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If Economics Ruled, the anti-Netanyahu Bloc Would Be Forming Israel's Next Government

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March 2021 campaign posters in Jerusalem.
March 2021 campaign posters in Jerusalem.Credit: Ohad Zwigenberg

Now that Prime Minister Benjamin Netanyahu has received a mandate to form the government, we’ll be seeing four weeks of meetings, leaks, rumors and pressure. The focus of all this activity will be Yamina’s leader Naftali Bennett, who has yet to commit himself to either the Netanyahu or anti-Netanyahu bloc. Gideon Sa’ar and his New Hope party is also feeling the pressure to join a Netanyahu government.

Let’s consider for a moment Bennett’s dilemma, and perhaps that of Sa’ar, based on the support their parties according to income decile. What you will find is that they are more similar to those parties seeking to oust Netanyahu, namely Yair Lapid’s Yesh Atid, Benny Gantz’s Kahol Lavan and the Labor Party than to those of the right.

Is that an indication of the kind of government that they want to see? In other words, that they are closer to the anti-Netanyahu bloc because economics is more powerful than politics?

What is clear is that the right-wing bloc’s voters are more heterogeneous than the center-left’s voters. The Arab parties are perhaps closer to the left politically, but in terms of class they are closer to the lower deciles of the right – the Haredim and perhaps part of the national-religious public.

The election last month ended with a record 13 parties entering the Knesset, up from eight in the previous election. The division has a personal character to it: Sa’ar formed New Hope after Netanyahu denied him a place in his government, while Religious Zionism split into Bennett’s Yamina and the rump Religious Zionist alliance led by Bezalel Smotrich over differences about religion and the willingness to hook up with the extreme right.

The same thing happened in the center-left: the split between Labor and Meretz, which had run together in the previous election, and between Yesh Atid and Kahol Lavan over Gantz’s decision to join the Netanyahu government. Likewise, in the Arab sector and the split of the Joint List into two different parties over United Arab List leader Mansour Abbas’ willingness to consider joining a Netanyahu government.

The personal factor in all these twists and turns is interesting, but what is no less interesting is the division of voters by wealth. No matter how you slice them and dice them, party preference is a function of income decile.

Prof. Momi Dahan of Hebrew University examined this in 2015, using data from the Central Bureau of Statistics that measure local authorities by 14 socioeconomic criteria. The plethora of parties in the last election enhances the resolution and the findings are fascinating.

On the right, the data show that Likud is strongest among the middle deciles. Religious Zionism took votes from it among the lower deciles, although it captured middle-income voters, too. Yamina and New Hope voters are closer economically to Yesh Atid and Kahol Lavan than Religious Zionism.

The data show that Yesh Atid and Kahol Lavan, which had run together in the previous three elections, were twins as far as socioeconomic metrics are concerned. Identical twins, according to the graphs. The split between the two parties wasn’t over differing world views but over Gantz’s decision to join the Netanyahu government last year.

The class proximity of Yamina and New Hope voters with those of Yesh Atid, Kahol Lavan, Labor and Meretz isn’t about ideological proximity, but there just may be some ideological proximity in regard to the rules of the game and governance in the wake of the Netanyahu trial.

“I believe that socioeconomic status has an important role in the voter choice of non-Haredi Jews,” said Dahan. As a rule, voters with more education and income generally vote for parties with a liberal democratic orientation. Non-Haredi Jewish voters with less education and middling to lower incomes tend to support ethnic democracy, which support measures such as the nation-state law, or even the idea of a government with monarchical characteristics, he says.

“But I believe that education and not income is the key to understanding differences in voting patterns of non-Haredi Jews,” Dahan said.

“The votes of Arab voters for Arab parties, the voters of Ashkenazi Haredim for United Torah Judaism and Sephardi Jewish voters for Shas all create a strong statistical link between socioeconomic status and voting, but it’s quite obvious that this voting arises more from identity politics than economic status. Economics plays a role, but only a marginal one,” he said. “That’s also apparently true to a degree for Yisrael Beiteinu voters.”

Dahan points to an anomaly in Israeli voting patterns, namely that voters tend to support an economic agenda at variance with their class interests. Meretz and Labor, the social-democratic parties, should be getting more support from middle-income voters, while Likud, with its more capitalistic stance, should be getting more votes from the upper-income deciles, But in fact it’s the opposite – Meretz and Labor have much more support from top income-earners and the Likud more from middle-income voters.

Dahan’s explanation for voter reference for liberal versus ethnic democracy only explains part of the phenomenon. It could be that Netanyahu’s economic policies of the past decades have not been free-market because of the structure of the coalitions that he has led – in short, that his partnership with the ultra-Orthodox and other parties have pushed him in directions his ideology wouldn’t normally take him.

Thus, for example, it was a Netanyahu government that enacted free dental care for children up to age 18. Likewise the increase in the minimum wage, expansion of negative income tax and housing subsidies through the Mechir L’mishtaken (Buyer’s Price) program.

These all came in response to demands from forces outside the government, for instance the Histadrut labor federation, but it also derives from the 2006 election, when under Netanyahu’s leadership, Likud won only 12 Knesset seats. That followed his time as finance minister when he cut allowances as part of his program for rescuing the economy from recession. The economy did recover, but Netanyahu was punished at the polls.

If Netanyahu weren’t dependent on coalition partners and shied away from disputes, for example with the Histadrut, he would have advanced less popular measures, such as limits on the right to strike by essential public sector workers and rescinding value-added tax on fresh produce. All of these are ideas that have been raised from time to time, only to be shelved.

In recent years, Netanyahu has discovered the magic of populism. We saw the deal he struck with the police and other security agencies for a combined 22 billion shekel ($6.7 billion) wage hike due to “the absence of job security,” and the equalizing of their employment terms with those of career soldiers. Netanyahu was fundamentally opposed to the giveaway, but he chose not to fight it. His preference for quiet is stronger than his ideology.

During the coronavirus, during which there were two general elections, Netanyahu pursued a spectacularly expansionary fiscal policy, although the entire world did much the same. The expansion of the unemployment-benefits scheme from six to 15 months was a critical undertaking for creating certainty in the midst of a crisis termed “once in a century.”

These measures, like others taken during the crisis, bought the quiet the state needed to manage the crisis. Without them, there would have been a social crisis that undermined political stability, not just of the Netanyahu government but of all governments going forward.

The Netanyahu policies of the last decade explain why he wins the votes of middle-income voters and why they don’t recognize the neoliberal label the left sometimes sticks on him. Still, that doesn’t explain why the social-democratic parties don’t attract more middle-income voters and why they do attract the upper deciles.

Apart from Netanyahu’s drift toward populism and Dahan’s view that identity plays a bigger role than economics, another explanation could be that the parties of the left haven’t held a key economic portfolio in ages. The last finance minister from the leftist camp was Avraham Shohat, and he stepped down more than 20 years ago.

Which leaves open the question of what Bennett and Sa’ar will do: Will they go the identity route to a coalition with Likud and the ultra-Orthodox, or go the economic route to join their socioeconomic brothers and sisters to the left?

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