The term “Startup Nation” has ceased to be a buzzword to describe the success of Israel’s high-tech economy. It has become an entire worldview, the paradigm through which many of Israel’s supporters around the world conceive of the Jewish state.

The Startup Nation model is a fairly simple one: despite decades of adversity, Israel is now a cutting-edge, modern, prosperous economic and technological powerhouse. It has become the Hong Kong of the Levant, a place of luxury, glamor, and plenty. Thanks to its tech economy, Israel is now an economic superpower that is leading the world to a better place through ceaseless industry and innovation.

There is, of course, some truth to this. Israel is certainly much richer than it was even a decade ago, and the tech economy has played an enormous part in this. Israel is now a more or less fully developed country, and has succeeded in creating what vaguely resembles a middle class. Its accomplishments in science and technology are very real, and have indeed played a disproportionate role in the global economy.

Nonetheless, the “Startup Nation” paradigm is, for the most part, a myth. I was put in mind of this a few days ago when I saw that Israel’s experiment in a national lottery for discounted apartments has been extended because of the overwhelming number of applications. In other words, so many Israelis are desperate for affordable housing that, when an opportunity to get it was offered, the system broke down.

This was a sign of an underlying reality that betrays the Startup Nation paradigm — showing that an enormous number of Israelis, under current conditions, cannot afford to buy property. In the US, home ownership is taken as a given. In Israel, even an apartment is such an impossible dream that people are forced to resort to games of chance in order to have at least a chance of realizing it.

This is only a symptom, however; and like all symptoms, it points to an even larger problem. I’ve had several recent discussions with Israeli friends of mine on the subject, and the problem comes down to a simple fact: it is becoming increasingly impossible for working people to afford to live in Israel.

There are several reasons for this, and they go well beyond the impossibility of home ownership. First, Israeli salaries, in comparison to other developed countries, are quite low. I was once offered a job with an Israeli publication at a salary of 30 shekels an hour. I very much wanted to work for them, but found that I could obtain 30 dollars an hour from an American publication, and the decision was made for me. A friend who works in child care — a highly demanding profession that demands extensive educational credentials — makes all of 60 shekels an hour (around $18.75), and this is the going rate for a great many other essential professions. Others I know who work in teaching, nursing, and other such jobs report similar problems.

These salaries, moreover, are largely stagnant. As in the United States, “real wages” in Israel have, for the most part, remained flat outside the high-tech industry. They simply do not keep pace with inflation and the rising cost of living, so Israelis are, in effect, taking a yearly pay cut in terms of actual purchasing power.

This is compounded by the fact that the cost of living in Israel is outrageous. Tel Aviv was recently named the most expensive city in the world by the Economist Intelligence Unit, with cost of living expenses being a major factor, and this holds true in most Israeli cities and much of the country in general. Even basic staples, some of which are price controlled, can be ruinously expensive — sparking protests over the rising price of, for example, cottage cheese, which prompted government intervention.

Combine this with the fact that Israeli taxes are relatively high, sometimes up to 50% of one’s income, and you have a situation in which many and perhaps most Israelis live month to month, often finding it impossible to meet their basic expenses. The financial sector has addressed this by extending easy credit, but no country can sustain itself on the installment plan. At some point, the dam will break, and mass defaults may well bring the whole edifice down.

The high-tech economy, of course, is the exception to all of this. In the tech industry, salaries are relatively high and the benefits plentiful, and people do generally get paid what they’re worth and can support a commensurate lifestyle. This is the heart of the Startup Nation paradigm, and constantly pointed out by its supporters. Their solution to Israel’s economic problems, they imply, is for the entire country to become a giant Google.

This is pure fantasy. First, any industry is to some degree limited. It may grow very large indeed, but sooner or later it ceases to be capable of offering any more jobs, even to those qualified to hold them. It is also absurd to think that a country can run on one industry alone, as the Gulf petro-states are now demonstrating in their rush to develop alternative economic opportunities. A nation does not only need coders and tech entrepreneurs. It also needs doctors, teachers, bus drivers, construction workers, plumbers, taxi drivers, and more — and they all deserve the same fair compensation and living wage enjoyed by those employed in the tech industry. At the moment, they are not receiving them.

The Startup Nation paradigm also creates a strong class divide. The high-tech industry requires an elite education in very specific fields. Not everyone has a talent for such specialization and will not excel at it, while others simply have no interest in it and wish to dedicate their lives to other worthy endeavors such as medicine, education, or running their own small businesses.

