At a press conference held to mark two years at his post,
Minister of Finance Benjamin Netanyahu discussed his
strategic goals. He claimed that if it follows his economic
program, within fifteen years Israel can be one of the top
ten countries in the world in terms of per capita income and
standard of living. Critics, including Rabbi Avrohom Ravitz
and Rabbi Moshe Gafni of Degel Hatorah, said that the poor
cannot wait ten years.
Netanyahu said: "Two years ago when the Israeli economy was
floundering, we came and presented a recovery plan and gave
certain predictions. Some laughed, some ignored, but today we
can all see the results."
He quoted predictions of The Economist that Israel
will be the fastest growing economy in the West in the course
of the next few years. "For years we haven't set any economic
or social goals. I want to do so here. In fact, the past two
years were the beginning of what we're doing," Netanyahu
said. He mentioned Ireland, Cyprus and Singapore as examples
of countries that Israel could learn from in a pursuit of
growth.
Within 10 years, Israel's GDP per capita will surpass the
Western European average, and within 15 years, Israel's
standard of living will among the top 10, Netanyahu pledged,
provided his reforms are allowed to run their course.
Netanyahu boasted that the first two years of his reform
program have attained all the initial goals: growth has
reached 4.3 percent yearly; the average wage rose 3.5
percent; unemployment dropped to 9.9 percent; the interest
rate plummeted from 8.7 percent in April 2003 to 3.5 percent
today; the mortgage rate is 1.7 percent, and some 100,000
Israelis have joined the workforce.
Ireland's economic transformation served as the major example
for the kind of changes Netanyahu believes are possible here.
Netanyahu noted that Ireland lowered its unemployment rate
from 17.2 percent in 1990 to 4.7 percent in 2003, while its
GDP per capita more than doubled, from $14,400 to $29,600. In
the same period Israel's GDP per capita rose from $16,800 to
only $19,800. Ireland was in worse shape than Israel 15 years
ago, and is in significantly better shape now, Netanyahu
said. Israel's per capita GDP has since fallen to under
$18,000.
"What did they do?" Netanyahu asked. "They lowered taxes,
cancelled monopolies, made incentives to work, cut
bureaucracy, privatized companies, and increased competition.
There is a word for it: they implemented free market
economics. They persevered for at least a decade, and they
passed us by."
Netanyahu also attacked policies which, he said, allowed the
number of unemployed receiving state support to multiply
sixfold since 1990, while the population grew only 43
percent. "An indiscriminate allowance policy brought about
the lowest work participation level in the western world, . .
. hurt the truly needy and brought the country to the edge of
economic collapse," he charged.
Responding to criticism that his policies are a social
disaster, Netanyahu insisted that apparently worsening
conditions resulting from the reforms are only temporary. In
the model countries as well, he said, there were initial
rises in inequality indices, "yet immediately afterward they
narrowed gaps, raised the standard of living of their
citizens, and wiped out poverty almost entirely."
When a country reaches the top, Netanyahu said, "All poverty
and unemployment problems fade away. Suddenly there are
budgets, social needs are taken care of, everybody makes more
money."
The reaction to Netanyahu's declarations was mixed. There
were expressions of support, but there were serious
reservations about the social consequences of his
policies.
MK Rabbi Avrohom Ravitz (Degel HaTorah) told Yated
Ne'eman that in his new post as Deputy Minister of
Welfare he sees every day, "the desperation of families that
cannot wait for ten years for Israel's economic recovery,
even if the Finance Minister's forecasts are correct.
Netanyahu forgot that the weakest tenth of the population
cannot philosophize on questions of correct economics. It
confronts poverty, hunger and tribulations on a daily basis.
Thousands of high-risk youths are in a state of desperation
and imperiled by the streets and there is nobody to care for
them and to provide suitable solutions. Even if the economy
is good from an academic standpoint it must be kept in mind
we are dealing with human beings beneath the poverty line.
"The Finance Minister and the entire government must also
take into account the large segment of the population that
chooses to lead meaningful lives by dedicating all of their
time to Torah study and knowingly chose to enter the category
of `beneath the poverty line.' Even those under financial
strain have a red line and the government crossed it long
ago. Furthermore life with dignity is no longer feasible.
This is a high-caliber segment of the public which chooses
Jewish living over Irish or Swedish economics. The general
public must realize that the bnei Torah sector has
undertaken spiritual tasks in order to justify our existence
as the Jewish people, and there is an obligation to support
this public and not to allow it to collapse economically."
MK Rabbi Moshe Gafni said, "Indeed during these two years the
rich have become richer but the middle class and lower
classes have become poorer. While the number of unemployed
has not decreased, while the wage rate in the state is below
all other Western nations, while one-third of those employed
earn less than NIS 2,000 ($450) per month, while the social
policy has totally collapsed in the majority of Western
nations, the Finance Minister boasts of economic growth
unknown to most citizens in the State of Israel who are now
in a more dire state of economic hardship after his two years
in office.
"Be'ezras Hashem the number of terrorist attacks has
decreased significantly. Tourism has recovered, the world
market, especially markets in the US, grew
substantially— facts that should have brought the
market and Israeli society to economic prosperity. Only the
Finance Minister's failed policy places the majority of
citizens in Israel in the same position as those living in a
third-world state. Without employment, without making a
living with dignity and without a welfare policy. It comes as
no surprise that Finance Minister Binyamin Netanyahu's
friends are from the top tenth [income bracket] alone."
