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for Social & Economic Progress
an independent pro-market
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The Jerusalem Post15 Mar ’11
Israel needs to slash its state budget by as much as possible if it wants a chance at fighting waste and corruption.
Recent deliberations on the government budget raised the question of whether it should be cut and by how much.
The answer is yes, and by as much as possible; the Israeli public sector is the nation’s largest employer (every third person works for it) and the biggest buyer. Government is a big part of it.
Since government provides so many jobs, plus near-absolute job security, and since it spends billions, our tycoons have become adept at milking it. They spend scores of millions on lawyers, accountants and lobbyists to help secure benefits of all sorts, plus laws and regulations that inhibit competition.
The strong bond between government and capital that developed here has a third partner, the media. Until recently, when Yisrael Hayom broke the mold, the media were a duopoly owned by the tycoons, and protected them (with the noble exception of The Marker and its valiant editor Guy Rolnik, who, at great cost, leads the struggle against excess media concentration).
A cooperative media assists the very powerful lobbyists that the tycoons employ. The lobbyists are extremely powerful. They secure lucrative jobs for former bureaucrats and MKs, as well as contributions for primaries and advertisements for the press. They also make sure that those who cooperate get favorable coverage, while those who do not get clobbered.
Lobbyists sit in on all Knesset committees, and are given almost unlimited time and a respectful hearing, however absurd and distorted their cases. The recent spectacular victory of Communications Minister Moshe Kahlon over the cellphone companies’ lobby was so remarkable because it is rare that even a determined minister triumphs over the lobbyists.
ISRAELI GOVERNMENTS, more than governments elsewhere have excelled in waste. The only way to get it to be moderately efficient (you can only dream of true efficiency) is to cut its budget so drastically that its ability to squander money is limited.
The question is what to cut.
An examination of the state comptroller’s reports can provide a laundry list of huge expenditures, especially in defense, education and welfare – the big-ticket items of wasteful government.
Waste has additional negative repercussions. It causes inefficiency (or perhaps inefficiency leads to waste) and corruption.
Inefficiency is harmful to the longsuffering taxpayers, many of whom can barely make ends meet. Yet they do not get adequate returns for their sacrifices, neither in internal or external security (think of the slaughters in the West Bank and the years of rockets hitting the south) nor in education or in law enforcement. Imagine what the talented Israeli entrepreneurs and workers could achieve if they would not be shackled by government, what a spurt of high growth we could enjoy.
This is why it is imperative to have deep cuts in government. Only a very small government can be even moderately efficient.
The repeated budget cuts Netanyahu imposed when he was finance minister made government a little more efficient, less intrusive.
Resources were shifted from a wasteful public sector to the private sector, which is, alas, only relatively more efficient. And yet vigorous growth followed To really cut seriously, the disciplined (and much-maligned) members of the Treasury’s Budget Division should draw up a list of wasteful activities. With support from their determined minister, Yuval Steinitz and the Bank of Israel, which knows the economy well, they could determine what should be cut.
BUT IT is not to be. Prime Minister Netanyahu, a super waste-cutter, needs all his political capital for political survival. Charged with such excruciating tasks as defending the country from Iran and assorted mischief makers plus disastrous developments (we haven’t yet seen the worst of the manipulated Arab rebellions), he could not be expected, even if he were Superman, to fend off the various coalition blackmailers’ demands, and especially the demands of Ofer Eini, the Histadrut chief, who being a labor kingmaker gets practically anything he wants (and it is plenty).
Evidently, bargaining with Eini, who doesn’t seem to care much about the weaker workers (he’s consumed with pushing for ever-more privileges for the fat cats of the monopolies – bosses and workers alike) is extremely time- and energy-consuming.
How can Netanyahu be expected to deal with Eini and find time to deal with his other Herculean tasks? The media too will make Netanyahu’s life miserable. They helped our “caring” politicians kick up a storm about the painful yet really minor and inevitable price hikes.
Even small price hikes inflict pain on the already overburdened millions of workers. Yet they are nothing compared to the inflated costs wrung from consumers by the tycoons and their monopolies, who, by Treasury estimates, bilk a full third of the miserable salaries most workers earn.
The media have little to say about this great outrage; our watchdogs are not about to bite the hands that feed them with billions in advertising income.
An across-the-board cut is not the best, but it’s the best we can get under our corrupting political system.
The Jerusalem Post30 Jun ’15
Israel’s last elections proved how right David Ben-Gurion was when he said that, in Israel, whoever does not believe in miracles is not a realist.
PJ Media20 Jun ’15
The security challenges facing Israel obscure other deep concerns about the viability of Israel’s economic system.
The Jerusalem Post7 Jun ’14
Unless the laggard Israeli economy is reformed soon, its problems—including its morally debilitating corruption—may threaten its future.
Israel Hayom15 May ’14
What does it say about Israeli society and the system of government when a prime minister is convicted of taking bribes?
Israel Hayom23 Feb ’14
What kind of education should it offer and at what cost?
The Jerusalem Post9 Jan ’14
The productivity of Israeli workers is only two-thirds that of Americans, and their salaries are much lower.
