A move in the right direction

Adopting a two-year budget in Israel will only strengthen present economic stability.

By M. STEINHARDT
July 26, 2010 22:25
1 minute read.
netanyahu after 2005 budget vote

bibi 2005 budget 298.88. (photo credit: Ariel Jerozolimski)

 
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As economic applications become more sophisticated, and governments, at least in the West, recognize the necessity of streamlining their processes to better achieve their mandates of stability and growth, one of the efforts being recommended is the use of longer budget periods.

There is nothing magical about 365 days or indeed any other arbitrary period. At times, people have thought about tying budgets to economic cycles, but they are no longer viewed as predictable.

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The idea of a two-year rather than a one-year budget achieves, in a reasonable way, much that one might wish for. It reduces unnecessary and uneconomic political haggling.

It maintains sufficient flexibility and allows economic developments to play out.

While one must respect Israel’s legislative process, so essential to democracy, it is hard to avoid being at times appalled by the spectacle of “horse trading” that includes legislators, whose economic understanding leaves much to be desired. While this may be democracy at work, it might be better if it were ameliorated by occurring once every two years, perhaps in a calmer environment.

The two-year budget, with a greater aura of professionalism may help this occur.

PERCEPTIONS CHANGE, outlook changes and the ability of a highly professional finance and economic agency or agencies to monitor nuance and anticipate change early enough to steer the budget process toward adjustment is obviously necessary whatever the length of the budget term. Indeed, the two-year budget will emphasize this ability of the government’s professionals to do their job well, and if they succeed, there should be noticeable improvement in economic performance.



Nothing happens without bumps, particularly the installation of a new vision. But here, as the risks are low, they can, and should be regularly and independently monitored. Improved budgetary results should be readily foreseen.

In light of the global economic crisis from which, happily, Israel has been largely but not entirely immune, this would seem an opportune time for it to continue to advance its policies to strengthen present economic stability.

Adopting a two-year budget is a move in this direction.

The writer is an American investor and philanthropist active in Jewish causes.

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