6.6% Growth? What Dreadful News

What horrible news! What a black day! The economy grew by 6.6% in the first quarter? If we are not careful we might even set a new record, passing the 7% growth achieved at the end of the last millennium. Horrors.

This is a hard day for everybody who besmirched Benjamin Netanyahu's economic policies, who are diligently working on undoing the Sharon-Netanyahu government's reforms.

Does Amir Peretz even remember that when Netanyahu, the most vilified man in the country, presented his economic reforms in March 2003 as the country staggered toward financial meltdown - Peretz, then head of the Histadrut labor federation, prophesied that Netanyahu's plan would cause huge unemployment and send the country into a deep recession?

Three years later, we don't have recession, we have growth. We don't have hordes crowding cars at traffic lights brandishing ill-spelled signs "Will wurk for food", we have receding unemployment. Instead of recession, 200,000 people have joined the workforce.

It turns out that Netanyahu's plan introduced a spirit of competition and entrepreneurship. He lowered government expenditures and taxes, and enabled the private sector to breathe and develop.

He cut the guaranteed income supplements and started the process of equalizing child allowances. He also forced many of those who could work to return to the workforce. He separated the banks from their mutual and provident funds, and reformed the ports and the pension funds.


So why is it surprising that the economy is growing at such an amazing pace? Why is it a surprise that business sector growth is rising even faster?

And it is not only the growth, but the fact that it is rising from quarter to quarter - along with investment growth - that is amazing.

The social-welfare lobby will try to tell us that all this - the quick turnaround - is not connected to the free-market economic policies. They will try to say that it is a result of the disengagement from Gaza, United States aid grants and global high-tech growth.

But it is clear to everyone that if today, instead of rapid growth and increased employment, we were to have seen a deep recession and growing unemployment - Netanyahu would have immediately, with no hesitation, been declared an enormous economic failure. So now we have to give him the credit due when the figures clearly show success.

There is another important lesson to be learned: We cannot go backward. We cannot increase taxes or raise government spending. We cannot return to the discriminatory child allowances. We need to continue with the reforms and encourage more people to join the workforce. That is the only way that there will ever be enough resources to fight poverty and close gaps.