A Religious Conversion

Hirchson has taken an accelerated course in macroeconomics. The course was administered by members of his own budget division, who declared him a diligent pupil.

Participants in the Caesarea forum, which took place in Jerusalem this week, could hardly believe what they were hearing. Finance Minister Abraham Hirchson approached the podium and, instead of speaking about the economy, delivered a dramatic statement: "I have a personal announcement to make ... There are people who are trying to harm me and my family, by means of pressure and threats ... Detectives are following me, with the aim of harming me. This will not work with me; even if the threats intensify, I will continue to promote the reforms that are so important for the people of Israel."

The audience was at a loss. This was certainly out of the ordinary. The whispering began immediately: Who is threatening the minister? Why did he mention the subject of reforms? Was it a hint that those threatening him were trying to prevent the enactment of one of the reforms he is proposing, such as the open skies policy (which would permit competition with El Al) or the breakup of the Israel Electric Corporation?

However, Hirchson did not give the audience much time to think, immediately moving on to the economy itself. He proudly spoke about the rapid growth, which has been accompanied by a decline in unemployment and an impressive increase in foreign investments. "These fruits are the result of implementing a clear and consistent economic policy," he said. "We are committed to continuing to adhere to these economic principles."

Benjamin Netanyahu, who was in the audience, smiled with satisfaction. Here is a finance minister who is going to stay on my path, he was perhaps thinking. But then Hirchson switched direction and began to talk about "Israeli society, which is growing, but is not healthy." Hirchson spoke about large segments of the population that are not benefiting from the fruits of growth, and said: "I intend to implement a different economy; it is my intention to address the social gaps and to stem the trend of increased poverty." Hirchson made it clear to all that he most decidedly was not a Netanyahu clone.

Over the past two months, Hirchson has taken an accelerated course in macroeconomics. The course was administered by members of his own budget division, who declared him a diligent pupil, with good listening skills, and who is open to persuasion. All of these are important assets. His friends say, with a smile, that he underwent a religious conversion.

Hirchson presented his audience with what seemed to be a solid macroeconomic worldview: He will not exceed the budget, and will even reduce the deficit to zero by the year 2009. This is even more ambitious than the Netanyahu program, which spoke of a 1 percent deficit in 2009. He will even reduce taxes - both income and corporate tax - by more, and at a faster rate, than Netanyahu. The former finance minister presumably had trouble believing what he was hearing.

Later in his speech, Hirchson critiqued Yuli Tamir's plan to add billions of shekels to the education budget, saying that not every program to increase expenditures constitutes a "reform." In his estimate, the problem with the education budget is not one of lack of funds, but of a system that must be made considerably more efficient. He is right.

He immediately enumerated the reforms that he would promote: first and foremost, the breakup of the IEC, which will introduce competition into the generation and distribution of electricity, to be followed by the company's privatization. He pledged more reliable and cheaper electricity. Given the immense power of the IEC's workers' committee, that would be no mean feat. In effect, this will be the greatest test of his strength. Hirchson also said that he would carry out a comprehensive reform of the mechanisms for supervising the capital markets, but he forgot to mention reform of the aviation sector (the open skies policy).

His program to reduce social gaps is well suited to the Finance Ministry's plans. He does not intend to increase social welfare allowances, but rather to provide subsidized day care and after-school programs that would make it easier for those wishing to enter the labor market - because the fact is that poverty vanishes when both spouses are working. Hirchson had a personal contribution to make, as well: subsidizing public transport, which would make life easier for those entering the labor market and members of the weaker socioeconomic classes. Officials in the treasury's budget division will not like this part of his program.

At the end of his speech, Hirchson reiterated the importance of education, but by this time the audience had already lost patience. More than anything else, the audience wanted to know to whom the minister was referring when he spoke about pressure, threats and detectives hired to harm him. Attorney General Menachem Mazuz already knows. Hirchson filed a detailed complaint with him this week.