They need to practice free enterprise (capitalism) rather than the half baked socialism they practice.
You're on the right track, but that is going to be hard to do. (The State of) Israel was founded on the socialist kibbutz model, and the current state is still highly influenced by European trends.
They want it all: the freedom and democracy a la the U.S. and the high-minded "social consciousness" of Europe.
I find it a huge contradiction that the government and the society maintain their socialist ethos, yet somehow all the factions come together to support the most forceful military actions when necessary.
Israel is very complicated for such a tiny country.