Israel Elections: Which economic plan does Israel really need?

While Netanyahu has put forward packages to help businesses recover from the pandemic, boost employment, and promote hi-tech growth, Bennett's plan would seek to double Israel’s standard of living.

VOTES ARE counted at a tent in the Central Elections Committee warehouse in Shoham last March. (photo credit: FLASH90)
VOTES ARE counted at a tent in the Central Elections Committee warehouse in Shoham last March.
(photo credit: FLASH90)
Ahead of Israel’s elections on Tuesday, Prime Minister Benjamin Netanyahu, Yamina Party head Naftali Bennett and New Hope leader Gideon Sa’ar are each touting their economic plans as being better than that of their competitors. But can any of them really help solve Israel’s woes?
“The political and public discourse is extremely superficial and shallow,” said Prof. Dan Ben-David, president of the Shoresh Institution for Socioeconomic Research and an economist at Tel Aviv University. “It’s like there’s no cost to just say whatever comes to your mind. But the issues affecting the country are fundamental, and as we come out of the pandemic, there is a tremendous opportunity right now to try to address problems at their roots.”
While Netanyahu has put forward packages to help small businesses recover from the pandemic, boost employment, and promote hi-tech growth, Bennett’s "Singapore Plan" would seek to double Israel’s standard of living by improving economic management, transparency and considerable tax cuts. But “Bennett’s plan is old, essentially a supply-side plan from the time of US president Ronald Reagan,” according to Prof. Elise Brezis, professor of economics at Bar-Ilan University and director of the Aharon Meir Center for Economic Policy.
“Israeli politicians understand that there is no reason to present a serious economic policy during elections, because everything needs to be negotiated among the parties,” Brezis said. “They know that there is no sense in presenting a complex plan that you won’t be able to implement.”
So what would a serious plan entail? Ben-David puts forth a series of issues he believes are most critical for Israel.
First, Israel needs a transparent budget, so that there can be a public debate about funding allocations. Right now, there is no way for the public to know where tax money is going, or how well it is at achieving certain goals.
Second, the country needs to increase law enforcement to clamp down on Israel’s shadow economy to address budget issues. “If we were to reduce our shadow economy to German or American levels, we would increase GDP by NIS 100-200 billion, and increase tax income by NIS 40-60b. For comparison, the entire Health Ministry budget is about NIS 35b. Getting our hands on that money would be a game-changer.”
Third, a long-term look at education is necessary to address employment and economic growth. “During the crisis, we saw clearly how a small part of society in Israel’s productive hi-tech sector thrived, while the large part of the population with low professional skills suffered. We need to offer much more serious vocational and professional skills training to upgrade people’s skill levels and advance their potential. But that’s for adults right now. For our kids, the education system is the worst in the developed world, and has been dysfunctional for decades. Half of the kids in Israel are getting a third-world education for math, science and reading. So if you think we have a problem today with the adults, just imagine what’s going to happen here in another generation. We need systemic comprehensive reform of the education system.”
Finally, Ben-David said, we need to address demographic issues. “We need to talk about the haredim. What we have seen over the last year is an ultra-Orthodox leadership that’s enabled by the government to completely control the flow of information to its people, depriving their children of a core curriculum that would enable them to contribute to the economy and advocating policies that are endangering their lives. They are a fifth of the country’s children now and are projected to be half of the nation’s kids in two generations. So we need to change things now because they are going to be harder to change in the future.”
That all being said, Ben-David says he is an optimist. “This election offers the opportunity to fix things that no one touched. This is the first time that it isn’t Right against Left, or religious against secular. The past year gave us a great opportunity to see the country’s problems up close, and we need to use it to fix things now. We need to bring people together around a vision for 20 years into the future, not just empty slogans.”