Small Politics and Narrow Interests

Finance Minister Roni Bar-On is about to be lashed, made to eat rotten fish and chased out of town. That is the punishment for the person who did not stand strong in the face of the populists and those with vested interests.

Finance Minister Roni Bar-On is about to be lashed, made to eat rotten fish and chased out of town. That is the punishment for the person who did not stand strong in the face of the populists and those with vested interests. The man who did not express an unequivocal stand, sharp as a blade, against the roars for a "safety net."

As soon as Bar-On and the senior officials in his ministry presented the economic growth plan, he should have understood that it was a big mistake. The public does not care about any macro plan, train to Jerusalem, or desalination plant in Ashkelon. The public wants only one thing: to get back the billions it lost in the stock exchange. Let Bar-On give it back. Let Tzipi Livni give it back. Let Ehud Olmert give it back. If they cannot, Benjamin Netanyahu will come to power, and he will give it back.

Therefore, the plan for economic growth was disparaged from all sides. MKs decried it and Labor said, "the failing finance minister should be replaced," because he did not solve the problems of the losses in the pension and provident funds.

Bar-On might not want to know this, but any plan he presents now as a "safety net" will run up against exactly that same wall of contempt and opposition. All the politicians will claim again and again that it is too little, too late. They will say that compensation must be given for past losses, not a safety net for the future. They will say that there is no need for an income test or to check whether a saver has another pension or property. Just pay everyone and that is that.

The fact is, Histadrut labor federation chairman Ofer Eini has already managed to express his opposition to a plan "full of holes," one he has not yet seen. The fact is that journalists representing extraneous interests continue, even now, to sow panic and lash out at the finance minister. They say they would give such a plan a miss, and that the time has come for the finance minister to open up all the taps and let the billions flow to the public and the economy. And if the economy collapses? That's not their problem.

At the top of this group of parties with vested interests are the bankers (who "brief" the journalists). They speak of concern for widows and orphans, but in fact they want to save themselves and their bonuses. They failed in their investments and by giving vast amounts of credit to tycoons and to hundreds of companies that built houses of cards. Now the value of the collateral has eroded and the banks are showing heavy losses. Thus all their bonuses will disappear, too.

The insurance companies are putting on the pressure to give the public a safety net, because their high management fees are sharply eroding. The tycoons want a safety net, because they are afraid their businesses will collapse, and how will they hold on to the private planes they bought at the expense of the public? The investment houses want a safety net so their clients will stop fleeing from their poor management. To lose money, we already know how to do by ourselves.

But the politicians have gone over the top. Expressing their enthusiastic support for the safety net are 119 MKs. They have turned this into an election slogan, along the lines of "peace and security" in previous elections. Furthest over the top is the Eini-Netanyahu duo. Eini is trying to implement what is in fact the most anti-social solidarity act seen in this country in years. To have Mrs. Cohen from Hadera, who hardly has enough money to finish the month, and has no pension, transfer her tax payments to benefit the Electric Company employees and the banks, who have an assured pension as well as fat provident funds - that is social justice, Eini-style.

Netanyahu, who once fought all-out wars against the Histadrut, now calls Eini's proposal for a safety net a "good idea." Soon he will be saying that increasing social allowances and subsidizing workers' salaries are good ideas. After all, he already folded his main flag when he promised Shas he would increase child allowances.

Bar-On has to understand that the "safety net" he will present will finish him off politically. Even if he pledges all the billions Eini wants, that will not stop the attacks. Eini will immediately pull out a new weapon: payment of wages for all whose whose jobs are no longer assured, while threatening a general strike over that matter.

Therefore the only step Bar-On should take is to go to the public and tell the truth. He must come out with detailed tables that explain that the public has not lost in the provident funds, the funds have not been wiped out, that there were high profits for five years and that the big loss in 2008 still leaves the public with a fine profit (see graph).

He has to explain that the safety net is poison to the budget, to growth and to employment. He has to explain that he is not willing to enslave the future and burden the economy with insane obligations. He has to say that this is cheap populism and a campaign by those with vested interests who are intentionally causing the continuing decline by sowing panic. Without them, the stock market would have stopped its nose-dive, because there is no real economic reason for it to be doing so. Therefore, he should declare, he will not agree to any safety net, even if the Histadrut strikes for one hundred years.

Such leadership would halt the declines. Such leadership is what we are missing today.