Economic Reform Gets Short Shrift, Says Top Economist

Manuel Trajtenberg, the architect of plan to tackle the high cost of living, says much has yet to be done because the Palestinian conflict preoccupies Israelis

Tomer Appelbaum

For most of the three years since the outbreak of the social justice protests over the cost of living, Prof. Manuel Trajtenberg has chosen to keep a low profile, but not always successfully. The Tel Aviv University economics professor chairs the Council for Higher Education’s planning and budgeting committee, but his public presence was most prominent as chairman of the official committee on social and economic issues appointed in the wake of the protests. After submitting his committee’s report to the government in September 2011, he immediately returned to academia, but his flirtation with politics and his candidacy as governor of the Bank of Israel maintained his high profile.

Efforts at reforms have stalled, Trajtenberg acknowledges, but he weighs his words carefully. Perhaps that’s because he hasn’t yet made a firm decision as to whether he wants to be an economist, a politician or a leader of socioeconomic reform. Despite his rhetorical restraint, it’s hard not to sense the criticism he has for the government following the submission of his committee’s report.

The Trajtenberg report dealt with government policy in a number of key areas, including expanding access to educational and social services, in part by lowering the age at which free preschool education is provided. It also dealt with proposals for lowering housing prices by increasing the housing stock, making the tax system more progressive and reducing import duties, and bringing more ultra-Orthodox men and Arab Israeli women into the workforce (see story on page 7).

“I’m not disappointed over how the committee’s recommendations have been implemented, because I never expected that the report would change reality,” he insists. “I expected that it would create a political process that would focus the results of the protests and increase the general public’s and decision makers’ awareness of what needs to be done in Israel. It’s gradually happening, but not quickly enough. Both politicians and Israeli society aren’t focused on social issues because the conflict with the Arabs is still dominant and remains a distraction.

“I’m not saying that as criticism,” he hastens to add, “but the current generation is no longer prepared to accept the contention that we need to wait for a solution to the security situation before dealing with domestic issues.”

Asked whether the country’s preoccupation with foreign policy had prevented many of his committee’s recommendations from being put into practice, he responds that the periodic changes in government in Israel have made long-term policy-making difficult.

But Prime Minister Benjamin Netanyahu is close to becoming Israel’s longest-serving prime minister.

“True,” he responds, “but all the parties, including the prime minister’s party, don’t really have time to develop a thorough platform and implement it. There’s no political entity that feels it has breathing space to develop a coherent outlook. My report is a contribution toward developing such awareness. Now we have a document that contains a broad picture of all the steps that need to be taken to deal with these problems, such as tackling the cost of housing,” he says in reference to the committee’s report.

“But ultimately someone has to get up in the morning and say that his goal is to increase the number of construction starts in Israel. We need to place an emphasis on socioeconomic issues over time. It’s not a great thing to do things on a one-time basis.”

Lowering the cost of living requires efforts “on all fronts,” Trajtenberg says. “The monopolistic forces in the economy are still very strong. Unless they are broken down, market by market, through guerilla warfare, we won’t see change. Anyone who expects that the [high] cost of living will disappear overnight is deluding himself.”

Asked what he thinks about disparaging remarks that Finance Minister Yair Lapid has made about economists, Trajtenberg replies: “I’m on good terms with the finance minister, and when I have something to tell him, I’ll say it to him directly.”

Lapid’s comments were made out of distress and for no other reason, Trajtenberg asserts, but the economist declines to respond when asked how Lapid is doing as finance minister. Trajtenberg served as an adviser to Lapid, but since Nadine Baudot-Trajtenberg, his wife, was appointed deputy governor of the Bank of Israel earlier this year, he has stepped down.

However, he does speak highly of Education Minister Shay Piron, who took office last year. “He gives us support and freedom of action along with showing great interest in what’s happening,” Trajtenberg says. “He’s not essentially a political person so [his] considerations are directed at improving education.”

Trajtenberg, who has served as chairman of the Council for Higher Education’s planning and budgeting committee since 2009, has been engaged in reforming Israel’s system of higher education system.

“What has happened in higher education over the past four years is an example of how we need to conduct ourselves in the public sector,” he says. “We are working in accordance with a multiyear plan with clear goals, and are reporting to the public regarding our progress. That means that I’m obligated to speak about both the successes and the challenges. We haven’t managed to recruit faculty to the extent that we planned up front, and due to a planning error, we set up just 16 centers for excellence instead of 30, as contained in the original plan − but yesterday’s minuses are tomorrow’s pluses.”

In recent years special efforts have been made to make higher education accessible to the ultra-Orthodox community. Trajtenberg’s planning and budgeting committee funded special programs that accommodate the ultra-Orthodox lifestyle, such as separate classes for men and women. There are currently about 7,700 Haredi students at ultra-Orthodox colleges, including 1,500 in new programs established by the committee. One of those programs, for example, at the Haredi campus of the Bezalel Academy of Arts and Design in Jerusalem, is geared toward ultra-Orthodox women studying for a degree in architecture and art.

Trajtenberg concedes, however, that this year saw a 20% drop in Haredi college enrollment. “But I’m sure that’s temporary. It’s a retreat on the part of Haredi society in protest against the law on sharing of the burden equally,” he says, referring to the law passed by the Knesset in March that ended the decades-long practice of exempting Haredi men from military service.

Trajtenberg predicts that ultimately the new law will reverse the drop in enrolments in institutions of higher education. “The law will enable 20,000 Haredim from age 22 to leave the yeshivas, and a significant portion of them will pursue employment and education,” he says.

The country’s Arab population is also underrepresented in higher education, a situation Trajtenberg promises to also change soon. He is proposing that two public colleges be established in Israeli Arab communities and that an additional educational center be set up in the south that would also serve the Bedouin community.

Trajtenberg denies that he is laying the groundwork for a career in politics, at least for the time being, but says he does intend to do what he can to promote progress.

“I have a position that gives me influence to promote exactly the issues that I think are the most important for the future of society. So at the moment, I’m not looking at the next step and am [instead] focused on what I am doing,” he says.

“It’s true that I have received approaches from political representatives. That’s no secret. I talk to people, but I make it clear to all of them that my current focus is what I am doing in higher education. We have a full agenda, and the day will come when I will leave my position and will ask these questions.”