Chopping Down the Tree of Growth

The rapid growth in the first quarter of 2006 shocked socially minded activists and politicians. They were willing to accept a moderate 4 percent growth rate, but 6.6 percent? That is really too much. They predicted that Benjamin Netanyahu's program would lead the country into disaster, recession and unemployment. They said that the government must raise taxes and increase spending. Netanyahu did the exact opposite - and economic growth is at a record high, unemployment is going down and there is even money left to increase the "health services basket."

But the socially minded are not prepared to admit that their worldview has failed. So they started a propaganda campaign saying that economic growth is all very well, but also bad, because only the rich benefit, while the poor get poorer. But they are hiding the most important fact: the increase in employment. The figures provided by the Central Bureau of Statistics indicate that between the second quarter of 2003 (the nadir of the crisis) and the fourth quarter of 2005, 228,000 Israelis joined the labor force, and unemployment decreased during those two and a half years from 10.5 percent to 8.8 percent, and is still declining.

How do they bypass this mine? They say that the added employment consists of part-time jobs that are not worth anything. True, the majority, 164,000 jobs, are part-time. The minority, 56,000, are full-time positions. The remaining 8,000 are posts normally filled by others who are temporarily absent. Is 56,000 meaningless? It means that 56,000 families are now making a living. Are part-time jobs a bad thing? Previously those same people were fully unemployed. Some of them are interested in having a part-time job, like mothers of small children, single mothers, students, and adults who are interested in flexibility. And anyone desiring a full-time job will get one if the economy continues growing.

Another argument made by the socially minded is that most hired workers are not enjoying the benefits of growth because their wages have not increased, and have even decreased. Nothing is farther from the truth. CBS figures show that after two years of wage decreases (2002 and 2003), wages have increased in real terms. In 2004 and 2005, they rose by 3.6 percent in most fields - government, the business sector, agriculture, industry, electricity and water, trade, financial and business services. In some sectors - construction, catering and food services and transportation - they have been cut, but by tiny sums equivalent to a few tenths of a percent. The problem is that the workers in these professions are not highly educated, and the solution is to acquire knowledge, education and professional skills. But instead of speaking about the vast majority of people whose situation and standard of living have improved, the socially minded speak about the minority. This is cheap propaganda.

The economic improvement over the past three years is evident. The vast majority of the people feel it. Granted, Eitan Wertheimer's situation has improved greatly - he can now add 100 antique cars to his collection - but a new worker who was previously unemployed can now buy a secondhand family car, which will be of more use to him than Wertheimer's 100. So one must look not only at the relative gap, but also at the absolute improvement that growth produces.

The socially minded are not willing to admit that. They are not willing to understand that the change derives from budget cuts, tax reductions, a market economy, competition, reforms and privatization. They sit in the Knesset Finance Committee shamelessly distributing the fruit of the tree of growth that they did not plant. They do not make do with eating the fruit, but spit the pits at the head of the successful free economy. And the worst thing is, they are sharpening their axes to chop the entire tree down.