The Frightening Side of Peretz

On August 6, 2001, a month before the attack on the Twin Towers, the president of the United States was shown a special intelligence report on the subject of al Qaida plans for terrorist attacks and airplane hijackings.

On August 6, 2001, a month before the attack on the Twin Towers, the president of the United States was shown a special intelligence report on the subject of al Qaida plans for terrorist attacks and airplane hijackings. The title of the report was "Bin Laden is determined to attack the U.S." But George W. Bush listened and did nothing.

Imagine if he had taken action: arrested Islamic activists, prevented money from reaching their organizations, forcing airlines to search every passenger, arrest people without trial, go to war in Afghanistan - and even managed to demolish al Qaida. What would we have said then? That he is crazy, that he sees mountains in shadows, that he is xenophobic, especially toward Muslims and that he is unnecessarily sacrificing young American boys. Nobody would believe that he prevented the horrific attacks in New York and Washington, because the catastrophe didn't happen.

That's what happened to Benjamin Netanyahu. He received an economy in deep crisis in 2003, after two and a half years of intifada that had scared away the tourists, emptied the malls and created a deep recession, accompanied by plant closures, firings, reduced wages, stalled investments and a total loss of economic security. The crisis was so deep that the governor of the Central Bank expressed worry about the possibility of a large bank going under, and the accountant general said that it was impossible to borrow one more dollar overseas. There was a huge deficit in the budget, 6 percent of the GDP, the dollar was threatening to go past the five-shekel mark, and anyone who could smuggle millions out of the country did so. We were a hair's breath away from a crisis like Argentina's, which would have meant poverty and shortages of enormous dimensions.

Netanyahu arrived at a critical moment - and by accident. Sharon gave him the Finance Ministry to trip him up, but Netanyahu actually succeeded. He conducted a classic plan: cut the budget, lower wages and taxes, cut welfare and run a long list of reforms. The plan got the economy out of the deep hole, and led it to 5 percent growth and a dramatic drop in unemployment: 170,000 Israelis were added to the job market in the last two and a half years.

But there's no good without bad. The gaps widened and poverty grew as a result of the cuts in allotments, because it takes time to persuade the public to go to work. But since the state's coffers have been filled (because of growth), it is possible and necessary to conduct corrective plans that will narrow the gaps and fight poverty by subsidizing and encouraging people to join the workforce, and increasing welfare for all those who cannot work.

The public reaction to Netanyahu's achievements proves that the law of catastrophe works. Netanyahu has become synonymous with failure. He invented poverty. Before him, people lived happily and wealthily. He's attacked from right and left, from the Likud and Labor - that's apparently the fate of someone who didn't wait for a catastrophe but prevented one. (However, that does not make him right for the premiership. He's too extreme, politically, as his new partnership with Uzi Landau proves).

Let's assume that Amir Peretz was finance minister in early 2003. What would he have done? Peretz was against Netanyahu's recovery plan. He presented an alternative plan: raise NIS 5.5 billion from the public through income tax, increase National Insurance Institute payments, and impose a compulsory levy on all citizens. With that extra money he planned to increase government activity. If Peretz's plan had been put into action, we would now be deep in the pits. Investors would have run away, the recession would have deepened, unemployment would have skyrocketed and poverty would be striking at much broader strata of society than it is now. That's why Peretz is so frightening. There's the fear he will want to take us back to a socialist economy controlled from above, with high taxes, more government involvement, tariffs, subsidies and endless bureaucracy. If that happens, the private sector will be damaged and shrink, and minimum wage won't only not go up, it will go down, because the coffers will go empty again.