The Jerusalem Post11 Jul ’13
As he completes an exceptionally difficult 8-year tour of duty during a worldwide financial crisis, Stanley Fischer has achieved a unique status.
The Weekly Standard7 Jun ’13
When Israel finally discovered a bonanza of natural gas about five years ago everyone was happy. But then fierce arguments broke out—and rightly so.
The Weekly Standard22 Apr ’13
The economic future of Israel now rests in the hands Netanyahu, Lapid and Bennet. will they succeed in fulfilling the most difficult and complex mission of liberating Israel’s economy?
Israel Hayom2 Jan ’13
The Israeli government could eradicate poverty by breaking the monopolies and spurring competition.
The Jerusalem Post7 Dec ’12
Our socialist and statist heritage bred our inefficient system. But foreign aid and remittances were serious enablers. The struggle against political and economic concentration could finally permit Israelis to overcome this destructive heritage.
Israel Hayom8 Nov ’12
The time to prepare the reforms is now, so that after the Israeli elections, the prime minister can immediately devote his time to moving them forward.
The Financial Times21 Jun ’12
Israel Hayom6 Jun ’12
To grapple with the impending crisis, Israel’s government must improve the nation’s competitiveness.
The Jerusalem Post7 May ’12
The Wall Street Journal3 May ’12
Reform-minded Prime Minister Benjamin Netanyahu is stymied by bureaucrats and monopoly tycoons.
Middle East Quarterly30 Mar ’12
As the high hopes for a brave new Middle East fade rapidly, Western policymakers must recognize that promoting market economics and its inevitable cultural changes are far more critical to the region’s well-being than encouraging free elections or resolving the Arab-Israeli conflict.
The Jerusalem Post17 Feb ’12
The choice is between an efficient, growth-inducing market economy or a welfare state, meaning a huge government that actually harms the poor and inhibits prosperity.
The Jerusalem Post25 Oct ’11
Aversion toward the rich has had strong roots in Zionism since its early leaders embraced Marxist practices.
Is capitalism in crisis? Of course.
The Jerusalem Post10 Aug ’11
The tent-dwellers’ revolt calls for the enforcement of ‘the will of the people’ (like all autocrats). It refuses to rely on Democracy.
The Jerusalem Post9 Aug ’11
David Lewis, the exceptional entrepreneur and philanthropist, and head of the Isrotel Group dies at 87
The Jerusalem Post20 Jul ’11
Although MKs appear concerned over rising costs, it was they who allowed this injustice to occur in the first place.
The Jerusalem Post28 Jun ’11
Who is to blame for the shameful situation in which millions of Israeli workers – who earn about half what American workers earn – have to pay double for goods?
The New Republic19 May ’11
A Middle East peace strategy that could actually work.
The Jerusalem Post9 Mar ’11
Too little attention has been paid to how Egypt’s socialist past and welfare-state present shaped the current rebellion.
The Jerusalem Post7 Feb ’11
The Herzliya Conference has become an important international event, but one central issue is absent: Israel’s debilitating economic concentration.
The Jerusalem Post22 Jan ’11
It’s highly unlikely that government can ever learn to make long-term plans and execute them efficiently.
The Jerusalem Post23 Dec ’10
How can one dare compare narrow-minded religion with the all-embracing faith of universality and equality that is socialism?
The Jerusalem Post1 Dec ’10
Many of the social and economic troubles we are experiencing are due to the public’s lack of understanding of the need for economic literacy.
The Jerusalem Post17 Oct ’10
The PM’s courageous decision to tackle economic concentration was misrepresented by several of our media publications—owned of course by tycoons.
The Wall Street Journal8 Oct ’10
Economic concentration hurts the country’s viability and the chances for peace.
The Jerusalem Post4 Oct ’10
A damaging ethos of ‘welfarism’ and distributive politics has come to dominate not only academia but our cultural, military and even our business elites.
The Jerusalem Post19 Aug ’10
The reformers must know the importance of the reform’s success both for Israel and for their careers, and what damage they will incur if it fails.
The Jerusalem Post13 Jul ’10
Kagan’s admiration for Justice Aharon Barak’s philosophy may have revealed her own predilection for radical judicial activism.
The Jerusalem Post30 May ’10
We must dismantle the oligarch-owned monopolies that impoverish the Israeli consumer and choke our economy.
The Wall Street Journal18 May ’10
The OECD’s invitation to Israel is a “seal of approval” but the country still needs more reforms.
The Jerusalem Post10 Feb ’10
The world’s astonishment at Israel’s response to the Haiti disaster is insulting. What we saw there was Israel’s true face.
The Jerusalem Post10 Jan ’10
Individual initiative and freedom are essential for creativity—in hi-tech as in all other spheres.
The Jerusalem Post14 Oct ’09
As far as Rose Friedman was concerned, public kudos did not matter that much. She persisted in being a rose, no matter what.
The Jerusalem Post22 Sep ’09
Lasting peace must grow from the bottom up, from an “economic peace process” that proves what advantages peace has to offer on a daily basis. It cannot come from signing peace agreements with radical and corrupt entities propped up by corrupting Western handouts.
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