Spinners and cheaters

Pensions are in much better shape than before Netanyahu's reforms, despite what his adversaries claim.

By
December 22, 2008 21:37
4 minute read.
Spinners and cheaters

bibi netanyahu 248 88 ap. (photo credit: AP [file])

 
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"Bibi took your pensions away. He threw them into the financial market jungle, ruining your future. He imported a failed capitalist ideology to Israel and destroyed the economy." So charge Binyamin Netanyahu's adversaries. It is legitimate, even desirable, to criticize politicians and policies. After all, even the most gifted statesmen have flaws, as we all do. But it would help to base criticism on facts, and it seems the latest anti-Bibi torrent is anything but factual. FIRST, ISRAEL'S pensions are in much better shape then they were in before Netanyahu's reforms. The worldwide financial crisis has hit all financial institutions, including pension funds. Here, provident funds and executive insurance plans suffered a loss of about 15 percent - low compared with the 25% losses of foreign pension funds. These losses seem even less ominous when we remember that in the last five years these funds gained, even after their recent losses, an annual average return of 5%, which means that the funds are generally ahead. Moreover, the funds that incurred these losses represent only 20% of the industry. Most Israelis belong to traditional pension funds that were barely affected. The irresponsible talk about the ruin of the pension funds is a lie. The reality is that between 2004 and today, public assets grew from NIS 1.4 trillion to NIS 1.88 trillion - this after taking recent losses into account. Public assets have grown by a whopping NIS 500 billion, hardly a "catastrophic ruin." Those claiming such ruin are also liable to cause a panic that will really destroy the pension funds and financial sector. There is little more dangerous then a spooked public. A general panic in which savers flee the markets could cause an Argentina-like collapse. Thre country could then experience factory closings, spiraling unemployment, an insolvent government and real economic catastrophe. We cannot expect desperate politicians to be sticklers for the truth. But we must insist that they avoid disseminating brazen lies that can cause an economic collapse. Even politics require some restraints. Our national savings are so far in good shape, and our leaders must face this bitter truth even if it is politically inconvenient. More facts: Contrary to allegations, pension funds were not first thrown into "the market jungle" by Netanyahu. They were shunted to financial markets by Shimon Peres and Avraham Shochat in 1987. It is the height of chutzpa for them to pillory Netanyahu for a move they initiated, and for which they - justifiably - claimed credit at the time. Peres and Shochat can be proud that "throwing" the pension funds into "the capitalist jungle" has not only brought far higher returns for the funds, but also benefited the economy by steering Israel's savings into productive investments, creating growth and employment. ANOTHER FACT: Massive government interference in the US economy played a huge part in the present financial collapse, precipitating the "market failure" that anti-capitalists blame. The ground for the crisis was laid by the "Fed" when it pumped massive amounts of cheap credit into the US economy after the 2001 dot.com bubble collapse. It was precipitated by the Clinton administration and Congress, which forced two semi-governmental entities, Fanny Mae and Freddie Mack, to grant mortgages for more than $5 trillion to borrowers without valid guarantees. These governmental actions enabled irresponsible bankers and brokers to inflate the sub-prime bubble. Generally, big government plays a crucial role in huge crises such as the present one or the 1929 Great Depression. But why not exploit the crisis to destroy what little freedom Netanyahu's reforms brought to the economy? Why care if the country will lose its only hope of deliverance from the economic retardation caused by our statist heritage? To discredit Netanyahu, our left-leaning media are inventing spins that convert day into night and night into day. They are trying to convince us that Netanyahu - whose reforms in 2003 saved workers from massive unemployment and the Histadrut-despoiled pension funds from collapse - is the enemy of workers and pensioners; that he who broke the banking cartel, the stronghold of our oligarchy, is working for the rich. They are trying to brainwash us into believing that an economic reform that generated a tremendous five-year rapid growth (5% average), after two decades of no growth and deep recessions, a reform that created 400,000 new jobs and reduced unemployment from 10.4% to 5.9% was "a catastrophic failure." THE CYNICAL operators who got Ehud Olmert elected have been ruining Israeli democracy by distorting information vital for critical voter choices. They were not even ashamed to boast on camera (in a TV documentary All the Campaign's Men) that in the last elections they acted "like sharks smelling blood and going for the kill," that they were determined "to put their foot on their adversary's throat and press until they strangle him." Now they are waging a similar campaign on behalf of Tzipi Livni, a candidate who vowed to bring us new, clean politics. It is scandalous that politicians aspiring for the highest offices, Livni, Ehud Barak, Haim Ramon, Avishay Braverman, Ronnie Bar-On and many others gleefully participate in this culture of lies. Before the term "spin" was born people used to call the distortion of the truth cheating, and "spinners" cheaters. To heal our sick body politic we should return to such simple language. The writer is director of the Israel Center for Social and Economic Progress.

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