Posted on 05/21/2003 3:45:37 PM PDT by Seti 1
IASPS - News Behind the News
May 21, 2003
New Economic Plan
Not too long ago, in a dramatic televised address to the nation, the new Finance Minister, Benjamin Netanyahu, told Israel of his plans to revolutionize the economy: no more, he pledged, would the hard-working private sector be forced to carry on its back the largest public sector in the developed world. His reforms would cut many thousands from the government payrolls, many billions from the state budget, privatize everything in sight and change the very structure of the heretofore statist economy. And if need be this would be accomplished by legislation, so as not to be dependent on the Histadrut.
For the next few months, Israelis woke to piles of garbage, closed airports and seaports, schools that opened different hours every day, a social security system that refused to answer calls or meet the people lined up at its doors, banks that opened one day and shut the next, post offices that announced they were open and weren’t, and so forth, as the Histadrut continued its 80-year campaign to bankrupt the Jewish people, put businessmen out of work and prove that its leadership controls the Jewish people for its own personal aggrandizement.
Last week Netanyahu went on TV again, this time to state clearly that this was the last such nationwide strike, no more would the Histadrut run the country into the ground, he would change things once and for all now, by means of legislation.
By the weekend, Netanyahu’s deputy Meir Shitreet had shaken hands with the Histadrut’s commissar Amir Peretz on a compromise.
Thus:
The revolutionary dismissal of 8% of the public sector work force turned into the voluntary early retirement of a few hundred people, and possible dismissals, to be determined, of up to 600 people: One eighth of the planned cut.
The unprecedented wage cut of NIS 8 billion turned into NIS 2 billion a year, for 2 years: One half the planned cut.
The end of automatic tenure in the public sector, and permission for public sector employers to fire employees who are not productive, disappeared: Nothing left of the planned economic normalcy.
Cuts in pension benefits and special funds set up to pad salaries – evaporated: Nothing left of the reform.
The plan to legislate reform, a relatively easy task considering there is currently no opposition in the Knesset, with the coalition controlling an absolute majority and the major opposition party having just fired its own leader - was abandoned in favor of negotiating with the Histadrut “under fire,” as it struck the country: Complete surrender to Histadrut terrorism.
In Ha’aretz May 21, we learn further that Netanyahu has acceded to demands from his own party to scuttle the reform in child health care, and the state will continue maintaining baby-care facilities; Knesset Speaker Ruby Rivlin is leading an inter-party campaign to scuttle plans to reduce taxpayer funding for all parties; Meir Shitreet announced that the purpose of the economic plan was, as Ha’aretz paraphrased him, “we have a budget deficit and to solve the problem the economic plan was created”; the Knesset Finance Committee is just now beginning to discuss the plan, or what remains of it; and Amir Peretz is threatening a new strike to ensure continued Histadrut hegemony over the pension funds it has already bankrupted.
So here are the results of Bibi’s New Economic Plan: Instead of changing the very structure of a socialist, statist economy, and allowing the productive members of Israel to earn a decent living without paying confiscatory taxes, instead of cutting taxes and government – in short, instead of creating the conditions for economic growth – we have a minor budget cut to close a major deficit.
And we have business as usual. The Knesset speaker wants more money for his parties, the deputy finance minister wants only to close a budget gap, the Histadrut is threatening to close the country, and the papers say that without the US loan guarantees Israel could never had made it.
These are sad days for anyone who loves Israel. The sadness is compounded by the heightened expectations from Bibi’s inspired speeches and promises. US loan guarantees allow the Israeli government to borrow more, obviating the need for real reform, the Histadrut chokes the economy, the government gives in and gives away all the money it borrows and takes in taxes.
Israelis wake up tomorrow as they did yesterday with the biggest public sector in the developed world, a labor union that has bankrupted the country’s pensioners and put thousands of importers and exporters out of work in order to maintain its own high-paid “Worker Committees” that control all the state monopolies, mothers don’t know what time to send their children to school and travelers don’t know if they will be able to leave the country through its one, state-run airport.
The New Economic Plan turned into the old. The revolution fizzled. The original sin was the government’s, for sitting down to negotiate with Histadrut, implicitly recognizing the right of a group of Stalinist wannabes to represent the entire work force of Israel. The possibility that a budget cut of less than one billion dollars will end Israel’s recession is nil. The dismissal of 600 state employees won’t even be noticed – if it ever happens, which is not likely. The dependence on borrowed money and US aid means Israelis will continue to mortgage their future in exchange for the current government’s ability to continue to spend, spend, spend rather than cut anything.
The odds that Israelis will see economic growth based on current policy are lower than a snake’s belly.
[IASPS is an Israeli think tank with offices in Washington--my comment].
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