The Long Train to Growth

Maybe the right thing to do is reduce the government's involvement in the economy, to continue trimming the budget, lowering taxes on earned income and reducing allowances in order to encourage people to work.

Finance Minister Benjamin Netanyahu's detractors (and they are many) have had a tough week. They did not like the sound of the latest positive economic figures: Industrial production rose, as did imports of raw materials, retail sales are looking up, exports continue to flourish, growth is strengthening its foothold, and most importantly unemployment is slowly shrinking and currently stands at less than 10 percent of the workforce.

A year ago the "social" champions predicted just the opposite. Amir Peretz, for example, said that Netanyahu's celebrations of growth were premature and that unemployment figures would continue to rise beyond the 11 percent mark. But what can you do, the economy behaved otherwise.

So maybe this policy is actually correct. Maybe the right thing to do is reduce the government's involvement in the economy, to continue trimming the budget, lowering taxes on earned income and reducing allowances in order to encourage people to work. Perhaps what really has to be done is to stop employing foreign workers in order to vacate jobs, to privatize and to institute reforms that will reduce the power of the large monopolies in this country and increase competition.

Labor party cabinet ministers believe that the social issues hold their party's electoral future, that Prime Minister Ariel Sharon has stolen the show in the diplomatic arena. These ministers vie among themselves for who can be more "social," in order to earn the favor of party members and the large workers' committees prior to the party primaries.

Against this background, Binyamin Ben-Eliezer invited the heads of the Israel Oil Refineries' and Israel Electric Corp's workers' committees to his installation ceremony as infrastructure minister. Ben-Eliezer then said that there must be a reexamination of whether IOR has to be split and privatized. The workers applauded him. Reforms at the electric company are also in danger. The workers zealously oppose them, and after a conversation with Ben-Eliezer, IEC employees began registering with the Labor party.

Communication Minister Dalia Itzik has already managed to intervene in the reforms at the Postal Authority. She told workers that she needed to reexamine the matter of quantitative mail distribution, and the workers smiled with satisfaction. Housing Minister Isaac Herzog wants to reinstate the grants for the purchase of apartments in outlying areas. It sounds great and nets him an immediate political bonus. Interior Minister Ophir Pines can unite local authorities and dissolve authorities that exhibit budgetary irresponsibility. But will he embark on a struggle against the heads of the authorities? The future of the sea port and banking reforms are now uncertain too. Will the Labor ministers stand beside the rich workers' committees, or with the public?

There are even problems with the issue of the budget. Netanyahu has reiterated that he will not breach the budget framework, but Minister Without Portfolio Haim Ramon really wants to deviate from it. He is not impressed by the fact the current economic growth was achieved thanks to cuts in government spending, facilitating tax and interest rate reductions and the expansion of activity in the business sector.

Netanyahu's work is not finished. The socio-economic gaps have not only not shrunk, they have actually expanded in the past year - and that is bad. After all, a society cannot maintain cohesion and stability if the gap between the rich and the poor keeps growing; this is an existential threat.

It is therefore worth bringing more jobless into the ranks of the employed - by increasing the investment in the Wisconsin Plan, which is designed to get guaranteed income supplement recipients back to work. Negative income tax should be instituted to encourage low income earners to work, and training programs should be offered so that Israeli can replace foreign workers in agriculture, construction, nursing and domestic service.

Work is the only effective weapon against poverty. Only through working can people regain their self-respect and their status in their family. It is clear that not everyone is capable of working, so assistance must be extended and even expanded for those who cannot support themselves.

The growth train has pulled out of the station, but in the meantime only the engine and half of the cars have begun to move. The 20th car is still motionless on the track. The forward momentum has not yet reached it - and it needs to reach it as soon as possible.