Re-Vo-Lu-Tion or Re-Ac-Tion?

Haim Watzman

I didn’t hear the “Re-Vo-Lu-Tion” chants that Gershom heard because I was unable to attend the demonstration Saturday night. Had I not been otherwise engaged, I would have attended, but I suspect that I would come home more meditative and less enthusiastic than my blog partner.

Like Gershom, I’m delighted to see Israel’s young people wake up to the fact that they can change the society they live in. And I’m even more delighted to see the citizenry in general growing mad as hell at the massive inequalities that have emerged in Israeli society since the market and profit motive became the new idols worshipped by nearly all Israeli politicians.

But Gershom and I have a long-running debate over economic policy. He harks back to the socialist economy of the 1960s and 1970s as a golden time, when the government (along with the Histadrut labor federation, virtually its alter ego) provided a comprehensive package of social services to the populace run by a huge and inefficient bureaucracy. The social services were adequate but offered poor and rude service, and the red tape and wastefulness caused many social ills. Huge amounts of time were wasted waiting in lines; inefficient and low-paying industries were heavily subsidized, strangling innovation; and there was little choice, neither in goods nor services. Furthermore, inflation was high, constituting a hidden tax on wage-earners and entrepreneurs. Perhaps our differences stem in part from the fact that, back then, Gershom was a salaried employee while I was self-employed.

So I welcomed many of the economic reforms of the 1980s and 1990s, those that made Israel’s economy freer, suppler, and more consumer-friendly. At the same time, I was dismayed by a worrying gap between free-market rhetoric and policies that, rather than encouraging true competition, in practice created a system that benefited a small coterie of plutocrats. Instead of using regulation to prevent monopolies and cartels from developing-and they are almost inevitable, if unchecked, in such a small country-leaders fell under the sway of money and, instead of regulating the rich and powerful, subsidized them.

It’s great that the public is finally waking up to the fact that it need not pay artificially high prices nor tolerate a system in which the tax burden falls disproportionately on the middle class. However, when people realize they are getting a raw deal, they do not necessarily push for wise policies. In fact, here in Israel we have a precedent for populist and justified demands for greater equality leading to economic disaster. In the early 1980s, after the Likud came to power, Menachem Begin wanted to give a better deal to the poor in the Mizrahi towns and neighborhoods that had supported him for so many years. The need was real but the free-money policies pursued by Begin’s third finance minister, Yoram Aridor, led to hyperinflation and a collapse in the stock market-precisely because Aridor packaged as good for the poor policies that were actually designed to help the rich. And just how is the stock market going to help the poorer people amongst us now? If we weren’t in this situation, I would definitely recommend looking at something like this Trade Republic Test so people could see how stock trading and the brokers they have there can help you to make a much-needed profit on your investment. But if it’s collapsed, and the rich are just getting richer, is this the best route to be going down? (One of the great ironies of that time was the Likud’s David Levy, the party’s senior representative of the downtrodden, vociferously opposing the imposition of a capital gains tax.)

The same thing can happen today. Yossi Sarid provided one important warning last week:

The first warning is to the environmentalists, many of whom are actively participating in the tent protest. The national housing committees Netanyahu is proposing will revoke the rules and principles that ensure responsible, sustainable development and cause irrevocable damage. Netanyahu’s supertanker will lay waste to every part of the country.
Israel will become a no-man’s land once it is flooded with real estate. Not even the Zionist leaders of yore, Hankin and Ruppin and Ussishkin, would be able to redeem this land, nor will the middle class, which is now fighting to make this status one that offers a dignified living.
The real estate sharks, in their insatiable greed, will gobble up more open areas. They will be the first to take over another juicy chunk of state lands. Thus they will steal even the poor man’s plot, and this bargain will cost us dearly.

And that’s just one example.

The current demonstrations are genuine and important. But they are not yet wise. The question is how to combine their enthusiasm with the wisdom needed to create the better society that we all want.