The class divide this has created can be seen almost everywhere in Israel, and it is remarkable how adept the partisans of the Startup Nation are at willfully ignoring it. One can see it very clearly in my own city of Tel Aviv. I am privileged enough to be relatively well-paid and single, so I can afford to live in the upscale north of the city. But venture a few blocks south, and you will encounter a completely different city. South Tel Aviv is poor and essentially discarded by the powers that be. It suffers from poverty, crime, deteriorating infrastructure, unemployment, and decades of neglect and general depraved indifference. The people who live there are courageous and proud, but they are very well aware that they constitute an underclass. And the Startup Nation, thus far, has done nothing for them. Even when their neighborhoods are improved, the wealthy quickly buy up the available real estate and eject the former residents, many of whom have lived there all their lives.

These areas of poverty and neglect are by no means confined to south Tel Aviv. They are scattered throughout Israel, especially in the northern and southern periphery, with its development towns and troubled Arab communities, whose distance from Israel’s vital center provides a convenient excuse for ignoring them.

None of this is acceptable, whatever the Startup Nation paradigm may lead us to believe. First, there is the obvious human factor: it is a terrible thing to live in poverty, particularly in a country that has the capacity to ensure that none of its citizens must do so. There is also the issue of Israel’s obligations as a Jewish state. While the Jewish left, especially in America, can be insufferable in its attempts to claim that socialism is Judaism and Judaism socialism, there is no doubt that Jewish tradition is replete with concern for the poor and the justice that is due to them. The ethos that the philosopher Norman Geras called “the contract of mutual indifference” is, without doubt, completely contrary to Jewish thought and morality.

The most fervent neoliberals, in Israel and elsewhere, would no doubt disagree with this, so it should be pointed out that there are also pragmatic reasons to reject the Startup Nation paradigm and attempt to find a more communitarian alternative. First, class divisions and economic inequality are inherently dangerous to social solidarity, and Israel cannot survive without social solidarity. As Israelis are fond of saying, we live in the Mideast, not the Midwest. This makes demands on Israelis such as compulsory army service, living with the danger of war and terrorism, and putting up with a state of often constant anxiety and sometimes trauma. If the Israeli people come to believe that they are not fighting for their society and community, but for the private property of other people who, for the most part, do not care about them, the results could well be disastrous.

One can see a small sign of this in the phenomenon of immigration from Israel, or “yerida” (descension). While the exigencies of war are one reason for it, most of the yordim I have encountered left Israel because they were simply unable to make a decent living there, and saw no future opportunities to improve their lot in life. So, they decamped elsewhere — including, of all places, Berlin — where the cost of living is lower, salaries are higher, and the mire of poverty and debt can be at least somewhat escaped. Given that Israel’s enemies openly admit that they regard demographics as a weapon of war, the existential threat mass yerida represents should be obvious.

Beyond this, however, there is the issue of simple reciprocity. Once, when discussing the issue with someone on the right, my interlocutor mocked what he called a mentality of “megiya li” — or “I deserve it” — among Israeli advocates of social justice. These people, he thought, just want the government to give them things they don’t deserve. But Israelis do deserve it. They make immense sacrifices for their country through military service, high taxes, and many other aspects of life — sacrifices that far outstrip those demanded by most other developed nations. The state demands much of them, thus they have a right to make certain demands of the state, and the demand to simply have a relatively decent life is ultimately not a great deal to ask.

Most important of all, however, is the challenge the Startup Nation paradigm presents to Zionism itself. It posits a simple question: what is the point of a Jewish state in which the Jews cannot afford to live? The answer should be obvious: none at all. A Jewish state in which its citizens live in poverty, inequality, or lives of quiet economic desperation is, at best, a very bitter joke.

If we wish to avoid seeing more and more Israelis ask this question, however, it would seem time to forge a better paradigm than that of the Startup Nation. A paradigm that would adopt more communitarian values and seek to emphasize not merely hellbent economic growth and the acquisition of wealth by the few, but rather a social market economy in which the Startup Nation’s talents for innovation and growth are directed toward nurturing the welfare of Israel’s citizens. Such a social market society would not only brighten Israel’s future, but strengthen the foundations of Zionism and Israel’s identity as a Jewish state — which, in a fit of absence of mind, the Startup Nation has begun to erode.

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