Over the past year, there has been huge commotion in Israel over the unique status enjoyed by a handful of high-tech factories. It all began once it became public knowledge that most of these factories pay no income tax, while most citizens struggle under the tax burden. Israelis everywhere are asking how it came to be that people with more pay less, and people with less pay more.

The commotion intensified once it became known that in the past few years these very factories received tax exemptions for profits amounting to 122 billion shekels ($34.5 billion). The public regarded this as a case of exploitation and greed by those companies’ managers. The state argued in its defense that these factories employ tens of thousands of workers. Collecting taxes from these companies could harm them and even cause them to relocate to other countries.

The best-known case of this revolves around the establishment of the local branch of Intel, a company that manufactures microchips. In the early 1990s, this international corporation convinced Prime Minister Yitzhak Rabin to take part in a huge investment to establish its factory in the Negev. During his second term in office, Rabin was intent on investing vast resources to benefit the towns and settlements of the periphery, which lagged far behind the center of the country.

In the decades prior, settlements in the south were dependent on unsophisticated, labor-intensive industries, headed by the textile industry. Dozens of factories were established to produce fabric. The big collapse began in the 1980s. The opening of international markets to free trade dealt a harsh blow to these factories and expedited their closure. They collapsed one after the other, like a house of cards, bringing down those towns and settlements whose economies were tied intrinsically to them. Meanwhile, a second generation of textile workers, who had only just completed their military service, went searching for new challenges and fled from the profession as if it was a raging fire. The result was devastating. Masses of young people left the development towns in search of a better future.