How intensely citizens interact with the state and are affected by its policies varies considerably not only from state to state but within the state as well. Interaction between the state and its citizens in Israel has been considerable. The reasons for the intense relationship between the state and its citizens are easy to discern. As Gershon Shafir masterfully demonstrated, states involved in the absorption and settlement of massive waves of immigration (Israel doubled its population through immigration within three years of its establishment) tend to centralized power and contain a big government bureaucracy that impacts on all aspects of life in the country (Shafir 1989). The relationship is all the more intense when a state is also challenged simultaneously by major external security challenges, which has resulted in wide-scale three year-long conscription and frequent stints on reserve duty after compulsory service.

Israel, in the past two decades, followed the World Bank’s lead in adopting increasingly liberal economic policies. These include a reduced and more balanced budget, a decrease of subsidies, privatization of state-owned firms, decreasing taxation, outsourcing and privatizing public delivery service systems. Liberalization is widening the gap between upper and upper-middle class and the rest as well as widening socioeconomic gaps between Jews and Arabs.