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| Science Forum Index » Economy Forum » The frightening side of Peretz |
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| ARIEL BOLUDOVSKY |
 Posted: Thu Dec 08, 2005 3:24 pm |
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The frightening side of Peretz
By Nehemia Strasler
On August 6, 2001, a month before the attack on the Twin Towers, the
president of the United States was shown a special intelligence report
on the subject of al Qaida plans for terrorist attacks and airplane
hijackings. The title of the report was "Bin Laden is determined to
attack the U.S." But George W. Bush listened and did nothing.
Imagine if he had taken action: arrested Islamic activists, prevented
money from reaching their organizations, forcing airlines to search
every passenger, arrest people without trial, go to war in Afghanistan -
and even managed to demolish al Qaida. What would we have said then?
That he is crazy, that he sees mountains in shadows, that he is
xenophobic, especially toward Muslims and that he is unnecessarily
sacrificing young American boys. Nobody would believe that he prevented
the horrific attacks in New York and Washington, because the catastrophe
didn't happen.
That's what happened to Benjamin Netanyahu. He received an economy in
deep crisis in 2003, after two and a half years of intifada that had
scared away the tourists, emptied the malls and created a deep
recession, accompanied by plant closures, firings, reduced wages,
stalled investments and a total loss of economic security. The crisis
was so deep that the governor of the Central Bank expressed worry about
the possibility of a large bank going under, and the accountant general
said that it was impossible to borrow one more dollar overseas. There
was a huge deficit in the budget, 6 percent of the GDP, the dollar was
threatening to go past the five-shekel mark, and anyone who could
smuggle millions out of the country did so. We were a hair's breath away
from a crisis like Argentina's, which would have meant poverty and
shortages of enormous dimensions.
Netanyahu arrived at a critical moment - and by accident. Sharon gave
him the Finance Ministry to trip him up, but Netanyahu actually
succeeded. He conducted a classic plan: cut the budget, lower wages and
taxes, cut welfare and run a long list of reforms. The plan got the
economy out of the deep hole, and led it to 5 percent growth and a
dramatic drop in unemployment: 170,000 Israelis were added to the job
market in the last two and a half years.
But there's no good without bad. The gaps widened and poverty grew as a
result of the cuts in allotments, because it takes time to persuade the
public to go to work. But since the state's coffers have been filled
(because of growth), it is possible and necessary to conduct corrective
plans that will narrow the gaps and fight poverty by subsidizing and
encouraging people to join the workforce, and increasing welfare for all
those who cannot work.
The public reaction to Netanyahu's achievements proves that the law of
catastrophe works. Netanyahu has become synonymous with failure. He
invented poverty. Before him, people lived happily and wealthily. He's
attacked from right and left, from the Likud and Labor - that's
apparently the fate of someone who didn't wait for a catastrophe but
prevented one. (However, that does not make him right for the
premiership. He's too extreme, politically, as his new partnership with
Uzi Landau proves).
Let's assume that Amir Peretz was finance minister in early 2003. What
would he have done? Peretz was against Netanyahu's recovery plan. He
presented an alternative plan: raise NIS 5.5 billion from the public
through income tax, increase National Insurance Institute payments, and
impose a compulsory levy on all citizens. With that extra money he
planned to increase government activity. If Peretz's plan had been put
into action, we would now be deep in the pits. Investors would have run
away, the recession would have deepened, unemployment would have
skyrocketed and poverty would be striking at much broader strata of
society than it is now. That's why Peretz is so frightening. There's the
fear he will want to take us back to a socialist economy controlled from
above, with high taxes, more government involvement, tariffs, subsidies
and endless bureaucracy. If that happens, the private sector will be
damaged and shrink, and minimum wage won't only not go up, it will go
down, because the coffers will go empty again.
--
http://www.hasidicreggae.com/ |
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| Guest |
| Posted: Fri Dec 09, 2005 1:55 am |
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I read this article also. The writer was mixing economics and
terrorism, not a good way to go about making your point. The man has a
point though. Look at Latin America versus the Asian tigers. The Asian
countries, South Korea in particular, adopted the neoliberal economic
model, eschewing the many "alternatives" to adapting the free market.
Brazil on the other hand became the bastion of these new models of
economic theory. Unfortunately, attempts to mitigate the harsh
realities of global competition have all failed. Israeli neoliberalism
may have produced increased inequality but is there an alternative but
to move forward? Latin America was and is the leader of
developing-world economic theory. But as it basked in the glory of
dependency theory, it saw a downward spiral so that today we see
mineral, labor, and tech-rich Brazil rated highest in income inequality
and Argentina default on loans and in political crisis. Israel has to
play the game according to the rules; no "third way" has succeeded. |
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