The Bottom Line / Two-faced No More

Today there is no more popular activity than taking a bash at former finance minister Benjamin Netanyahu

Today there is no more popular activity than taking a bash at former finance minister Benjamin Netanyahu. There he lies wounded and bleeding, after the Likud central committee fiasco, so everyone can blame him for the ills of society, the poverty and unemployment, the soup kitchens, everything. One can even blame him for taking the first shot at the poor for the benefit of the rich. Yes, it's a free for all, a very popular pastime. But oh so very wrong.

It's so easy to forget, but Netanyahu took on the job at the start of 2003, when the economy was mired in a deep crisis. The stock exchange was wallowing at its depths, interest rates were sky high, and the state couldn't borrow even one dollar on the international markets. The intifada and terrorism caused tourism to dry up completely, investments to drop, and private consumption to slow down, and the results were bankruptcies, dismissals, wage cuts, rising joblessness - and a biting recession.

And then Netanyahu arrived and changed the mood. He was the first finance minister who spoke about the free market as an ideology. He didn't hesitate to put the fat man (the public sector) on a diet so that the thin man (the private sector) could grow and blossom, providing new places of employment.

And what did the "social welfarers" have to say about him? That his policies would worsen the recession to rising unemployment and the mother of all crises. Histadrut chief Amir Peretz said: "Unemployment will continue to rise and will pass the 11 percent level," and fellow MKs Haim Ramon, Yossi Sarid, Haim Oron and Tamar Guzinsky all concurred with this forecast. But they all came a cropper: the policies brought the economy out of the crisis, a renewal of growth, and a drop in unemployment.

What's clear is that government expenditure should be curbed, the budget cut, taxes on labor slashed, and welfare payments reduced to encourage going out to work. The government should privatize, push more reforms on pensions, the ports, the banks, the electricity sector, Oil Refineries and Mekorot - all of which would boost economic activity, but harm the mighty, the rich and the strong.

Today our economy is growing at the highest rate in the West: 5 percent a year. Some 180,000 Israelis have returned to the workforce, productivity has risen, real wages have increased, unemployment has dropped from 11 percent to 9 percent. Inflation remains under control despite sharp rises in the dollar and the price of oil, and we have a balance of payments surplus. Now if all that isn't for the social good, then what is? And of course we won't forget that the political process (the Gaza disengagement carried out despite his protestations) also brings economic benefits.

It's easy to blame Netanyahu for poverty and society's ills. But it just isn't true. The poverty and financial hardships have been growing in Israeli society for the past 30 years under the misguided policies of increasing welfare payments, which caused an exodus from the labor force. Obviously at first, when welfare payments are cut, there is an increase in poverty. But that's just like in surgery: at first it hurts, but over time, it is life-saving, and the only rescue for our economic social ills is the move to a culture of work.

The good Olmert - Netanyahu's replacement - could not devote even one shekel to helping the situation of the poor, or the local governments, or roads or financing the disengagement, if Netanyahu hadn't first saved the day. But at the critical moment, just when the jug was full of milk, Netanyahu kicked out and upset it. He had no patience. Instead of going out to the public in an election year with a plan to improve the fare of the poor, he is leaving it to his rival Olmert.

For two and a half years he worked in the treasury to convince us that the old Netanyahu was dead. You remember? That arrogant, flighty, not serious prime minister; the one that was thrown out of office in 1999. And lo and behold, on August 7, he abandoned the wheel of responsibility and returned to his old image.

So we have two Netanyahus. The one is a good and successful economist, the other a bad, impatient politician with far-right ideology. And the politician managed to knock the economist out cold.