Analysis

The Pundits Got It Wrong: In 2019, the Economy Did Sway Israeli Votes

Polls show that people’s feelings about the economy are shaped by their politics — and the right-wing majority thinks Bibi & Co. have delivered

Posters of Prime Minister Benjamin Netanyahu outside the Tel Aviv hall where Likud held its victory rally, April 10, 2019.
Ariel Schalit,AP

The central thesis of the elections for Israel’s 21st Knesset was that the economy and social issues were ignored in favor of national security, the left-right divide and the personality of the prime minister – yes Netanyahu or no Netanyahu. Political advisers told their clients that these were the talking points and only candidates of the second string campaigned otherwise.

The results on April 9 seem to have borne out this thesis. The parties that focused on the economy – Meretz and Labor on the left and Zehut, Kulanu and Gesher on the right – did poorly; some even failed to garner enough votes to enter the Knesset at all.

Most of the votes went to the two big parties of the center, which avoided taking firm stands on socioeconomic issues at all. The rest went to sectoral parties like United Torah Judaism and Shas for the ultra-Orthodox and Hadash-Ta’al and United Arab List-Balad for Israeli Arabs.

The political wisdom that operates in most Western democracies according to which “it’s the economy, stupid” doesn’t apply in Israel. It’s wrong or perhaps its application isn’t quite the same.

To understand why, you have to go to the opinion polls that were conducted a few months before the election. One by the Israel Democracy Institute two months before the vote found that for most of the Israeli public the issues that mattered most were socioeconomic – 45% said so, compared with 28% who opted for defense and foreign policy, 11% for state and religion and 9% for the state of Israel’s democracy.

But the poll’s sponsor expressed the view that the public wouldn’t really be influenced by economic issues for the simple reason that there is no major difference between the main parties on policy issues. Why choose a party based on its economic stand when it’s no different from the others.

In fact, an examination of the party platforms on the eve of the elections showed that to be exactly the case. Likud and Kahol Lavan had almost identical positions and most of the smaller parties were no different. The economy might be important to the public, but it doesn’t present voters with the same stark choices that other issues do.

But there’s another reason, which is even more important, that explains why the election didn’t center on the economy: The public believed its financial situation was good, so it naturally opted for the parties that have been in power or for the one that promised to preserve the status quo – Kahol Lavan, with the added benefit of offering to getting rid of Netanyahu.

That view is supported by polls taken by IDI and other organizations. The Israel Democracy Index for 2018, led by Prof. Tamar Herman, found that 53% of Israelis thought that Israel’s economic situation is “good” or “very good.” Another 30% think it is “so-so” and only 16% termed its “bad” or “very bad.”

This is a long-term trend. Since 2003, the percentage of Israelis who thought the economy was “good” or “very good” has been rising. In the last two years, the increase has accelerated. The majority of TheMarker readers think the economy is in bad shape and expect it to get worse in the coming years, but the majority of the broader public thinks otherwise.

A survey done by the Central Bureau of Statistics published in February shows the consumer confidence index, which tries to measure how the public sees what’s happening, is rising all the time. When the CBS asks the public questions like “What changes do you expect in terms of your household finances?” “What changes do you see happening in the country’s economy?” and “What are your expectations regarding your ability to save?” the answers grow more optimistic year by year.

Could it be? How is it possible that on the one hand the media reports day in and day out about the hole in the state budget, the price of housing, the collapsing healthcare system and traffic-clogged roads, while on the other hand the public thinks the economy is doing just great?

The answer could lie in another survey, one that asks the public what they think of the economy, with the answers categorized by their political positions. The poll, which was conducted in June 2018 also by IDI, asked respondents where they thought the Israeli economy would be in another 10 years. The results are fascinating.

Among Likud voters, 56% said they expected it to be better while among Meretz voters only 8% said they thought so. Between these two extremes, half of Habayit Hayehudi voters were bullish, for example, while only 25% of Zionist Union voters thought that way.

Strange? It’s the same economy for all of them whether you’re a rightist or a leftist. But the fact is only a small number of people make their forecasts based on a real analysis of the situation; most of them respond based on their gut instinct.

In other words, right-wingers who voted for Likud are happy that their party and their leader is in power, so they accept the narrative that the economy is in good shape and will stay that way. In contrast, leftist voters, even if many of them are earning more and have a higher standard of living than voters on the right, are unhappy that their representatives are out of power. They adopt the narrative that all is bad and will get worse.

The bottom line is that even feelings of wealth and financial security are influenced by politics, social psychology and the group thinking of the various political blocs.

It may not find favor in the eyes of centrists and leftists, but Netanyahu has a point when he says Israel’s economy is in excellent shape. Most of the right feels that way and they are the majority of Israelis. He’s also right when he describes leftists as sourpusses. Those polls show that their views aren’t connected to the objective reality They’re unhappy because they aren’t in power.

In the United States it’s the same. On the eve of the 2016 presidential election, when the polls predicted a victory for Hillary Clinton, most Republicans said they believed the economy was in trouble while Democrats expressed the view that Barack Obama had done a good job and the economy was fine.

Right after the election, however, when Donald Trump emerged as the victor, the views changed overnight. Suddenly, those same Republicans thought the economy was better while the Democrats had become bears. It all changed in a matter of days – not enough time for economic fundamentals to have changed at all.

The explanation is pretty simple: We’re human beings, not computers, and our judgments are affected not just by our assessment about the state of the economy but by subjective factors as well as our moods.

The polls show two things. The first is that for the majority of the public economics is politics, subjective and emotional, even if they have access to data, graphs and tables.

The second is that despite everything the last election was about economics after all. The majority chose Netanyahu and the parties of the right because they thought that that coalition had performed well over the last four years and wanted it to continue. The main opposition parties offered no real alternative and the public rejected the alternatives the small factions proposed.

In the end it may have been the economy, after all, stupid.