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Prime Minister Benjamin Netanyahu has developed a new system of governance over the past three years, one not found in political science textbooks or even in Machiavelli's "The Prince." It's called "frighten and conquer," and it has three stages. Here's the guidebook.

In stage one, terrify the public about impending catastrophes, until it is scared to death.

In stage two, introduce the great statesman who will offer a way to avoid disaster.

In stage three, watch as members of the grateful public cast their ballots for this heroic statesman.

And just so it remains clear who exactly this great statesman is, Netanyahu makes a point of continually frightening the public regarding every item on the agenda: the Palestinian issue, Iran and economic affairs. In each case, he offers a way to avoid disaster.

It was the economic issue that Netanyahu dealt with this past week. After frightening the public for a week about the price of gas rising by 20 agorot, he rolled up his sleeves, worked like a crazed zealot, and at the last minute - on Saturday night, shortly before the evening news - he had a stroke of genius and reduced the gas hike by 15 agorot. That came as a tremendous relief, and it was a striking victory; we knew we owed gratitude to our great leader.

The next day he explained to the public that this was a responsible, correct move. "Those who speak of lowering taxes and unbridled spending are devoid of economic knowledge as well as responsibility. We need the taxes to purchase more Iron Dome systems, to complete the separation fence, to fund free education for children, to pave roads and [fund] trains, to help the elderly and the needy. We won't go over the budget this year."

Anyone who heard this had to be impressed and amazed. Here was a leader explaining why it is wrong to reduce taxes and increase spending; yet, as he continued to speak, Netanyahu noted that he has reduced the gasoline tax four times, for a total reduction of 80 agorot. How can he say one thing and then its opposite without blushing?

You can act this way when you're sure the public is stupid, that it will believe anything it's told. In that way, a leader can talk about responsibility while also displaying sensitivity and compassion for the loyal citizenry. Netanyahu also explained that tax revenue is not simply wasted. Tax funds are diverted to worthy causes such as missile defense and the elderly. Not a single shekel is allocated to subsidized housing for the ultra-Orthodox, or to allowances for yeshiva students who neither work nor serve in the army, or for the construction of a new settlement for 50 lawbreakers, at a cost of tens of millions of shekels. Nor is a single shekel wasted on the most bloated government in Israel's history, comprised of 29 ministers and seven deputy ministers.

But this is all slim pickings compared to the ruse known as not going over the budget, or to put it in political jargon, "not exceeding the budgetary framework." Up to now, the government has yet to figure out how it will fund the 10 agorot reduced from the price of gas last month. Now it has a shortfall of another 15 agorot to fund. The Finance Ministry's budget department has devised an "efficiency plan" for government ministries that features a 2 percent reduction in personnel, wage adjustments and caps on the number of overtime hours. That's a bad joke. Clearly, there's no chance that such a program would ever be carried out. After all, this is a prime minister who is unable to stand up to public pressure on gas prices, so he wouldn't stand a chance against the Histadrut labor federation and the large unions.

The series of populist decisions about gasoline sends a signal to all politicians, unions and lobbyists that the prime minister is weak-willed and Finance Minister Yuval Steinitz can't stand up to pressure. This means the pressure will continue to build and that more concessions are in the offing, particularly as we head toward elections. These are dangerous trends.

Netanyahu is certainly not "devoid of economic knowledge," but he is operating as though he who doesn't know a thing about macroeconomics or business administration. He and Steinitz are slowly but steadily creating intolerable budget deficits, lowering the country's credit rating, raising interest levels, decreasing investment, increasing unemployment and causing a macroeconomic crisis.

There is, for Netanyahu, one last hope: that the crisis doesn't come before the next election. Until Israelis go to the polls, Netanyahu will continue to frighten us, "rescue us" and worry about one thing only: that we cast the right ballot.Re

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