The old Benjamin Netanyahu stood for certain economic policy principles: a free market, competition and small government. But whatever their virtues, Netanyahu himself couldn’t help but relate his policy prescriptions to voters as if they were imbeciles incapable of understanding them unless they were to put in terms intelligible to a six-year-old.
Thus, one of his favorite metaphors has been about a fat man (the bloated government) being carried by a thin man (a private sector bled dry by taxes). That, he would go on to explain, is unfair, illogical – it should be the other way around: A fat, prosperous economy should be carrying a thin government. And, if the metaphor wasn’t simple enough, Netanyahu would tell it slowly and with long pauses, giving time for the concept to be absorbed into the minds of his doltish listeners.
The Bibi of 2022 apparently thinks no more highly of the electorate than he did 20 or 30 years ago, but in the meantime he’s jettisoned the economic principles he once held, in a quest to regain power. For proof, you need look no further than the messaging on the economy he is using ahead of the November election.
The first half of the message, as conveyed in Netanyahu’s tweets, is that prices for everything from gasoline to bread are soaring. Israeli consumers are struggling to get through the month, and the government is doing absolutely nothing about it, according to the former prime minister.
And which government is that? Why, the one of “Bennett, Lapid and Abbas.”
It stretches the imagination, even that of voters who don’t like Arabs sitting in the government, to believe that Mansour Abbas, who doesn’t even have a cabinet seat, has had a hand in fanning inflation. But why not mention him? Imbecilic voters need to hear day in and day out that it’s a “Muslim Brotherhood government,” even when the issue is rising prices.
The second half of the message is that once elected his “government’s first task will be to lower prices and taxes, with the help of God and all of you,” as Netanyahu promised in a tweet accompanied by a headline about gasoline prices reaching their highest in a decade.
The first half of the Netanyahu message is at least partly true: Inflation in Israel reached 4.4 percent year on year in June, it's highest in a decade. That’s not terrible, but it’s a bit of a shock for consumers who have grown accustomed to little or no inflation, or even to falling prices for things like gasoline, air travel and products purchased online from overseas.
But a 4.4 percent rise increase by the consumer price index doesn’t demand the kind of hysterical messaging Netanyahu is employing. Inflation in Israel is still modest compared to the United States or the Eurozone, where it was running at 9.1 percent and 8.6 percent, respectively, in June.
Not that the Bennett-Lapid government deserves credit for Israel’s relatively low inflation, but neither does it deserve blame for the inflation that there is.
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Accelerating inflation is a global phenomenon that has nothing to do with Abbas’ nefarious influence, much less the indifference or wrongheaded policies of Naftali Bennett or Yair Lapid. But why would Netanyahu blame the coronavirus, global supply chain snafu or his good friend Vladimir Putin? He’s not competing with them for Knesset seats.
Soaring prices for homes, as against other inflation, is something to worry about. Those were up 15.9 percent in April-May compared with a year ago. Yet Bibi seems to talk about housing a lot less than about other price increases, which may be because he’s not confident that his voters have forgotten that home prices soared during the 12 years he was prime minister.
Netanyahu let his finance ministers deal (unsuccessfully) with housing prices while he looked on, which is one reason why the Part 2 of Bibi’s inflation messaging should be ignored as the emptiest of campaign promises.
Netanyahu has picked up on the fact that Israelis are anxious about inflation, maybe more so than they are about Iran or Arabs in the government. But Bibi himself lost interest in economics a long time ago.
Netanyahu’s brief moment of policy glory occurred when he was finance minister in 2003-2005, when he actually did put the “fat man” of government on a diet of privatization, tax cuts and lower spending. But, as prime minister after 2009, he did little or nothing to improve the state of the economy. That is exactly what can be expected from him if he returns to the job after November. He’s moved on.
But it’s not just about his indifference to economics. Netanyahu knows as well as anyone that there’s nothing any Israeli government alone can do to stop inflation. The prime minister of Israel can’t order China to stop its COVID lockdowns and ramp up factory production, nor can he fix the global supply chain or end the war in Ukraine (although Bennett gave the latter a brief try).
Nor can the Bank of Israel do much. It is raising interest rates, which should cool consumer demand and almost certainly slow the pace of housing-price increases by making it more costly to take out a mortgage. Higher interest rates will stem the shekel’s depreciation and prevent prices of imports from rising even faster. But when the main source of inflation is beyond Israel’s borders, these remedies can only have a limited impact.
Thus, while Netanyahu has talked about being “committed to lowering prices immediately after the election,” he conveniently stops sort of saying how he would do that.
The one thing that he has mentioned is lowering taxes. Ironically, thanks to the “terrible” Bennett-Lapid government’s responsible spending policies and to a growing economy, the government has actually run up a small budget surplus, which in theory gives it room to reduce taxes.
But doing so would actually fuel inflation by increasing consumer demand, unless it was accompanied by budget cuts, which is something Bibi hasn’t talked about.
The grim reality is that there is no painless way to combat inflation, which is why it’s hard for politicians with any pretense of honesty to address the issue.
To his credit, Lapid has refrained from making empty promises about inflation. Unfortunately, however, he may be finally succumbing to the Bibi onslaught, and in recent days, the prime minister has become anxious to show he is doing something about, of all things, rising bread prices.
Bread isn’t a major household expenditure in Israel, and its price is rising due to a global shortage of wheat. But bread is symbolic, and the price of a basic loaf (lechem achid) is government controlled, so Lapid could win some points by delaying a price hike.
Such a move would be an empty exercise in headline-grabbing. But if that’s as far as Lapid goes, it won’t go down in the annals of Israeli election economics as a terrible offense. On the other hand, if he chose to explain why bread prices are rising, say he won’t interfere and urge the public to put inflation into perspective, an intelligent voter might give him points for honesty. Alas, Bibi may be right that the uninformed vote is far bigger.