(photo credit: Bloomberg)
"It’s the economy, stupid” was one of three defining messages that political
strategist James Carville used in helping Bill Clinton to unseat George H.W.
Bush in the 1992 US presidential elections. A decade later the economy continues
to be an issue that can make or break US presidential hopefuls and determine the
balance of power in Congress and in the Senate. And the same is true in
democracies around the world.
But in Israel, economic policy – if
mentioned at all in the platforms of even the largest political parties – has
consistently been eclipsed by security and diplomacy issues. When referring to
right-wing and left-wing politics in Israel, the intention inevitably is not to
make a distinction between social democrats and neoconservatives but between
doves and hawks.
And this preoccupation with security issues is
understandable. From its very conception, Israel was gripped in a struggle for
survival. Today, Iran is marching toward the attainment of an atomic bomb while
vowing to “wipe Israel off the map.” And Iran’s proxies in the Gaza Strip and in
south Lebanon continue to build up arms with the purpose of attacking the Jewish
Still, a number of factors have come together to make the economy
a central issue in elections for the 19th Knesset expected to take place on
Part of it has to do with the relative quiet in the West Bank
and in Lebanon – and to a certain extent in the Gaza Strip, though there has
been what is expected to be a temporary flare-up there in recent days. And
Israelis have become accustomed to the stalemate with the Palestinians on peace
talks, recognizing the tremendous distance between what Israel is willing to
compromise on and Palestinians’ demands. This state of affairs has allowed
Israelis to refocus their attention from security and diplomacy to socioeconomic
There is much to focus on.
Though basic macroeconomic
indicators such as unemployment and GDP growth look good – especially in
comparison to the US and Europe – there is a plethora of socioeconomic data that
point to major flaws in our economy.
Topmost among these is severe income
In OECD countries today, the average income of the richest 10
percent of the population is about nine times that of the poorest 10% – a ratio
of 9 to 1. In Israel, Turkey and the US the ratio is about 14 to 1.
it is becoming increasingly difficult for the average Israeli to make ends meet.
Just this weak the Central Bureau of Statistics published figures for 2011
showing that the average net income per household dropped nearly a percentage
point to NIS 12,345 a month, while average household expenditures were up
slightly to NIS 13,967 a month. In other words, Israelis spend more than they
earn (assuming reported income reflects actual income).
Due in large part
to low participation in the labor market by haredi men and Arab women, poverty
levels are exceedingly high in Israel. According to the National Insurance
Institute Poverty Report for 2011, 1,773,400 Israelis live in poverty – 837,300
of them children. The institute also found that 433,300 families are
impoverished and 20.1% of the elderly are destitute.
Issues such as
poverty, high consumer prices and income inequality must not be ignored. During
the election campaign candidates must be forced by the voting public to
articulate coherent economic policy solutions such as increasing competition to
bring down the prices of consumer goods; finding ways of getting more
ultra-Orthodox into the labor market; and improving our educational systems so
that more young people receive the education they need to find higher-paying
jobs as adults.
These are necessary conditions for the health and
strength of Israel no less than protecting our citizens from terrorism and
military threats. In the US, in Europe and in other democratic countries the
economy receives the attention it deserves from politicians.
The time has
come for Israelis to join in declaring: “It’s the calcala (“economy”), stupid.”