Israel's housing activists are misleading the public
Fortunately, unlike social protest leader Daphne Leef, Prof. Manuel Trajtenberg has a few hours of economics studies under his belt. He knows all too well that when it comes to economics, there are no free lunches.
By Nehemia Shtrasler Tags: Israel protest Israel housing protestI don’t know if Prof. Manuel Trajtenberg was hoping that the leaders of the tent protest would listen to what he had to say, but he surely didn’t believe he would be subjected to such a barrage of insults.
He’s been trying to talk to them for weeks, to conduct a dialogue, but they are refusing to have any contact with him. Last week, protest leader Daphni Leef called on him “to resign immediately from the futile committee so as not to be remembered in the history of the people of Israel as the individual responsible for governmental deception.” Commenting on the panel itself, she added that it was “a committee established in haste − cynical, cruel and knowingly misleading the public.”
And all this said without her exchanging a single word with Trajtenberg or seeing one of his recommendations.
So whatever the committee recommends is insignificant. The leaders of the protest will not agree to a thing, to any sensible solution that takes into account the limitations of the economy and the global crisis. They want to change the very foundations of the economic system; they are opposed to a market economy, to privatization, to competition and to free enterprise. They are interested in “changing the system” so that the state would manage everything, decide everything, determine everything, while the private economy becomes nothing more than surplus to requirements. It’s enough to take one look at the radically leftist “team of experts” they have gathered around them to understand why Trajtenberg has become the new punch bag of their hatred.
Leef herself, in the space of just a month, has turned into an expert in macroeconomics. Without blinking an eye, she says there is no need to maintain the current budgetary framework, calling instead for opening up the 2012 budget and sharply increasing government expenditure (from 43 percent to 55 percent of GDP) for the sake of education, health, welfare and housing. She also has a huge list of demands, including dozens of clauses, that stretch out over eight pages.
In an effort to do right by everyone, Leef says “budgets should not be diverted from one group to another.” In other words, no one should be harmed, no group should suffer cuts, because everyone is deserving − the ultra-Orthodox, the settlers, the disabled, the homeless, the renters, the parents, the single mothers, the middle class, the lower class, the elderly, those who want extensive and paid maternity leave, and also those who want a lengthy regular holiday. Everyone is deserving.
This is the “new economy.” It has no order of priorities. It doesn’t do wrong by anyone. Everyone gets more, and that’s it.
Fortunately, unlike Leef, Trajtenberg has a few hours of economics studies under his belt. He knows all too well that when it comes to economics, there are no free lunches. There is no such thing as making something out of nothing. He knows that in the first lesson of economics, one learns about the transformation curve, which explains why there is a need to forgo one thing in order to achieve something else.
Trajtenberg, therefore, has no intention of breaking the budget framework. He knows that increasing government expenditure and raising tax rates comes at a heavy economic cost. They are, in fact, a deadly elixir for growth and employment.
That’s because the more resources the government extracts from the economy, the less there are for the business sector, which can then invest less and produce less, leading to a drop in the growth rate, a rise in unemployment and a fall-off in tax payments. As a result, the state then finds itself in a crisis and suffering from high unemployment, and is forced to implement harsh cuts that harm society and the welfare of the population. This is exactly what is happening in a number of Western countries at present − Greece, Ireland, Spain, Italy, France, Britain and the United States.
After all, we found ourselves in this terrible state back in 2003, when government expenditure reached 51 percent of GDP, public debt reached 99 percent of GDP, and no one in the world agreed to loan us a single dollar more.
That crisis, some eight years ago, forced the government to implement drastic cuts and a series of reforms that led to a reduction in the government’s weight in the economy, lower taxes, growth of around 5 percent a year, a drop in unemployment to a very low level of 5.7 percent, shrinking of the public debt to 76 percent of GDP, and the achievement of the relative stability in which we find ourselves today.
This stability must be preserved. Therefore, changes can be made in the field of taxation, and in the budget itself, too. But in no uncertain terms should the framework be broken.
Trajtenberg, therefore, is not the one who is “misleading the public.” He is the one defending it, including Daphni Leef.
