Netanyahu, Lapid Get Failing Grade on Economic Policy

Three economists have little good to say about Israel's economic policy.

Zvi Zrahiya
Zvi Zrahiya
Netanyahu and Lapid at the Knesset.
Netanyahu and Lapid at the Knesset. Credit: Emil Salman
Zvi Zrahiya
Zvi Zrahiya

Finance Minister Yair Lapid’s words of praise for the 2015 draft state budget didn’t impress a trio of leading Israeli economists. Speaking on Sunday, they gave him and Prime Minister Benjamin Netanyahu Fs in economic policy management.

“I would give [Lapid] a very low grade, perhaps 45” out of a possible score of 100 — “a total failure,” said Shlomo Maoz in an interview with TheMarker TV and the Knesset Channel.

The economist’s bid for a place on the Likud Knesset slate in the last election was backed by Netanyahu. He gave Bank of Israel Governor Karnit Flug a passing grade, saying she failed to act quickly enough to head off slowing economic growth.

“There was an economic slowdown already in November 2013 and the Bank of Israel didn’t read the map correctly. I told them to reduce the interest rate. It’s not their job to lower housing prices,” Maoz said.

He gave both Netanyahu and Foreign Minister Avigdor Lieberman a C+.

Avi Ben-Bassat, who until fairly recently was an economic adviser to Lapid, said it was impossible to make a distinction between the performance of Lapid and of Netanyahu. “The government has collective responsibility and they are responsible together for policy,” he said, awarding them “a very bad grade, they didn’t pass, they failed.”

Regarding the 6-billion-shekel ($1.6 billion) defense spending supplement, Ben-Bassat said he had no doubt it would come at the expense of civilian spending. Before Operation Protective Edge, the cabinet had agreed to increase total 2015 spending by 8 billion shekels, he noted.

“If defense spending rises between 6 billion shekels and 8 billion shekels, there won’t be any money for civilian services. Remember the population grows by 1.7% every year,” explained Ben-Bassat.

Yossi Yonah of Ben-Gurion University said he measured the success of an economic policy by its ability to redistribute wealth and ensure social justice.

“By all the social indicators we lag behind the countries of the Organization for Economic Cooperation and Development. If you measure us as if we were a business, the situation is okay — we’re profitable, exports and per-capita income are up and we have a stable economy. But if you compare the factory owner to his workers, we’re talking about a dismal failure,” he said.

Yonah said the defense establishment was acting like an interest group, and that was undermining public confidence in the army’s leadership.

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