The vast difference between the Jews of the Diaspora and Israel lies in the completeness and scope of the reality, and binding intensity, in which they live and work.Yehoshua never explains what exactly is Jewish about the 'reality and binding intensity, in which they live and work,' beyond the fact that they do it all with other Jews. Is this enough to call an experience 'Jewish' -- more Jewish than a religiously meaningful experience in a non-Jewish setting? If for example you never keep Shabbat, Kashrut, observe any of the Chaggim or have any knowledge of Jewish texts and history, but spend your entire life with Jews, are you really a more 'complete Jew' than a Hassid in NY or Toronto? I would argue not -- although you could argue you are a more 'complete Jew' than your Diaspora peer who never keeps Shabbat, Kashrut, observes any of the Chaggim, etc.
The Israeli Jew is a total Jew, bound to a Jewish framework that determines all aspects of his physical, economic and social existence.
Jews in Israel can send a Jew to fight a war (even one he opposes), evacuate him from his home, and, of course, levy taxes and impose other obligations on him. In Israel, all the elements of reality that make up a Jew's life are Jewish, just as in Holland all the elements of life are Dutch. While a Jew in the Diaspora may feel Jewish 24 hours a day, the significant elements that make up his life are in no way connected to a Jewish reality; instead, they are bound up in the non-Jewish reality in which he lives.
In short, Yehoshua's argument is old and unnuanced, and it seems to me that too many Israelis use this argument to justify their complete lack of observance and interest in their religion.