It was the media that recently reported that the Bank of Israel was looking for a media consultant to help improve its public image. Now it seems the central bank no longer needs a consultant for it has found a magic formula - a public relations war on poverty.
Before calling a news conference, governor David Klein yesterday morning met President Moshe Kastav, who is known for his concern about social welfare issues. Katsav welcomed Klein's show of commitment, saying that the bank governor "shows unusual compassion for social problems."
If anyone believes something new happened yesterday, that this was the first time the central bank governor has spoken about poverty, they are suffering from amnesia. In fact Klein had virtually nothing new to say - even his references to cuts in defense spending as a way to raise more money for the anti-poverty program were nothing new.
In an interview within September 2003, Klein said: "Instead of overly deep cuts family allowances and social services, the defense budget must be reduced by NIS 3 billion."
As Klein sees it, low employment is the main reason for poverty in Israel. He has said so several times in the past, and his line of thinking is shared by most economists. So what he is saying is neither new nor original.
Everyone knows that just 56 percent of our work force gets up every morning and goes to work. The figure for OECD (Organization for Economic Cooperation and Development) countries is 65 percent - in Scandinavian countries it's 75 percent.
If Israel's employment rate to top 65 percent, 400,000 people would join the work-force, living standards would rise, and poverty levels would fall. The problem is that Israel hasn't figured out how to encourage more people to join the work-force.
Proceeding with his analysis, the central bank governor lists the usual suggestions. These include "major cuts in the number of foreign workers" - but Israel has, in fact, been following this policy. Immigration police say 100,000 foreign workers left the country in the past two years - 35,000 were deported, and the others left voluntarily.
True, Israel could search for new ways to apply pressure, like increasing taxes on people who employ foreign workers, but the lobbyists for contractors and farmers have prevented any such taxes being imposed.
The Bank of Israel says that education should play a key role in reducing poverty. Does anyone disagree? There's not a single economist who would dispute the truism that a solid education is needed to work in a 21st century global economy.
Some might have been impressed yesterday by Klein's call to increase family allowances for "very large families," especially those of Haredis and Bedouin families. But Klein immediately qualified this commitment, saying "income tests" should be used to determine eligibility for allowances, and family assets like an apartment should be included. Once a number of standards are used in these assessments - housing, cuts in local taxes and medical expenses - it will turn out that a large number of families will be deemed ineligible for allowances anyway.
It's easy to make pronouncements on cutting the defense budget - getting the government to approve it is another matter entirely. Its the same with education - one can talk about streamlining education, but dealing with teacher unions that oppose dismissals is a different matter.
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