l Find the guilty party, first. The social economic cabinet met this week and with a series of quick draws, moved to eliminate unemployment. The treasury provided the forecast that growth next year will be 4 percent and 80,000 new jobs will be created. The finance minister chipped in increasing the deficit by NIS 4 billion. In other words, according to the government, it's done all the right things and the economy is poised for an impressive takeoff.
But what will happen if these are nothing but voodoo recipes, and unemployment continues to grow next year? In that case, Finance Minister Silvan Shalom announced, the guilty party will be David Klein. If the governor of the Bank of Israel sticks to his monetary policy and doesn't lower the interest rates, said Shalom, "there won't be any growth and unemployment will jump to 12 percent."
In other words, all the huge budgets, all the reforms, all the emergency programs for fighting unemployment - it will all be worthless against a half percent by Klein. The fact is that the governor's monetary policy has been expansive, judging by the amount of money in the economy and interest rates at historic lows of 3-4 percent. But that doesn't matter. Klein is always useful as a good scapegoat.
l Good old Sharon. Just like in the days when he was industry minister (1984-1990), Ariel Sharon is absolutely sure that he can run the economy from above with pinpoint treatment of each and every factory.
As part of his "start working" policy framework, the cabinet decided to establish a team of ministers, led by the premier, to deal with factories in trouble, "to prevent, in the first stage, firings of thousands of workers." But the result won't be an end to firings. The result will be throwing away money. Because as soon as the ministerial team is formed, a long line will form outside the Prime Minister's Office. Everyone who is ready to try extorting some money from the government will be in that line - after all, if someone's ready to give, there will be plenty ready to take.
The result will be transferring money to associates, to party members, to lobbyists and the money transferred to them will be the money needed for the infrastructure, a far grayer area, whose fruits are only seen in the years to come.
l Pretending not to pay. In the context of discussions about increasing investment in infrastructure, the treasury decided to privatize some projects. The system is known as Private Financing of Infrastructure (PFI). For example, a private contractor builds classrooms for the Education Ministry and the ministry guarantees it will pay 25 years rent in advance.
In effect, this bypasses the budget because there's no different between it and financing the project by increasing the government's deficit. PFI does it with mirrors: The government says "meanwhile" it isn't spending anything and only the contractor is making an investment. But the minute the project's done, he'll get his rent, and at the end of the day, his fee will be the entire cost of the construction plus the contractor's profits. The "meanwhile" is how the government tricks the public.
l Secrecy. Unlike past years, this year's internal treasury budget discussions took place in secrecy. In fact, there were very few discussions. Previous years saw a number of cycles of discussions and arguments between the minister and the treasury officials over the size of the deficit and other plans. This time there was practically none of that.
The secrecy led to the press not having precise data, for example, about the growth of the budget, or whether the budget includes all the planned defense and infrastructure expenditures. This new policy of hiding information doesn't prevent journalists from trying to estimate the data, which leads to so many mistakes and inaccuracies that it only causes confusion and damage to the economy itself.
l Narrowing the gaps. Another precedent this week was the finance minister proposing "reforms" that increase government spending. Until now, individual ministers made suggestions that involved increasing the budget, the finance minister objected, and they argued until a compromise is reached. But Silvan Shalom is the one who proposed compulsory education through high school and free entrance to universities for the first year for anyone with a matriculation certificate, which will greatly increase public spending.
Education Minister Limor Livnat won't remain out in the cold on this one. Asked about Shalom's plan, she said that it has its pluses and minuses but that she'd make sure that 100 percent of the country's high school graduates get matriculation certificates.
The two proposals can be combined. Lower the barrier of the matriculation exams, give pupils unlimited choices of exams in any subject (without English and mathematics), allow repeated examinations until they pass, and then let them go with the highest score. With "matriculation certificates" like these, and acceptance at all the universities - including the medical schools, and electronics, computer science and accounting departments - and without performing any major surgery, the gaps in Israeli society will be closed, as if by magic.-
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