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The government-tycoons-media triangle
By DANIEL DORON
15/03/2011
This country needs to slash its state budget by as much as possible if it wants a chance at fighting waste and corruption.
 
Recent deliberations on the government budget raised the question of whether it should be cut and by how much.

The answer is yes, and by as much as possible; the Israeli public sector is the nation’s largest employer (every third person works for it) and the biggest buyer. Government is a big part of it.

Since government provides so many jobs, plus near-absolute job security, and since it spends billions, our tycoons have become adept at milking it. They spend scores of millions on lawyers, accountants and lobbyists to help secure benefits of all sorts, plus laws and regulations that inhibit competition.

The strong bond between government and capital that developed here has a third partner, the media. Until recently, when Yisrael Hayom broke the mold, the media were a duopoly owned by the tycoons, and protected them (with the noble exception of The Marker and its valiant editor Guy Rolnik, who, at great cost, leads the struggle against excess media concentration).

A cooperative media assists the very powerful lobbyists that the tycoons employ. The lobbyists are extremely powerful. They secure lucrative jobs for former bureaucrats and MKs, as well as contributions for primaries and advertisements for the press. They also make sure that those who cooperate get favorable coverage, while those who do not get clobbered.

Lobbyists sit in on all Knesset committees, and are given almost unlimited time and a respectful hearing, however absurd and distorted their cases. The recent spectacular victory of Communications Minister Moshe Kahlon over the cellphone companies’ lobby was so remarkable because it is rare that even a determined minister triumphs over the lobbyists.

ISRAELI GOVERNMENTS, more than governments elsewhere have excelled in waste. The only way to get it to be moderately efficient (you can only dream of true efficiency) is to cut its budget so drastically that its ability to squander money is limited.

The question is what to cut.

An examination of the state comptroller’s reports can provide a laundry list of huge expenditures, especially in defense, education and welfare – the big-ticket items of wasteful government.

Waste has additional negative repercussions. It causes inefficiency (or perhaps inefficiency leads to waste) and corruption.

Inefficiency is harmful to the longsuffering taxpayers, many of whom can barely make ends meet. Yet they do not get adequate returns for their sacrifices, neither in internal or external security (think of the slaughters in the West Bank and the years of rockets hitting the south) nor in education or in law enforcement. Imagine what the talented Israeli entrepreneurs and workers could achieve if they would not be shackled by government, what a spurt of high growth we could enjoy.

This is why it is imperative to have deep cuts in government. Only a very small government can be even moderately efficient.

The repeated budget cuts Netanyahu imposed when he was finance minister made government a little more efficient, less intrusive.

Resources were shifted from a wasteful public sector to the private sector, which is, alas, only relatively more efficient. And yet vigorous growth followed To really cut seriously, the disciplined (and much-maligned) members of the Treasury’s Budget Division should draw up a list of wasteful activities. With support from their determined minister, Yuval Steinitz and the Bank of Israel, which knows the economy well, they could determine what should be cut.

BUT IT is not to be. Prime Minister Netanyahu, a super waste-cutter, needs all his political capital for political survival. Charged with such excruciating tasks as defending the country from Iran and assorted mischief makers plus disastrous developments (we haven’t yet seen the worst of the manipulated Arab rebellions), he could not be expected, even if he were Superman, to fend off the various coalition blackmailers’ demands, and especially the demands of Ofer Eini, the Histadrut chief, who being a labor kingmaker gets practically anything he wants (and it is plenty).

Evidently, bargaining with Eini, who doesn’t seem to care much about the weaker workers (he’s consumed with pushing for ever-more privileges for the fat cats of the monopolies – bosses and workers alike) is extremely time- and energy-consuming.

How can Netanyahu be expected to deal with Eini and find time to deal with his other Herculean tasks? The media too will make Netanyahu’s life miserable. They helped our “caring” politicians kick up a storm about the painful yet really minor and inevitable price hikes.

Even small price hikes inflict pain on the already overburdened millions of workers. Yet they are nothing compared to the inflated costs wrung from consumers by the tycoons and their monopolies, who, by Treasury estimates, bilk a full third of the miserable salaries most workers earn.

The media have little to say about this great outrage; our watchdogs are not about to bite the hands that feed them with billions in advertising income.

An across-the-board cut is not the best, but it’s the best we can get under our corrupting political system.

The writer is director of the Israel Center for Social and Economic Progress.
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