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Don't Expect Netanyahu to Shout 'Make Israel Great Again'

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Netanyahu, wearing a blue suit, light blue shirt and red tie
PM Benjamin Netanyahu: Should be grateful he was forced into early elections before the economy tanks. Credit: Oren Ben Hakon

The focus of the elections suddenly announced this week, for April, isn't going to be the economy. Not that Israel doesn’t face a host of challenges in the economic sphere, but nobody's going to be wasting their time talking about them.

It isn't that other issues necessarily get treated intelligently, but economics seems to be particularly prone to stupidity.

Typical voters don’t relate to economics beyond how their wallets are directly affected. When times are good, they ignore the matter altogether; when they are bad, they are attracted by easily-digestible “solutions” that often make things worse in the long run.

America voters drank from the poisoned chalice in 2016 when too many of them bought Donald Trump’s story that their economic woes could be solved by stopping the immigrants who were taking their jobs from entering the country, reviving the coal industry, cutting taxes, and bringing back manufacturing from China.

It sounded good to the typical rust-belt denizen, who isn’t creative enough to think about a future better than the good old days. He’s not interested in how to adapt to a changing economy; he wants the old one back.

But the fact is that Trump’s solutions were exactly the opposite of what the U.S. economy needed. Just for one example, immigrants are ensuring the workforce stays young at a time when birthrates are falling. They are plugging a huge gap the U.S. is suffering  in engineering and scientific talent.  Trump’s wall -- which he and his supporters recognize as Symbol No. 1 of his policies that they are happy to shut down the government for its sake -- will only make things worse.

A recent survey of global financial literacy actually ranks Israelis among the best informed; but it also gave high scores to the Americans who voted for Trump and the British who supported Brexit even though the economic case against it was overwhelming.

As Israel’s handful of Yellow Vest protesters have learned over the last two weeks, Israeli consumers -- rich, middle class and poor alike - are not about to throng the streets in protest. They are if anything enjoying an economic boom. Israelis have no reason to emulate the French, and as the elections get underway, they’re not going to be screaming for solutions to non-existent problems.

They wouldn’t get good answers anyway.  When peeps of protests emerged this month over hikes in prices for electricity, water and some food products – a non-event given that prices are in a long-term decline – Finance Minister Moshe Kahlon went into panic mode. His solution was to cut the excise tax on coal used to generate electricity and to promise tax cuts on imported food. He  may have solved a minor problem of price hikes here and now, which  consumers can relate to the next time they go shopping get their electricity bill. But it exacerbates a major problem, which is the government’s widening budget deficit.

But then, what did you expect? Kahlon has been a populist finance minister from day one and with elections approaching his please-the-voter instincts went into overdrive. Unfortunately for Kahlon, the voters don’t really care because pocketbook issues aren’t on their mind. The first opinion polls of the election season show his Kulanu Party falling to five to seven Knesset seats, from 10 now.

In fact, with the notable exception of the 2011 social-justice protests which brought a brief wave of grassroots economic activism, the public hasn’t interfered in what the mandarins at the Finance Ministry and Bank of Israel choose to do.

Splendid isolation

Israeli policymakers live in splendid isolation, free to restrain deficit spending and lower the national debt, engage in some deregulation and privatization without a peep from indifferent voters. It’s not democracy at work, but it does work: The economy has been growing, unemployment is at record lows, wages are rising, and poverty and inequality are slowly coming down.

Bibi should be grateful that he was forced into an early election and not just because the timing may give him a few months’ grace before corruption charges are filed against him. The thing is, after all, the economy is showing the natural signs of strain after so many years of virtually non-stop growth. But the trouble is unlikely to emerge in the 15 weeks between now and Election Day.

That means Netanyahu and the rest can avoid making populist promises on the economy to assuage voters’ concerns. Whether it is Bibi or someone else, the next prime minister will have to contend with a sputtering economy or worse, but he will be starting with as many as four years to deal with by making the right choices it before the next election.

Israel rarely finds itself the position of being a lucky country, but on the intersection between economics and politics, the stars may just be in our favor.