Wanted: a new economic agenda
Arie Caspi
Haaretz, 6 December 2002
In recent weeks, Israel's newspapers have published a number of brilliant articles praising the Labor Party's newly elected chairman, Amram Mitzna. The writers lauded Mitzna's courage and credibility, and especially his willingness to reach a settlement with the Palestinians. They urged him to stick to this path all the way to the elections. Mitzna and his PR team bought the concept; they plan to make it a central slogan of their campaign. But promising to solve Israel's security problems will not get Mitzna to the prime minister's residence. A willingness to compromise with the Palestinians is no asset when it comes to beating Ariel Sharon.
Mitzna's battle against Sharon is nothing like his recent successful campaign against Labor rival Benjamin Ben-Eliezer. Not only the majority of Labor voters, but most of the Israeli public thought Ben-Eliezer had failed as a leader. His political maneuvers were embarrassingly obvious. Sharon, on the other hand, is a master of deception. He makes Ben-Eliezer, Ehud Barak and Benjamin Netanyahu look like innocent schoolchildren.
Sharon's messages to the public are like putty, easily adjusted to the particular hole he needs to fill. Whether he is speaking to George W. Bush, Shimon Peres, the West Bank settlers, or Israeli voters, he delivers whatever his listeners want to hear. Two months before each election, we suddenly discover Sharon the pacifist. Only he can bring peace, which will surely last at least until he is reelected. Then he can do what he really wants. And what Sharon wants always ends in disaster.
Labor has no chance of winning if the campaign is fought over issues of security. The Israeli people are not nearly as intelligent as some fawning politicians like to claim. Though most of the public has accepted that a Palestinian state will be established and that Jewish settlements will need to be dismantled, the majority of Israelis are still out for vengeance. They don't care about the impact Israeli violence has on Palestinian violence. A peaceful solution now seems so improbable that promising it will not change anyone's political views. Especially when Sharon is offering a magical solution: targeted assassinations and peace, too.
It's the unemployment, stupid
Mitzna will sit in the prime minister's seat only if he can set a new economic agenda. At the moment, that goal seems a long way off. Social and economic issues give Labor its competitive edge. The current polls and the results of previous elections all suggest as much.
Mitzna should not try to target the poorest Israelis. They won't vote for Labor anyway. Some of them do not even go to the polls. Others automatically support the ultra-Orthodox and Arab parties, while a few vote Likud. A leftist government has an obligation to these people, but cannot rely on them come election day. Mitzna should be aiming his efforts at those located in the top deciles of Israeli society.
According to the Central Bureau of Statistics, 265,000 Israelis are currently unemployed. This figure refers to job-seekers - people who want to work. If we suppose that each of them have in their immediate families four or five adults, that means that 1.5 million Israelis - one-third of all voters - have someone unemployed at home. Many of the jobless were laid off. Hundreds of thousands of other Israelis still have jobs, but live in constant fear of losing them. A majority of Israelis now exist in a state of economic dread. We hear about terrorist bombings through the media, but the threat of poverty lurks in our bedrooms.
Over the past 25 years, Israel's Finance Ministry has developed an economic philosophy that made it into a kind of political party. Treasury officials come and go, but the ideology stays the same. Labor and Likud finance ministers have largely accepted the treasury's view, with only minor differences between them.
Bit by bit, all of our social defense mechanisms are being worn away. This process will damage not only the poorest stratum, but all of society. The state is gradually shaking off its responsibility for health care, retirement pay and job security. Welfare payments for the unemployed and the elderly have shrunk. Retirement pension funds have also been eroded, and government spending on health care has diminished. Of all the Western European nations, only in Greece does the government cover an even smaller percentage of the overall health-care expenditure.
Lagging behind Stockholm
The reason for this process is that most Israeli decision-makers are enslaved by economic theories formulated by the likes of Milton Friedman and Margaret Thatcher. In recent years, however, the Nobel Prize in Economic Sciences has twice been awarded to people who challenged the basic premises of the free market economy. Joseph Stiglitz, last year's winner, rejected the assumption that the information necessary for making financial decisions is equally available to all. Daniel Kahneman became this year's laureate for proving that market players - meaning us - do not behave rationally.
The fact that the Nobel committee repeatedly honors people who break the rules of the Western economy suggests that the philosophy embraced by the Israeli province has long fallen from grace in the outside world. Stiglitz, for example, proposes that governments spend more money on unemployment insurance; the Israeli treasury suggests the opposite, and Mitzna agrees.
Israel's 2003 budget ignores the widespread unemployment. The government no longer feels obligated to ensure that its citizens have jobs. Instead of creating job opportunities, the government is firing more people than any other Israeli employer. The Finance Ministry cuts back by reducing the funding to public bodies such as municipalities, high schools and welfare organizations. That way the government can avoid clashing with the civil servants, forcing public organizations to fire employees who do not have such a strong union.
Moving the battleground
Mitzna's greatest electoral asset is that he seems so credible. But he is mainly interested in finding a solution to the Israeli-Palestinian conflict, and that won't win him the elections. Mitzna believes that most of our economic problems can be solved if we cut ourselves off from the occupied territories. But he is wrong. The assumption that Israeli withdrawal will be enough to solve our economic woes is rooted in a poor understanding of the modern state's economic needs.
The territories are only one part of the problem. Disengaging from them will take much more time and money than Mitzna thinks. And even when that process is over, there will still be major problems to deal with: vast economic inequities, the collapse of social services, the absence of job security. But Amram Mitzna, like most of our senior politicians, buys into the socioeconomic philosophy of the chief treasury officials and the Bank of Israel.
Labor will have trouble setting a new economic agenda when each week brings two new bombings. But moving the battle to the economic arena is its only chance of beating the Likud. Without an economic plan that will offer hope and economic security and address deflation - a deadly combination of rising prices and dropping economic activity - Mitzna hasn't got a prayer. To win the upcoming elections, he must offer much more than the treasury's usual road map, a fact of which he seems sadly unaware.
To beat Sharon, Mitzna must be more than good. He must be phenomenal. Instead of repeating hackneyed economic slogans, he has to offer something new - a New Deal, free of outdated preconceptions, that will assuage voters' economic fears. And it also wouldn't hurt if the Palestinian martyrs took a break until after the elections.
