Zionist Camp’s Economics Guru Needs to Revamp His Program

Sure it’s tough listening to the Labor Party’s neo-Marxists, but Manuel Trajtenberg’s plan offers too many promises that will ruin Israel's economy.

Nehemia Shtrasler
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The head of a government-appointed committee on socioeconomic change, Prof. Manuel Trajtenberg, speaks to MKs in the Knesset, October 4, 2011. Credit: Emil Salman
Nehemia Shtrasler

You shouldn’t envy Manuel Trajtenberg, Zionist Camp’s candidate for finance minister if the Labor-Hatnuah alliance forms the government after the March 17 election. It’s not easy to stand in front of a group of Labor Party neo-Marxists attacking your economic program. It’s not easy to listen to their complaints and slander.

As far as they’re concerned, another 7 billion shekels ($1.75 billion) for the budget is nothing, not even an appetizer. Shelly Yacimovich, Yossi Yonah, Merav Michaeli and Stav Shaffir want to increase spending by much greater sums.

Back during the 2013 election campaign, Yacimovich talked about 138 billion shekels in spending increases over five years — neo-Marxism at its best. This is also a way to lead the country into a crisis, poverty, shortages, unemployment and inflation, as can be seen in Venezuela, where Yacimovich’s doctrine has been put into practice.

But the problem is that Trajtenberg’s plan isn’t right either. It promises the world while forgetting there isn’t the money. It contains Houdini-style sleight of hand: We’ll increase spending and intervene without raising taxes, but we’ll still cut the deficit. How’s that possible? It’s not.

If Trajtenberg opened the draft 2015 budget, he’d find a complete analysis of our budget situation for the next few years on page 244. We already know that the deficits will be very high due to the government's obligations. In 2016 alone, 13 billion shekels will have to be cut to maintain a reasonable deficit.

So how can we talk about increased spending without getting into a Greek-style crisis? Apparently, some politicians think the people are foolish enough to believe what they’re told and vote accordingly.

The plan’s main plank is housing. It proposes giving away land for free if the government is allowed to rent the homes to young couples at subsidized prices. This isn’t a realistic plan; it competes only with former Finance Minister Yair Lapid’s plan to scrap the value-added tax for certain buyers of new homes. It’s a step backwards to the days of bribery and deception.

Who would manage the housing stock? Who would get the homes? What would the criteria be? What would be done if someone got the reduced price and then turned around and re-rented the place at full price to another couple?

Would a special apartment police be set up? Would another government company be set up to manage the apartments? Since the housing supply won’t increase, it’s clear this election maneuver wouldn't just fail to lower prices, it would halt construction and spur price increases. That's elementary, my dear Trajtenberg.

On other issues — education, health, the cost of living, employment, social welfare and the elderly — the plan is so full of slogans and promises there’s no use commenting on them. From Trajtenberg, the quintessential economist, I would have expected an entirely different plan, one without promises.

I would have expected a plan that lowers the deficit, not increases it. A plan that admits you can’t make something out of nothing — that if you want to increase spending on one thing you have to cut it elsewhere. A plan with new priorities, not just increases. A plan that doesn’t raise expectations of a finance minister handing out goodies.

A plan with key reforms such as eliminating the value-added-tax exemption on fruits and vegetables, not to mention the one for Eilat. A plan that streamlines the defense budget, reforms the public sector and the Israel Electric Corporation, raises the retirement age for women and shuts down the last dinosaur, the Israel Land Authority. A plan that lowers the huge import duties on milk, beef, chicken, fish, fruits and vegetables, olive oil and honey — and these are just examples.

It’s true it’s not easy to stand up to the neo-Marxists, but if you don’t give the people a bold plan, why get into politics at all?