Charlie,
Actually Israel was only able to absorb the mass immigration of the 50s because of the “reparations” from former West Germany. Until then it was impoverished and had a strict (and strictly violated) austerity program. Since the Likud revolution of 1977 there has been much privatization, which has resulted in prosperity and much greater efficiently. For example, when the phone company was part of the Ministry of Communications it took years to get a phone – unless someone had an “in” (protektzia). In fact, protektzia was needed for just about anything decent. The middle-class Mizrahi (which later merged with the socialist HaPoel haMizrahi) joined the governments to get a piece of the pie and insure thee rights of the religious public (e.g. kosher food in the IDF). Jo Amar, in fact, had a protest song about this called Lishkat haTaasuka (employment Service). There is no such thing as equality..Not in this world and not in the next. The only difference is the basis of inequality. As George Orwell put it, “all animals are equal but some are more equal than others”.
Israel’s experience is not exclusive. Every country that has thrown off socialism for a free enterprise economy has greatly benefited. Unfortunately, many people did not have the foresight to realize this. Prof. Yisrael Aumann, in fact, commented that socialism sounds great but has one problem. It doesn’t work.