The Tycoons' Moment

In Israel, the tycoons - who like to click their tongues over 'the state of education' and 'the state of the health system' - have yet to utter a single responsible peep.


Even before the events of Palestinian September erupt and rescue Prime Minister Benjamin Netanyahu from having to cope with "the peoples' demands," it seems he is already arranging on his own for the protest to be weakened. The Trajtenberg Committee, whose chairman has already announced that he will not bust the budget, is merely a smoke screen. Behind him, a three-sided process of dismantlement is taking place.

The first side of the triangle, the committees to accelerate residential construction (known in Hebrew by the acronym vadal ), has already been completed. Netanyahu presented their establishment as a response to the protest, even though these committees, an exact replica of the Residential Construction Committee of days gone by, have been his pet idea for several years now, in the spirit of the land privatization he has tried to carry out ever since 1996.

The second side of the triangle, the battle against economic concentration, is also behind us. In his weakness, Netanyahu allowed this concentration to worsen, but that isn't what he wanted. Now, it would admittedly be convenient for him to implement the recommendations of the committee he set up and portray himself as a trust-buster, but in any case, he believes in the necessity of this step with all his might.

The third side - a change in tax policy - has been trumpeted in headlines since the beginning of the week. But faithful to the economic system to which he adheres with impressive religious zeal, Netanyahu has thus far refused to accede to the Finance Ministry's pleas to make such a change.

For some years now, treasury experts have sought to cancel planned reductions in corporate tax and even to raise this tax, to create a special tax bracket for especially high earners, and to raise taxes on income that isn't from labor - primarily, capital gains and dividends. As far back as a year and a half ago, the treasury's outgoing budget director, Udi Nissan, warned that continued tax reductions were liable to exact a heavy price, and that Netanyahu's belief that "fewer taxes mean more growth" was mistaken. "Citizens of a country with a per capita income of $30,000 expect a higher level of public services," he said in an interview with TheMarker.

Granted, Nissan didn't say that the level of those services that have undergone privatization or massive dilution is disastrous, but he hinted as much. And experience teaches that the farther away a person is from his public office, the more outspoken he becomes.

As noted, Netanyahu has thus far stubbornly refused. But now, to ease the pressure, he might accede to a softened version of the treasury proposals and present it as an achievement for the protesters.

When the complete triangle is presented to the public, that will be the protest's moment of truth. Its leaders, and the experts they asked to assist them, will have to explain why this triangle is not a real achievement and is not a reason to dismantle the protest tents. They will have to remind the public why they took to the streets, and why, as long as the system here has not been radically changed, they have no reason to desist from the profound revolution they are carrying out, which has already given rise to a sweeping change in the socioeconomic discourse.

That is where the protesters' responsibility lies. But this responsibility cannot be allowed to fall on the young protesters alone. The much greater share falls on Israel's business community, to which successive governments have catered. It's difficult for them? They have people whose example they can follow.

The legendary Warren Buffett fired the opening shot, and this week, a group of the highest earners in France - including bankers, advertising and media tycoons, and the CEOs of companies like L'Oreal, Danone and Citroen - published a petition entitled "Tax us!" Nothing less. In light of France's deficit, and as a gesture of solidarity with the general public that is being asked to contribute to the effort, the rich, who termed themselves "the fortunate," demanded to pay much higher taxes than the state currently levies on them.

They thereby confirmed the economic thesis that has recently gained prominence in Europe: that huge deficits are not the result of excessive government spending, but of insufficient income, which (to quote Nissan ) weakens the state's ability to provide services. Moreover, they proved they understood that something very deep and basic has changed: that the party is over.

But in Israel, aside from occasional expressions of "solidarity" with the protest for PR purposes, the tycoons - who like to click their tongues over "the state of education" and "the state of the health system" - have yet to utter a single responsible peep. The time has come for them to do so.