The recent elections in Israel produced one major surprise – the Yesh Atid party
(which loosely translates to “There is a Future”) won 19 seats in the 120- seat
parliament. This party was founded just a year ago and is led by Yair Lapid, a
former TV presenter with no public record, and no discernible qualities that
indicate he is fit for public office (although the latter could be said of most
The main reason for Lapid’s success is easily traced to the
growing desperation of the Israeli middle class. This desperation is mostly
economic – the tax burden (including indirect taxes) on the Israeli middle class
amounts to more than 50 percent of income. In addition, the cost of living in
Israel is considerably higher than in most other OECD countries.
to purchasing power and average salaries, most international comparisons suggest
that Israelis are faced with expensive housing, clothing, cars, petrol and food
(although Israel does compare favorably in some areas, such as health
Squeezed between a high tax burden and high cost of living, the
middle class is gradually getting poorer. Double-income families can hardly make
ends meet, and singleincome families are rare. As this impoverishment process
seems to have been taking place for many years and under successive governments
from the Right, Left and Center, the public finds itself voting for a newcomer
who, on the face of it, seems unfit for the job.
Indeed, Lapid is not the
first out-of-the-blue maverick to stun the system with an electoral victory.
Unfortunately, he’s likely to disappoint like the ones before him, paving the
way for another false messiah to benefit from middle class misery.
REASON Lapid will fail is because he’s misdiagnosing the problem – Lapid thinks
the government is not doing a good enough job managing the economy and the lives
of its citizens. Accordingly, he believes the solution is to tweak the system,
make some adjustments, expand state control, and all will be well.
education system is one example: There is a general consensus in Israel that the
system is failing – costing a lot of money but producing poorly-educated kids.
Lapid’s solution is basically to maintain (and even increase) the state’s
already totalitarian hold over the system (there is some talk about a national
education council). This is unfortunate because at best it will leave the system
in its current degenerative condition, and at worst will cost even more – but in
either case it will not result in any improvement.
What Lapid fails to
realize is that the problem is not that the government is doing a poor job
managing the system, but rather that the government is managing it to begin
with. It appears as if some Western countries (Ireland, Sweden and Holland)
understood that the government is part of the problem, and chose to try the
school voucher system.
It is unfortunate that the school voucher idea is
getting no air time in Israel and that Lapid, a supposedly fresh political
leader, is sticking to the old, stale and sure-to-fail big government solution.
Lapid is also choosing the same tired path when dealing with other issues such
as the high cost of real estate – again his solution is even bigger involvement
of the state in the market.
The realization that big government is the
problem rather than the solution is manifesting itself in parts of the Western
world not only through education reforms. UKIP, a British libertarian party, is
making impressive political headway in the UK. The popularity of Ron Paul and
the growing libertarian wing of the American Republican party indicate that the
US might also be getting ready to jump on the small government
Israel is way behind, possibly because the state was
established along socialist lines, perhaps for other reasons. The type of
political thinking represented by Ron Paul and Nigel Farage is utterly absent
from Israeli public discourse. It seems we are destined to suffer under the boot
of big government for a long time to come. Lapid and his new party will simply
add their weight.The author is a senior analyst at Excellence Nessuah.
He was formerly with Merrill Lynch NY and Commerzbank London.