A capitalist government

Almost eight weeks after going to the polls to elect the 19th Knesset, Israelis will finally see the democratic process kick into action. If all goes as planned, the Jewish state’s 33rd government will be sworn in on Monday.

From Binyamin Netanyahu’s point of view, it would have been much easier to form a coalition that included Shas and United Torah Judaism, not because Likud Beytenu and the haredim share an ideology or a political platform, but because of political pragmatism.

But by choosing – or being forced into – forming a coalition with Yair Lapid and Naftali Bennett, Netanyahu has facilitated the creation of a government that reflects a majority consensus among Israelis. And that consensus is surprisingly bourgeois in its sensibilities and capitalist in its outlook.

Not since the 1965 election, the last before the Six Day War, was attention so focused on domestic issues that eclipsed the question of a negotiated peace with the Palestinian – rightly seen as all but unattainable under the present reality (split Palestinian leadership, intransigence even in the “moderate” Palestinian camp, and a lack of an Israeli majority to accommodate Palestinians’ demands).

And because the vote was so heavily determined by domestic issues, it revealed that a strong majority of Israelis in a nation designed and built by socialists has moved decisively away from the economic dogma of its founders.

Indeed, the heads of the two largest factions – Likud Beytenu and Yesh Atid – are outspoken in their support for smaller government and market capitalism.

Meanwhile, Bayit Yehudi, a reincarnation of the National Religious Party, succeeded in doubling its strength, reinstating the party’s standing that began deteriorating in the 1981 election over internal squabbling about the settlements, the role of rabbis in politics and the rise of Shas.

The man who succeeded in doing this was Bennett, a software entrepreneur whose company, Cyota, a developer of anti-fraud security software for financial institutions, was sold in 2005 for $145 million. In contrast, Labor’s Shelly Yacimovich, despite her high level of personal integrity and dynamic leadership, failed to significantly improve her party’s showing with a campaign that emphasized almost exclusively a left-wing economic platform.

Yacimovich had hoped to capitalize on the economic protests that began sweeping the nation in the summer of 2011 and mobilized a record number of protesters not seen since demonstrations against the 1982 First Lebanon War.

But Yacimovich – and others – misunderstood the most significant sociological phenomenon to unfold in recent Israeli history. True, some leaders of the protests articulated decidedly left-wing economic views, calling for larger welfare transfers and attacking Netanyahu’s policies as tilted in favor of the rich.

But the vast majority of Israelis who took to the streets were not demanding more government spending. Consumer rights were in the forefront. They demanded that major food producers cease colluding with the supermarket chains, and complained about the tremendous bureaucratic obstacles making anything from starting a business to building a house a headache.

The middle class was fed up with the market inefficiencies, red tape, and unfair competition that jacked up the cost of everything from cottage cheese to housing. They were not lamenting the breakdown of the welfare state. If anything, mainstream Israelis were making it clear they were tired of paying too much taxes to support a population that does not work, while they serve in the military and perform reserve duty from which others are exempt.

By popular demand, one of the most burning issues facing the new government is the tens of thousands of ultra- Orthodox who do not perform mandatory military service, are not schooled to integrate into the labor market, and inevitably end up becoming a drain on the rest of society.

Now with Lapid as finance minister and Bennett as economy and trade minister (formerly the Industry, Trade and Labor Ministry), the two newcomers to politics are in a unique position to do away with aspects of the economy that are either remnants of the Jewish state’s socialist roots or the product of special entitlements conceded to the haredi population when it was still a tiny, embattled minority.

Let us hope that petty infighting and personal feuds do not get in the way of the important domestic goals the 33rd government was voted into office to accomplish.