rich, which is a little hard for him to do since he is really of it and, in many ways, represents it.

AVISHAIBut I think that we don't really know yet whether this protest movement is really saying, you know, we in the Jewish state want to get back to the old kind of Jewish state we had before the '67 war, where, you know, the Labor Zionists made it a much more egalitarian place for us, or whether we're really moving forward now into -- well, Israel is this big Hebrew republic. It has a big Arab minority.

AVISHAIWe're part of the world. We're globalizing. We can't go back to the old thing. And we have to create a more democratic thing, a more egalitarian thing, but something that also includes Israeli Arabs, which is 20 percent of the population and going to be 25 percent in another generation.

AVISHAIAnd young people here, if they can keep their eye on that ball, could create a new political party and could put -- you know, and could compete, I think, pretty effectively for the center in Israel that will take quite a few seats from the current Netanyahu government. I don't think Netanyahu himself is going to be able to do this. I don't -- I think that's a bit of a fraud, and I think most people see it as a fraud.

NNAMDIHmm. Okay. Here is Anne in Washington, D.C. Anne, you're on the air. Go ahead, please.

ANNEThank you very much for taking my call. I had a couple of questions. One had to do with the fact that it's being reported in the media here, almost more than the other considerations you've raised, that housing is a big issue, the availability. And this would seem to contradict what we hear here, which is that the Israelis are expanding settlements pretty much constantly.

ANNEAnd the other factor has to do with the fact that the -- although you've cited ways in which the Israeli economy is strong and flourishing, to my knowledge, U.S. tax dollars are actually subsidizing Israel to the tune of about $5,000 per Israeli citizen. And a lot of that is going towards the occupation. A third factor -- I just want to bring up very quickly because you just mentioned it.

ANNEYou said the projection is for Palestinian Arabs within the green zone, within Israel proper, will be 25 percent of the population within another generation. And my understanding is that, actually, the numbers are projected to reach parity and be equal to those of Israeli citizens within the green zone in about 30 years. And that would have enormous implications for Israel, which doesn't have a constitution, calling itself a democracy. What do you...

NNAMDIA lot of questions you raise there.

ANNEOkay. Thank you so much.

NNAMDIBernard Avishai.

AVISHAIYes. First of all, on housing.

NNAMDIHousing first, yes.

AVISHAIHousing, of course, is a big deal, but it also is telltale. Housing is driven by the cost of land. Land is 90 percent controlled or owned by the government. For the Israeli government to privatize and auction off a good deal more land, that would drop housing costs substantially, they would be, in effect, giving up control over what Israeli governments have always been very careful about, namely, creating a sector in housing which was exclusive to Jews.

AVISHAIThe danger for the Israeli right -- people like Netanyahu -- in privatizing land is that Arabs can gain a great deal more land for the expansion of Arab cities and Arab towns. So here is a perfect example of, you know, how far can the government go in creating a bettering of -- in bettering the cost of living without providing a kind of lever for Israeli Arabs to expand their own towns and cities?

AVISHAIAs far as the settlements are concerned, it is true that the Israeli right, right wing government, have kept the cost of housing low, or at least kept the boiling point around the lack of housing at a lower temperature, by sending lots of people off into the West Bank and into the occupied territories. This is one of the reasons why some settlers and some people in the settlement movement have joined these housing protests because they want to see the government spending a lot more on putting housing in occupied territory.

AVISHAIAnd this is the kind of thing that this young coalition, this young leadership of the coalition, has to decide. Are they going to say things that, in effect, put a red flag in front of the settlers and the Israeli right? Or are they going to say, hey, we've got to do this without expanding into the West Bank?

NNAMDIOne of the other points that Anne raised was about the -- what she estimated as $5,000 per person from the U.S. going to Israeli citizens and wondering what's happening with that money.

AVISHAIWell, I'm not sure how she gets that number.

NNAMDIMe either.

AVISHAII don't have my calculator in front of me. But it's true that the American government subsidizes Israel to the tune of about $3 billion a year. Three billion is, in a budget of $60, $70 billion, is not nearly as important as it used to be. And most of that is really military aid, which is basically what the American government gives the government of Israel to buy Israeli jet fighters, tanks, smart bombs, et cetera.

NNAMDIWe're running out of time very quickly. But there's one aspect of this that I wanted to raise with you because we have the tendency in Washington, again, to see everything through the Israel Palestinian lands. But one part of this protest coalition is actually made up of African immigrants, especially Ethiopian immigrants. What is the significance of that?

AVISHAIWell, they are the poorest community in Israel still. The Ethiopian Jewish immigrants came to Israel in the '90s, mainly, along with the Soviet immigrants. But they didn't come with Soviet levels of education. And the African Israeli immigrants are kind of poster children for what happens when the social safety net has been frayed under right wing government since Netanyahu, but even, really, since Netanyahu, Barak, you know, really for the last 20 years.

NNAMDIAfraid we're just about out of time, Bernard. Obviously, this is an issue that we'll be looking at in the future. Thank you so much for joining us.

AVISHAIOh, pleasure. Thank you.

NNAMDIBernard Avishai is a professor of business at Hebrew University and author of "The Hebrew Republic: How Secular Democracy and Global Enterprise Will Bring Israel Peace At Last." He's a former editor of the Harvard Business Review. Thank you all for listening. I'm Kojo Nnamdi.