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She made be bonkers...but your paragraph below is such a poor analysis of what is really happening as to question your grasp of economics (it wasnt high tax economic induced crises - but a housing bubble, banking crises, credit explosion, poor regulation) Ire US UK were/are Very Low Tax economies. Greece doesnt collect tax, Spain Ireland fuelled housing bubble (Tel Aviv anyone?). All have lower tax as % GDP than Holland Denmark Sweden Austria (latter humming along nicely). Dont insult us (and her) with your baby economics or beginners. "That’s because the more resources the government extracts from the economy, the less there are for the business sector, which can then invest less and produce less, leading to a drop in the growth rate, a rise in unemployment and a fall-off in tax payments. As a result, the state then finds itself in a crisis and suffering from high unemployment, and is forced to implement harsh cuts that harm society and the welfare of the population. This is exactly what is happening in a number of Western countries at present − Greece, Ireland, Spain, Italy, France, Britain and the United States"
Shtrasler has it wrong. His view is too simple. Most of the protestors do not want to do away with the private economy. Instead they want to change the balance and dynamic between the private and public sectors by putting more emphasis on public welfare. The emphasis in the US and Israel has very much on the private economy for the past few decades. People just want it to move back toward the center.
charming sentiments, but I find the whole idea fundamentally flawed on the false assumption that government spenditure has to be "extracting resources from the economy". The government itself is a part of economy not by only collecting money but also investing it. Spending on education and welfare is integral and necessary part of a healthy sustainable economy and the private businesses themselves are unlikely to efficiently invest in that. Having said that not every government has a good investment strategy. Or rather, most governments have no idea what they are doing!!
So typical of economists like Strasler to take credit for Israel's "stable economy" (stable for the second highest rate in poor in the Western world) while including the US in a list of countries in which he gives the impression that they invested in a socialist agenda and therefore are paying for it today. (it was more likely the credit companies, bankers and lack of regulation of the so-called free market that were responsible). How distorted can you and your economic studies get?
We have seen what people with economics degrees have done to our world – they are part of the problem, not means to the solution. The stability Nehemia Shtrasler is talking about is a lie, it is like a fresh coat of paint on an iron frame that has rusted to the core. When you have 1,200 firemen missing and the government wants to cut 25% more, is it a wonder that two children playing with matches burn down half of the country? When crime numbers are up thousands of percents because of lack of quality police – does that not get factored into the economy? When the health system is collapsing and there are 35 children in each schooi class? When there aren't enough graduates in technological professions in a country that bases its advantage on the human edge? All that with a government bailing out tycoons which it helped create (Netayahu privatized services like crazy to a few families, creating monopols) Prof. Manuel Trajtenberg has to go – he, like Nehemia Shtrasler, does not even begin to grasp the problem and its extent.
We have seen what people with economics degrees have done to our world – they are part of the problem, not means to the solution. The stability Nehemia Shtrasler is talking about is a lie, it is like a fresh coat of paint on an iron frame that has rusted to the core. When you have 1,200 firemen missing and the government wants to cut 25% more, is it a wonder that two children playing with matches burn down half of the country? When crime numbers are up thousands of percents because of lack of quality police – does that not get factored into the economy? When the health system is collapsing and there are 35 children in each schooi class? When there aren't enough graduates in technological professions in a country that bases its advantage on the human edge? All that with a government bailing out tycoons which it helped create (Netayahu privatized services like crazy to a few families, creating monopols) Prof. Manuel Trajtenberg has to go – he, like Nehemia Shtrasler, does not even begin to grasp the problem and its extent.
... which is surely a valid beginning... the settlements ruined the border towns... they should not be allowed to undermine the urban middle-class population as well, by guzzling excessive goverment allocations... whether it be for defence and excessive infrastructure, or whatever...
Sounds sinisterly familiar...? Need an extra $2 Trillion to balance the budget? Let's just print some more... Daphne seems to be reading the same economics tomes that BHO and cronies are (Marxism at it's best?)
