I believe the contemporary Israeli Rabbinut epitomizes the contemporary breakdown of minhag ha-maqom (communal custom). Without kehillot (communities) with minhagei meqomot (plural: customs of communities), the Israeli Rabbinut is just a vast leviathan that must cater to every minhag (custom) around. There is no longer such a thing as a local communal beit din (Rabbinical court) that can oversee matters especially for the local community. This is just the way things are, and I don't see them changing anytime soon.
Minhag ha-maqom began to break down with the Spanish Expulsion, when Sephardim found themselves in Ottoman lands with Romaniote (Byzantine, Judeo-Greek) Jews, and sometimes in Ashkenazi lands. Traditional geographic-based communities were broken up, and people from different communities found themselves suddenly to be geographic neighbors. (This also happened within the Sephardim, when Sephardim from different cities in Spain suddenly found themselves living in the same area in Turkey.)
With the Spanish Expulsion, the question arose: does one follow the original minhag ha-maqom even when the immigrants outnumber the natives, or does one follow the new minhag ha-maqom being imposed by the more numerous immigrants? For example, if the incoming Sephardi immigrants outnumber the native Romaniotes, does one follow Spanish or Byzantine minhag? But everyone agreed that one minhag ha-maqom was to prevail, because the concept of minhag avot (ancestral custom of ones genetic forefathers) had not yet been invented.
Minhag avot was not invented until Ashkenazim, after WWII, found themselves in Western European countries, all mixed together, and also in Israel, living alongside Sephardim. This had already happened a little bit in previous centuries, such as when the disciples of the Vilna Gaon and Baal Shem Tov made `aliyah to a Sephardi-dominated Israel, for example, but the Holocaust provided the most extreme case of destroying communities.
From this, minhag avot was invented. The reasoning seems to have been that when the Torah concept of minhag ha-maqom (i.e. following your community's customs) no longer suffices - because when no geographically self-contained kehillot exist, no minhag ha-maqom can either - that in such a case, we are permitted to flout the Torah and engage in Reform-style violation of bal tosif (the prohibition of adding onto the Torah). In this case, when minhag ha-maqom no longer "works", we can invent minhag avot, whole-cloth, and tell people to follow the customs of their ancestors, even though there is no support for this notion in the Torah or Talmud. I speak of obligations; that is, the Torah and Talmud speak of an obligation to follow the customs of one's neighbors, not of one's ancestors.
Similarly, when I express my libertarian politics, people often complain that without government welfare, the poor will starve. I doubt this is true (have you heard of a little thing called tzedaqa?), but even if it were, the problem with these people is that they believe a worthy goal (viz. helping the poor) legitimates a crime (viz. government theft, otherwise known as "taxes"). I'm sorry if the poor will starve, but this doesn't make it alright to violate the Torah prohibitions of geneiva and gezeila (stealthy theft and armed robbery).
In short, people usually think in a utilitarian fashion (i.e. based on results), while I think in an deontological fashion (i.e. based on absolute morality). In other words, other people think only of the ends, while I work to ensure the means are justified as well. When faced with the breakdown of kehillot, or the the starvation of the poor, people think in a utilitarian fashion, and are concerned only with the desired end. They find ways to salvage the situation, by inventing minhag avot out of thin air, and by taxing people without their consent. By contrast, I think deontologically, based on means that are justified: does the breakdown of kehillot or the situation of the poor legitimate my violating the Torah, or not? In short, I reject using unjust means to accomplish a just end. Tzedeq tzedeq tirdof: "justice justice shall you seek", meaning your pursuit of justice must itself be just. So again, I don't care how much the poor are starving, for theft is theft, period.
Furthermore, I believe that if the government got out of the welfare business, then private individuals would step up. When the government is involved, people stop caring. You can have a poor widow starving next-door, but you won't ever even see her face, because you'll tell yourself that welfare is covering her needs. Welfare breeds complacency not merely for the recipients, but even for their neighbors. If the government were not involved, then citizens would realize they must take matters into their own hands, and actually take the time to bake a casserole for that poor widow next-door. The Israeli Rabbinut today causes the same problem. Because the Rabbinut builds all the synagogues and provides all the rabbis, there is no sense of communal solidarity in Israel. There are no kehillot. In America, synagogues must be built and rabbis hired by the willingness and work of the members. Thus, the communities are much more alive. It is also much easier for a single, unmarried individual to find a Shabbat meal, for example, because there is an entire communal framework set up. But in Israel, no one belongs to a community. The synagogues and rabbis exist without anyone's having to be involved, and so no one feels any loyalty or responsibility, either to the synagogue or to the surrounding community. Everything is fluid and anarchic, and so a single person has nowhere to go to ask for a Shabbat meal.
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