Bottom drachma / Burn that laurel wreath
Never mind CDS, mortgage-backed securities, subprime meltdowns and all those weird terms that became front-page news in the last couple of years. The truth of the global economic crisis is much simpler, embarrassingly simple in fact, so simple that everybody understands it instinctively.
It's the ancient story of the ant and the grasshopper. If you work hard and save for a rainy day, you'll be okay. If you laze about and spend a lot, you won't be okay.
The uproar in Europe shows how true that is. The Germans respect hard work, productivity and savings, and tend to put their savings in conservative assets such as bonds, not shares. The Greeks, Spaniards and Portuguese never boasted high employment rates or productivity. The British and Irish do have a culture of hard work and productivity but also of consumption. In fact, they have consumed themselves straight to the brink, whether buying fun or property, and drowned the fruits of their labors in a sea of debt.
The result is that the German ant has to carry the hedonists of Europe on its back. It has to pay their bills. Is that fair? No, but who said life is fair?
As for Israel, the lesson that hard work and thrift will save us when hard times come around should worry us. There has been too much complacency in the last year and a half and too little recognition that to weather the next crises, Israel has to continue tightening its belt. We must continue to work hard and save, not rest on our laurels.
Analyzing the roots of Israel's success in the present crisis, we find elements of consistent behavior, and of luck, too. The consistency lies mainly in the business sector's tremendous competitiveness in world markets: Managers in the business sector know they can't sit back and relax.
The consistency also lies in the Jewish penchant for incessant inward critique, which confers a great advantage: It drives Israelis to constantly seek to improve.
The luck is that the crisis in the early 2000s forced Israel to slash its budgets, streamline the public sector and step up saving. In retrospect, the Israeli response to that recession enabled the spurt of growth from 2005 to 2008 and gave it the resources to weather the present trouble.
Where would Israel be now if not for that crisis five years before the one ravaging the world since 2008? That's hard to say, especially since it's hard to gauge to what degree people have learned their lessons.
Certainly, most people barring a handful of economists don't seem to realize that the belt has to stay tight and the budget balanced. Israel does have the fundamentals for sustained prosperity: the competitiveness and internal disquiet that drive constant improvement. But Israel also has a nasty habit of resting on its laurels. The lesson of Europe should teach us not to do that. Ever.
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