Israelis Are Wise to the Economic Game

The powers that be are trying to dismiss calls for economic reform as 'populism,' but Israelis are starting to think for themselves.

Guy Rolnik
Guy Rolnik
Guy Rolnik
Guy Rolnik

So the people want social justice.

Two years after the social justice protests broke out, with hundreds of thousands of Israelis taking to the streets, we have learned how the regime really feels about the movement.

The word "regime" is a tad misleading; it implies "government." But the government in Israel, as in many places, isn't really the regime. It's just part of the regime, sometimes a small part. Most of the power is in the hands of special interest groups – conglomerates, banks, industries, Big Union and some parts of the wider public sector and the political parties they openly or covertly control.

None of these groups likes the social protest movement and what it symbolizes, since it could change the balance of power and threaten the legitimacy of those who quietly, behind dense smokescreens, have grabbed big chunks of the economic pie irrespective of their skills or efforts.

They embraced the social protest as long as it was merely a lofty concept, unconsolidated. They loved it mainly because the ideas arising from it were confused, contradictory or unrealistic.

But the social process gradually developed; the public's interest in economic and social issues increased, and small groups formed that were determined to study what they needed to study.

The response of Prime Minister Benjamin Netanyahu to the public's growing involvement in economic affairs – calling it populism – is no surprise. Netanyahu, 64, has been holding senior positions for more than 20 years. For years, he was one of the few people in government who understood numbers and economics. But he probably doesn't understand the subterranean changes Israeli society and the world have been undergoing.

One can argue with the perceptions and positions of protest activists like Eyal Ofer, the spokesman of the "Dear Israel" protest against the cost of living who led the resistance to Israel exporting any of its natural gas resources. But populist is the last thing you could call him. You won't hear Ofer spouting cliches. He's no unthinking mouthpiece of any particular economic system. He doesn't prattle about capitalism or socialism. He's too mature to think socialism can replace the free market, and he's too cynical and aware to believe the free market really is free. He never stops learning. He has respect for facts and figures.

True, he's no professor of economics or high-tech millionaire. But unfortunately, I don't meet many academics, businessmen, entrepreneurs or intellectuals who have the kind of energy, courage and yearning for change that Ofer has. Most are too involved in their own affairs and are afraid to critique or attack the powerful unless they have something personal at stake. No new leadership has sprung up in Israel that is prepared to take risks and fight the current order based on knowledge and values. Naturally, most of the politicians, in the opposition and coalition alike, bow before the powerful interest groups.

The development of the public discourse, specifically in respect to the seam between the tycoons, the bankers, the regulators and the government, scares the decision makers in the business and public sectors.

Until not many years ago, the public discourse focused mainly on diplomatic issues – territories: yes or no – and specific local issues. It was very convenient for the people in power: The public was divided in half (pro or con the territories). From time to time some other issue would rise up and die down, never threatening the system. People could scream to their hearts' content about the occupation – that was "democracy" – and everybody figured the war-and-peace machine would keep supplying jobs for decades to come. Just don't pry into the system – the way money and power are divvied out in this country.

In Gaza, out of Gaza, partner no partner, just don't poke into the defense budget or ask how many millionaires the defense establishment has created, whether through arms sales, tenders, unnecessary jobs or pensions.

Talk all you want about the rights of women, minorities, Arabs, the Druze, the Bedouin and the Circassians. Pontificate on religious oppression and intolerance. But don't ask how the NIS 350-billion national budget is being used and managed.

You can talk till the cows come home about capitalism versus social-democracy or privatization versus nationalization. That's fine; go for it. It won't change anything anyway. But do not ask why the government decided to let the mediocre tycoons keep control of the banks and insurance companies that manage a trillion shekels of the public's money.

Netanyahu, a veteran politician well-versed in economic affairs and policy, shies away from the public protest and new public discourse, which makes sense. The position of Yair Lapid, the new finance minister and ostensibly a product of the social protest, is harder to understand. The contempt he has evinced toward "populism" could reinforce the impression that he is no product of the social protest after all; that he has no burning drive to bring change; that he is a product of the daily paper Yedioth Ahronoth (where he published a weekly column for years), the Channel 2 television station (where he hosted a show) and Bank Hapoalim (for which he starred in ads). These are three of the most powerful institutions preserving the system.

If Netanyahu, Lapid and their people are really concerned about populism, they should tackle it head-on. They have the microphones, the studios, the access and the power to explain, teach and manage a dialog. Maybe they don't want to, because inconvenient questions might arise.

But Eyal Ofer isn't alone. Slowly, movements are forming that have values and knowledge and want to change the structure of the Israeli economy. Tomer Lotan and the Maas group are the farthest cry from populism. They don't bog down with slogans about left and right – they believe the worst problem, which receives the least attention, is the quality of service in the public sector. They reflect the maturation of Israeli society.

"We want to look at the elephants in the room that everybody's ignoring," Lotan says.

They know change can only come from people like them.

In the past couple weeks, Netanyahu, Lapid and their people have been conducting a coordinated attack on "populism," which seems to have gotten under their skin just as the public discourse has moved onto very non-populist issues – Israel's gas and the structure of the capital market after economic concentration is wound down.

But here's a surprise. The ones leading the attack on economic concentration aren't politicians from the left. They're economists like professor Avi Ben-Bassat and Ami Erel, one of the few members of Knesset with a true business background.

If we dig into it, we find that the people attacking the government believe very much in the free market. They just think the present market structure, which the government is in no hurry to dismantle, is bad for business and competition. Maybe Lapid and the prime minister should read "Saving Capitalism from the Capitalists," a book by two University of Chicago professors, Raghuram Rajan and Luigi Zingales, about how people in positions of power monkey with the system for their own good, not the greater one.

Thousands of social justice protesters in Tel Aviv, August 6, 2011Credit: Tal Cohen
Activist Eyal Ofer is no populist.Credit: Moti Milrod

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