How did American Jews get so rich?
Since the mass immigration some 100 years ago, Jews have become richest religious group in American society. They make up only 2% of US population, but 25% of 400 wealthiest Americans. How did it happen, and how crucial is their aid to Israel?
Later, Lauder reiterated his "unequivocal" support for Netanyahu and "policies that seek to create a lasting peace in the Middle East".
Lauder's remarks made headlines and sparked both enthusiastic and angry responses not just because of his important role, but also – and mainly – because he is a very rich man.
Forbes magazine estimates his wealth at $2.7 billion. His family owns the Estée Lauder cosmetics giant, he is one of the biggest art collectors in the world, and owns dozens of television channels and media outlets in the United States and worldwide, including 25% of Israel's Channel 10 TV. He is a heavy donor to countless Jewish and Israeli organizations, bodies and officials – including Netanyahu.
Jews in all centers of power
Lauder is definitely not the only American Jew funneling money to Israel while influencing the country. Many Israeli adults used to receive a parcel from "the rich uncle in America" during their childhood. Thousands of organizations, including hospitals and universities, receive billions of shekels in donations from the US. A Hebrew University study found that they make up about two-third of all donations in Israel.
Each new immigrant receives aid from the Jewish Agency, whose budget is mostly made up of donations from the US. Many of us live on lands the Jewish National Fund bought from Arabs by Jewish-American money. A haredi yeshiva student gets NIS 1,000 ($295) a month from the Israeli government, and another NIS 3,000 ($885) from haredi American donors.
The online Jewish Encyclopedia says some 5.6 million Jews live in the United States (not including half a million Israelis) – about 1.8% of the population. Most of them reside in rich cities: Miami, Los Angeles, Philadelphia and Boston, and mainly New York.
A study of the Pew Forum institute from 2008 found that Jews are the richest religious group in the US: Forty-six of Jews earn more than $100,000 a year, compared to 19% among all Americans. Another Gallup poll conducted this year found that 70% of American Jews enjoy "a high standard of living" compared to 60% of the population and more than any other religious group.
More than 100 of the 400 billionaires on Forbes' list of the wealthiest people in America are Jews. Six of the 20 leading venture capital funds in the US belong to Jews, according to Forbes.
Google founder Sergey Brin has a Jewish father, Facebook founder Mark Zuckerberg is Jewish, as is his deputy, David Fischer, the son of Bank of Israel Governor Stanley Fischer. The chairman of the Federal Reserve, Ben Shalom Bernanke, is Jewish too, as is he predecessor, Alan Greenspan, and the Fed founder, Paul Warburg.
Jews are well represented in Wall Street, Silicon Valley, the US Congress and Administration, Hollywood, TV networks and the American press – way beyond their percentage in the population.
From town to Brooklyn alleys
The United States is among the richest countries in the world, making American Jews one of the wealthiest ethnic groups in the universe. Their success story is even more phenomenal considering the speed in which they became rich.
Only several thousand Jews lived in the US upon its establishment on July 4, 1776, most of them Marrano and people who were exiled or escaped from Spain in favor of colonies in North America.
In the mid 19th century, some 200,000 Jews immigrated to the US, mostly from Germany and central Europe. Most of them were Reform Jews, well-established, who saw themselves as Germans and Americans more than as Jews. They scattered across the continent and set up businesses, from small stores and factories to financial giants like Lehman Brothers and Goldman Sachs.
The great wave of immigration began in 1882. Czarist Russia, which was home to about half of the world's Jews, went through a failed industrial revolution and was on the verge of collapse, while the Jews living in small towns became impoverished and suffered from cruel pogroms.
Within 42 years, some two million Jews immigrated to the US from Ukraine, western Russia, Poland, Lithuania, Belarus and Romania. They made up 25% of the Jewish population in those countries, about 15% of the world's Jews, and 10 times the number of Jews who immigrated to the Land of Israel during that period.
The US became the world's biggest Jewish concentration. The mass immigration to Israel began in 1924, when the US enacted tough laws which halted the immigration.
The immigrants arrived in the US on crowded boats, and most of them were as poor as church mice. Dr. Robert Rockaway, who studied that period, wrote that 80% of US Jews were employed in manual work before World War I, most of them in textile factories.
Many workplaces were blocked to the Jews due to an anti-Semitic campaign led by industrialist Henry Ford. Most of them lived in crowded and filthy slums in New York – Brooklyn and the Lower East Side.
Many films and books describe the world established in those neighborhoods: Vibrant, but tough and brutal. There was a lively culture of cabarets and small Yiddish theaters, alongside a Jewish mafia with famous crime bosses such as Meyer Lansky, Abner "Longie" Zwillman, and Louis "Lepke" Buchalter, who grew up in the filthy alleys.
Many of the Jews, who were socialists in Europe, became active in labor unions and in workers' strikes and protests. Many trade unions were established by Jews.
The Jewish immigrants, however, emerged from poverty and made faster progress than any other group of immigrants. According to Rockaway, in the 1930s, about 20% of the Jewish men had free professions, double the rate in the entire American population.
Anti-Semitism weakened after World War II and the restrictions on hiring Jews were reduced and later canceled as part of the 1964 Civil Rights Act, thanks to the struggle of liberal activists, many of whom were Jews.
