Historically there are two things Jews as a nation don't seem to be able to handle: money and power. Unfortunately both of those seem to have coalesced within the State of Israel to create an ongoing crisis for religious Jewry.
As Assaf Wohl notes in this article, there is a good reason so many secular Israelis revile their religious brethren.
Firstly, the Rabbinate has become the “military wing” of the haredi community. Through it, the haredim abuse the rest of the population. Through the Rabbinate they force Israel’s citizens to get married, divorce, convert and set their clocks the haredi way. And as we know, depriving human beings of freedom provokes fury. Hence, one needs great chutzpa to force people to behave in ways they don’t wish to adopt.
Will a religious person agree to eat pork of desecrate the Shabbat? Heaven forbid. Then why would the religious community force others to adopt customs that others view as a big no-no?
Secondly, the Rabbinate is perceived as a corrupt body that produces nothing but jobs for its close associates. In fact, it is a sort of closed off elite that mostly takes care of the people it cares about; a body meant to feed only one sector – the haredim. The best proof of this is that the haredi rabbis and kashrut supervisors who took the Rabbinate hostage don’t even recognize the kosher certificates they issue. It’s only an income source for them.
The National-Religious Jews are kept out. Reform Jews are out, Conservative Jews are out, and anyone who doesn’t have the beard and hat required by the clique is out. And what about women? Don’t even mention that.
What kind of theocracy has been created within our democracy? Where else will you find a job that is paid by the public and is good for life, like the city rabbi position? And why do we need two chief rabbis, at an exorbitant cost?
Thirdly, there’s the issue of the economic situation and market conditions. After all, social workers, doctors and police officers are employed under disgraceful terms, yet their jobs are perceived as much more vital than the abstract, spiritual work done by the rabbis. What will happen if the rabbis strike tomorrow? The sun won’t shine? Now let’s try to imagine a day without doctors.
Now, some of Wohl's arguments are weak. His example of forcing a religious Jew to eat pork, for example, is one of the common but irrelevant arguments against frum "coercion". We often hear similar arguments from Reformers like "I won't pray in a separate-seated service" and the like. However this fallacious for one simple reason: for Torah observant Jews there is a strict rule against eating pork. For secular Jews there is no contrasting requirement. Being forbidden to eat treife if you're religious is not the same as consuming it if you're not.
Secondly, complaining that there are two chief rabbis is also a red herring. One of the sad consequences of our long golus is that two parallel halachic systems have been in play for centuries now, Ashkenazi and Sephardi. There are a few important differences between them (can you say kitniyos?) and neither group is about to drop the traditions of their fathers in the name of national unity, chas v'shalom. As a result if you're going to have a chief rabbinate, you need two chief rabbis.
But then there's the underlying question: do you need a chief rabbinate?
One could argue that such an institution is essential for Israel. After all, Israel has always had an existential choice to make as to its nature. Is it a Jewish state or is it a secular state that happens to have a Jewish majority? This is not a simple matter. If it is the latter then Israel's right to exist comes into question. After all, the so-called Palestinians are fond of their fictional history and claims to our Land. The only truly legitimate counter-claim we can make is that this Land belongs to us by virtue of our history. We are the continuation of the same Jewish nation that build two commonwealths here and never abandoned a presence in Israel. If the State becomes a secular "Manhattan by the sea" with little more than a lip service connection to proper Torah Judaism and Jewish history then why couldn't the Arabs claim that such a state could be created anywhere in the world? Why take their land?
Therefore it is essential that Israel have an enforceable Jewish element to it. The problem then becomes: how much? Not being Shlomo HaMelech I don't feel qualified to answer that question. Certainly as we are only at the aschalta d'geulah state of matters I can't expect anyone to step forward and propose a completely halachic state. However one could easily make the argument that in a Jewish state important life cycle events need to be Jewish. Food needs to be Jewish. Holidays need to be Jewish.
The problem therefore isn't the existence of a chief rabbinate but its behaviour. Let's use Wohl's example about doctors. Yes, you need doctors (most of you more than you realize) but spiritual health is as important as physical health. We need rabbonim too. But just as arrogant doctors (I think there's a couple out there, possibly in the NY area) can present a bad face to the field of medicine and leave people resentful of the profession as a whole, corrupt rabbonim can easily do the same thing and with far worse effect because when one becomes physically ill one eventually has to go to the local ER no matter how much one hates doctors. When one becomes spiritually ill the same cannnot be said about presenting to your local shul.
Therefore just as competence is not the sole criteria by which a doctor must practice, so too it cannot be the same criteria for rabbonim.
The leaders of the religious community, whether they want to know it or not, hold the very image of Judaism for the masses in their hands. They have a chance to lead the people back to Torah through gentle, positive behaviour or to create enemies of religion through medieval and corrupt beahviour.
The challenge, as I started this post off with, is to overcome the Jewish inability to handle money and power by learning to use both positively in the public service of God.