I applaud Strassler's courage to opt for the truth rather than for the populist. Yes, we can probably get a chicken in every pot, but not necessarily an SUV in every garage. One must understand that even if we tax the superrich, dividing the tax among the poor will not raise their standard of living to affluency. Similarly, although it is time to get the orthodox off the state's tit, it can be done only gradually. Would you want their children to starve? So bravo to Strassler and also to Alterman.
ALL governments on planet earth only mislead to fill their pockets but talkback pretends to be God to cover up for the politicians and block the TRUTH from being shown.
policies to direct money the rich (or as republicans here in America like to doublespeak, the "job-creators"). There is a fundamental disagreement in the philosophy of these two economic approaches. Leef's is that it is the workers for whom the government should be working a to whom the fruits of the labor should go. The workers, when allowed to fully reap the benefits of their own labor, will spend the money and continue to stimulate the economy. The suggestion by this author that, if we continue to allow the rich to profit off of the labor of the workers that they will naturally re-invest has been proven wrong. Let it go.
Dafne Leef has the same 'spend it all' mentality that Barrack Obama has. Margaret Thatcher said it best: The trouble with socialism is that eventually you run out of everybody elses money.
When enormous part of the Israeli Budget goes for Settlements, instead on investing in long term Desalting Infrastructures..... NOT POSSIBLE because Mrs Livnat need to mantain her family ideological ties at Yesha. When enormous amount of money goes to Haredi non working population, instead on ORT/ Amal schools... NOT POSSIBLE all the time than sitting with SHAS When most of the Taxes are taken from middle class working sector, and leaving untouched the Large Corporations Maybe by having a major reconsideration on Israel Priorities will give the answer
A huge part of the budget does not go to the settlements, the bulk of the things are privately financed. As for the Haredi thats not going to change as long as we have a system of coalition government because all governments on the left and right need the religious block and these benefits is the price for joining the coalition. Everybody pays taxes the fact there are more middle and working class people paying taxes that the rich doesn't mean they don't pay their taxes. Corporations pay tax although at the same time corporation tax cannot be to high otherwise you will drive these companies out the country. If corporation tax was excessive in this country what do you think the companies like intel would do ... stay in Israel or close down their plants and go to India? That Leef woman is a fool who doesn't know the first thing about economics but because she started this protest she thinks she is an expert on everything and knows better than anybody else in the country. You want things your going to have to decide what the priorities will be because there is not enough to give everybody what they want its going to mean cutbacks for some sectors which are already underfunded to go to others and an increase in the taxes ... everybody ( middle & working classes included ) are going to find themselves paying higher taxes so in reality they are going to have even less money because whilst governments can put up taxes they can't force employers to pay people more money so I think the protestors are in for a big let down and the bulk of the middle classes might end up poorer. Time to end the protests before they get more complicated than they already are and leave the ELECTED GOVERNMENT to decide what economic reforms its going to make because they are the only ones with the authority to make reforms. As for Daphne Leef we need to pack her off to a kibutz never to be seen again although then again kibutzim might be to capitalist based for her liking now they are run as businesses. Ti
Prof. Trajtenberg has been elected to advise and the government to decide and implement a change. We are living the results of their previous decisions and the has brought economic hardship and made life un-livable for the majority of citizens in Israel...both the middle class and the lower one. It is the duty of those elected to make change that has impact of people lives.
Who elected that idiot Daphne Leef to decide what economic reforms the government will make? This protest has gone to her head because she statrted it and now she is an expert on economics and has authority to dictate what reforms the government will make. The woman doesn't live in the real world with her ideas we can all have something for nothing. This woman belongs in another time when socialism was the name of the game and it was the job of government to provide everything from water - toilet paper. Any revolutions ar this time and we risk economic collapse and that won't make the middle classes better off it will make everybody much poorer. We need responsible economics which will result in some reforms although nothing Luke what Leef and the other socialist want ..... Economic evolution is better than revolution.
There will not be a revolution - Israel will not go from black to white. But it is possible to enact reasonble and even major reforms. There is a time to demonstrate (great people), but after september 3 comes another time - maybe a little bit boring time, but necessary: the time for experts to sit down and hammer out the details. We are not going to reshape the wheel, or to abolish capitalism and the market economy, but we can still change things.
Someone who speaks with sense and purpose. Well done