Economics Will Decide the Israeli Elections in Netanyahu’s Favor


netanyahuBy Gidon-Ben-Zvi

Forget Hezbollah, Hamas, Abbas, and Iran: the primary driver in Israel’s upcoming elections is the high cost of living. Recent polls have consistently shown that domestic policy and economics, rather than security and Palestinian peacemaking, are what most Israelis will be thinking about when they cast their votes on March 17.

With Israeli Prime Minister Benjamin Netanyahu’s bedrock issue, national security, no longer the focus of many voters, the Zionist Camp smells blood. The left-center bloc led by opposition Labor leader Isaac Herzog and Tzipi Livni is campaigning hard to persuade stressed out Israelis that the era of sky-high rents, stagnant salaries, and limited job opportunities will end once Netanyahu is sent packing.

Beyond the populist blather that passes for political discourse, it’s the staleness of the Zionist Camp’s ideas on how to fix Israel that voters should be wary of.

For example, outraged members of the Zionist Camp recently lashed out when it was revealed that the Netanyahu government has pumped one-third of the country’s funding for subsidized housing into settlements: 35% of the funds for less than 5% of Israel’s population, while engaging in a campaign of diplomatic suicide.

Blame Israel’s economic troubles on the settlements. It’s an old leftist canard that delegitimizes the very real trials and tribulations of more than 400,000 Jewish men, women, and children – Israelis – who happen to be living over the Green Line.

In addition, the Zionist Camp believes that the current government’s policies vis a vis West Bank settlement activity has unleashed a potent anti-Israel boycott, divestment, and sanctions movement that is growing stronger by the day.

If Benjamin Netanyahu is re-elected, we are warned, Israel will inevitably find itself economically and politically isolated.

In fact, it’s the Israeli left’s socialist and statist heritage that bred an inefficient economic system that is only now beginning to be reformed.

Hertzog and Livni claim to be the heirs to Herzl and Ben-Gurion. Hilik Bar, the Secretary General of the Israeli Labor Party recently wrote, “The Labor Party, which together with Hatnuah is running as the Zionist Camp, founded and built the State of Israel.”

As such, a quick history lesson is in order. Israel’s Zionist founders, on whose ideological shoulders today’s Zionist Camp stands, asserted that World War I was caused by the failures of capitalism.

After Israel’s independence in 1948, Socialist Zionism established a highly centralized economic system dominated by political cronyism. While the statist policies of Israel’s successive labor governments failed to create a socialist paradise, they did succeed in building monolithic, unresponsive bureaucratic institutions that retarded the country’s economic growth for decades. Israelis learned to live in a perpetual state of impoverishment.

However, Labor economic policies do much more harm than merely restrict competition and stifle productivity. A recent Jerusalem Post piece by Jerusalem Institute for Market Studies Director Corinne Sauer noted that a series of studies drew one conclusion: countries considered anti-business are also the most corrupt.

This grim economic landscape began to be overhauled in 2003, when Benjamin Netanyahu was appointed Israel’s Finance Minister. Netanyahu initiated a series of pro-market economic reforms that Israelis are only now beginning to benefit from.

Don’t look now, but Israel’s economy is actually showing signs of robust growth. Exports to Europe are on the rise, with nearly 10 percent growth in the past year alone; Israel’s hi-tech industry is having a record year, with a number of Israeli companies going public and a record amount is being invested in Israeli companies.

But surely, these successes are few and far between. Certainly, ‘ordinary’ Israelis are worse off today, no?

Truth is, Israel has enjoyed virtually uninterrupted growth for over a decade. The worldwide Great Recession has largely bypassed the Start Up Nation. While debt crises and bank bailouts have hobbled European economies to this day, Israel hasn’t just persevered, but prospered.

And while the cost of living has undeniably increased, household income has also grown since the percentage of homes with two wage earners has risen from just 30% a decade ago to 44% today. Wages growth has been slow, but it has grown faster than in Europe.

For these positive trends to continue, Israel needs to improve its labor productivity to ensure sustained and higher levels of economic growth.

Does the Zionist Camp’s platform encourage a climate of freedom, competition, and entrepreneurship critical to helping Israel realize its full economic potential?

According to Secretary General Hilik Bar, Israel’s ongoing challenge of developing an economy in which the country’s wealth stimulates domestic innovation and prosperity can best be addressed if the government does not “pump your taxes into wealthy settlements in the West Bank while ordinary Israelis are suffering.”

Oh Labor, there you go again…


{ Newscenter}