Likud Chairman and former Prime Minister Benjamin Netanyahu on Wednesday morning presented his economic plan for the 25th Knesset and managed to include a few excellent ideas that in another country where voters choose their leaders based on their economic needs and aspirations rather than based on tribal affiliation, he could have persuaded many to give him a chance. But Israelis vote their clans, and so only two newspapers picked up the story as it happened – Globes and The Marker. The Moses newspaper empire didn’t go near it, and neither did Israel Hayom which is no longer in Bibi’s camp.
Netanyahu dedicated the opening third of his Facebook presentation to an unfair barrage of accusations against the Lapid-Bennett government, for things they couldn’t prevent – and which he hadn’t done either, because of the global crisis stirred by the pandemic and the war in Ukraine. But then he got around to solutions, and those were intriguing and even exciting.
Before we get to his agenda, we must point out that when Netanyahu served as Finance Minister in Ariel Sharon’s government (2003-2005) he carried out far-reaching reforms, mainly in taxation and the capital market. He led an aggressive capitalist policy and promoted initiatives to reduce government spending, extensive cuts in welfare budgets, and the privatization of government companies. A lot of people were hurt, but Israel started veering in the direction whereby nowadays it is among the top 15 economies in the world.
Here’s the rub, though: the voters hated Netanyahu for his brave moves as finance minister, and when he ran as Likud Chairman in 2006, his party dropped to 12 seats. Bibi learned his lesson and never again undertook brave moves of this kind – he left them to a succession of underqualified finance ministers who were all well below his grade. That’s why I, for one, have a hard time trusting that Netanyahu will carry out all the moves he promised this morning, should he win the November 1 election. If he does, he would go down in history as a great leader and even greater economic visionary. But will he?
Israel is experiencing a devastating rise in housing prices which affects young couples and renters alike. Netanyahu proposed a brilliant plan to issue government bonds that would be tied to the housing price index, as a way of reducing the demand in the housing market. Israelis buy apartments to preserve the value of their money; if their government offers them an equivalent investment in bonds, as Netanyahu put it, it would be insurance against inflation and they won’t have to chase after new apartments. They can cash their bonds when they are ready to buy.
It’s a much better idea than the idiotic campaign conceived by Netanyahu’s former finance minister Moshe Kahlon to punish investors in the real estate market.
Netanyahu on Wednesday also proposed to shorten the time for obtaining construction permits and continue the land subsidy for young couples. That latter program has not been a stellar success under previous Netanyahu administrations, but if he can tweak it, it can be improved.
He also promised to support new construction with state-budgeted infrastructure works before construction: roads, sewer systems, and schools would ostensibly be in place ahead of the builders. He promised to use sticks and carrots for the contractors: whoever builds faster will get more carrots.
According to Netanyahu, there are three conditions for success: “A stable government, personal leadership by the prime minister, and a temporary and non-populist emergency plan.”
That part was worrisome. In a country like Israel which suffers from a chronic centralization of governmental decisions––a remnant of the old Bolsheviks who founded the country––introducing even more centralized decisions usually does more harm than good. Netanyahu, of all people, should know this, having saved the country’s economy in the past using free market economics.
Now he wants to freeze municipal real estate taxes (“Arnona”). Alas, he would be able to do it as prime minister. In Israel, the government regulates local real estate taxes. He promised to do it for only one year, but a lot of beneficial projects can go under without the local governments’ investment, and freezing real estate taxes tends to be a popular move with the voters, so he might not end it after a year.
Netanyahu also promised to curb prices, presumably through government intervention. It’s one thing if he plans, as he promised today, to increase imports to force local manufacturers to compete. It’s entirely different if his government starts regulating prices through all the means at its disposal. It’s a practice that works well in Cairo, Egypt, with familiar consequences: bankrupted businesses and discouraged investors.
Yair Lapid’s Yesh Atid attacked the plan, admittedly with little regard for facts, and certainly without a mature consideration of his proposed plan. Instead, they said: “Opposition Chairman Netanyahu continues his disconnected fake news campaign to hide the fact that for 15 years he carelessly and promiscuously neglected Israel’s economy. The government of change led by Lapid will continue to bring achievements in the fight to lower the cost of living for Israeli citizens.”
Well, they’ve had a year and the cost of living has skyrocketed. Again, in a country where politics is not tribal, Yesh Atid would have felt compelled to offer a critique of Netanyahu’s plan, together with an equally detailed plan of their own. In Israel they don’t have to: it’s enough to say the name Bibi and couple it with “fake news.”
Instead, quite Bot-like, many of the Yesh Atid MKs tweeted the same cloned response word-for-word.
Let the best tribal chief win.