The general strike called by the Histadrut over the nonpayment of regional council employees is a classic example of the worst of all worlds. Workers are not being paid, bankrupt regional councils remain unreformed, and the whole country suffers from a general strike. Is there not a better way? It is obviously unacceptable for government workers to go months on end without receiving their salaries. The regional councils and the government each gamble that the public will regard the other as being responsible for essentially holding these workers hostage. Yet both are clearly to blame. The main burden of responsibility lies with dysfunctional regional councils. Many of them should not exist at all, but should, rather, be merged into larger administrative units. A high proportion of these failed councils are in the Arab sector, which presents special problems. But the solution cannot be to let such failures fester, or to let the situation degenerate to the point it has. The government also bears considerable responsibility for the deterioration that triggered the strike. This is not because the Treasury should simply cave in to blackmail and continue to throw good money after bad. Rather, it is the government that has the option of removing failed councils, in effect placing them in receivership. This is obviously a drastic measure, but unpaid workers, failed local governments and national strikes are collectively much more damaging. Replacing councils is a step that has been successfully taken in the past. The Histadrut says one of its demands is that a mechanism be put in place to prevent the nonpayment of salaries in the future. The only such mechanism would be to ensure that the whole regional council system is reformed so that such failures are not allowed to continue. In general, what needs to happen is for local governments to gain more power over their own budgets in exchange for demonstrating responsible management. As matters stand now, much of the regulatory and budgetary control is centralized in government ministries. This is a recipe for the current mess, in which failed councils are dependent on federal budgets and become experts in squeezing money from the center rather putting their own houses in order. In addition to the need for reforming the relationship between local and central governments, the current situation is a function of another structural anomaly: the right of the Histadrut to try to shut down the entire economy, including essential services, in support of a particular sector. In most countries, the workers of a particular company or sector might strike over a labor dispute that affects them. But what do the airport or the post office have to do with regional councils? The National Labor Court obviously tries to tread a fine line between upholding the right to strike and limiting damage to the economy. There is no reason, however, why this line should be drawn where it is now, allowing the Histadrut to cause tremendous amounts of economic damage as broadly as it wishes. A change in attitude by the court, however, would not address an underlying problem that also deserves attention: the size of the public sector. It is no coincidence that such massive strikes occur only in the public sector. The ultimate antidote to such across-the-board strikes is for the public sector to shrink through privatization. This is not to say that everything should be privatized, or that privatization is a panacea. But our public sector is too large, and there is much privatization to be done that would help the economy, improve service and prices for the consumer, and reduce the vulnerability of the public to strikes. The inability of the government to pursue structural reforms, whether regarding local councils or privatization, is costing the country dearly. This week's strike is just the tip of the iceberg of such costs, which continue year round and for which the unpaid council workers are paying an intolerably high price.