In 1957, 75% of US Jews were white-collar workers, compared to 35% of all white people in the US; in 1970, 87% of Jewish men worked in clerical jobs, compared to 42% of all white people, and the Jews earned 72% more than the general average. The only remnant of their poverty is that most of them still support a welfare policy and the Democratic Party.
As they became richer, Jews integrated into society. They moved from the slums to the suburbs, abandoned Yiddish and adopted the clothes, culture, slang and dating and shopping habits of the non-Jewish elite.
Most Jews left religion when they immigrated to the US, but returned to it later on and joined Reform and Conservative communities, becoming more alike the Americans, most of whom are religious Christians.
'Jews always studied more'
Alongside the Jews, millions of immigrants arrived in the US from Ireland, Italy, China and dozens of other countries. They too have settled down since then, but the Jews succeeded more than everyone. Why? All the experts we asked said the reason was Jewish education. Jewish American student organization Hillel found that 9 to 33% of students in leading universities in the US are Jewish.
"The Jewish tradition always sanctified studying, and the Jews made an effort to study from the moment they arrived in American," says Danny Halperin, Israel's former economic attaché in Washington. "In addition, the Jews have a strong tradition of business entrepreneurship. The Irish, for example, came from families of land workers with a different mentality, studies less and initiated less.
"The Jews progressed because many areas were blocked to them," says Halperin. "Many Irish were integrated into the police force, for example, and only few Jews. The Jews entered new fields in which there was need for people with initiative. They didn't integrate into traditional banking, so they established the investment banking."
"The cinema industry was created from scratch in the 1930s, and the Jews basically took over it. To this day there are many Jewish names in the top echelon of Hollywood and the television networks. Later on, they took high-tech by storm too – another new industry requiring learning abilities."
'Grandpa arrived with $2, dad completed PhD'
"The Jews were the first people to undergo globalization," says Rebecca Caspi, senior vice president of the Jewish Federations of North America (JFNA). "They had a network of global connections way before other nations, and a strong and supportive community.
"The Jewish communal organization is considered a role model for all other ethnic groups. It helped the Jews everywhere and especially in the US, which was always more open than other countries and provided equal opportunities, while on the other hand –wasn't supportive of the individual."
How do community institutions help people succeed in business?
"The mutual help allowed poor Jews to study. My family is an example of what happened to millions. My grandfather arrived in New York with two dollars in his pocket. He sold pencils, and then pants and then other things, and in the meantime studied English, German and Spanish and established ties.
"He had five children, and the family had a small store in Brooklyn. They got help from the HIAS Jewish organization, which allowed them to study. They were so poor that they didn't have money for textbooks, so the siblings helped each other. My father was the youngest, and until he started university the four older siblings had already managed to settle down, so they all helped him complete his medical studies."
"The Jews had to excel in order to survive," says Avia Spivak, a professor of economic and former Bank of Israel deputy governor. "I once had a student of Russian descent, who told me that his parents said to him, 'You must be the best, because then you might get a small role.'
"That was the situation of the Jews abroad, and in America too until the 1960s. The most prestigious universities didn't take in Jewish students, so they studied in colleges and got the best grades. When the discrimination disappeared, the Jews reached the top."
Is that why they succeeded in the US more than in other places?
The discrimination lessened in most countries. I think Jews succeeded in America in particular because capitalism is good for the Jews. Jews have a tendency for entrepreneurship, they study more and have quick perception, know how to seize opportunities and have networking skills. A competitive environment gives Jews an advantage."
Is that the reason Israelis are not as rich as American Jews?
"I think the 'Jewish genius' – which is not a genetic issue but a cultural issue – is expressed in Israel in other areas. The Jews in America arrived in a country with existing, stable and strong infrastructure. Here they had to build the entire infrastructure from scratch, under harsh conditions."
'Government hurting aid, but it'll continue'
There is no doubt that American Jews' huge success helped Jews survive in Israel.
"The help is beyond the actual donations," says Caspi. "The federal aid arrives largely thanks to the Jewish pressure. Israeli businesspeople use their connections in America to open markets and raise funds, especially for the venture capital industry."
The American aid strengthens the connection between the two communities – which together make up about 80% of the Jewish people – but also creates discomfort on both sides: The Americans view Israel as a "shelter for a rainy day" and feel committed to help the State, but some feel their money is being wasted due to wrong moves; the Israelis live in fear of what will happen if and when the aid stops. The fear is increasing, with one-third of US Jews marrying non-Jews and stating that they feel less connected to Israel.
"Israel would have been established and would have survived even without the American aid, but it would have been poorer," says Halperin. "There are areas, like higher education, in which the aid is critical – and if it suddenly disappears, things will be difficult."
Every time there are arguments between the Israeli government and Jews in America, Israeli and American public figures warn that "one day they'll have enough and stop donating." Can that happen?
"The scope of donations is decreasing in the past few years," says Halperin. "The Jews have a sense of belonging to the American society and give their donations to American organizations. They want to see their names at a New York museum rather than at Jerusalem museum.
"As the Holocaust becomes more distant, the fear for Israel's existence drops. In addition, Israel is no longer perceived as a poor country. And the Americans have their own problems: The financial crisis and education in the US, which is becoming more and more expensive. The donations will gradually drop, and may eventually disappear.
"But it's hard for me to believe that the donations will disappear at once because of a political crisis. It looks like our government is trying to make it happen with all its might, but fortunately, it can't even do that."
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