Labor's 'war on poverty' rerun

Just what the poor needed: More spending money for politicians.

peres waiving finger 88 (photo credit: )
peres waiving finger 88
(photo credit: )
Israeli poverty can be vanquished in a year or so, Deputy Prime Minister Shimon Peres asserts.

That is if the government will adopt a Peres plan, based - believe or not - on Lyndon Johnson's "Enlargement to Poverty Law" (sic).

It is astonishing to find the visionary Peres reviving - in collaboration with Housing Minister Isaac "Bougi" Herzog - a Sixties "War on Poverty" plan - especially since it was really a failure. It cost the American economy and its society, especially the poor, very dearly. But the plan is a bargain, we are reassured. It will cost "only" NIS 4 billion, a mere trifle, representing only half the cost of disengagement.

The plan is remarkable in admitting that "the policy of allocating government benefits did not prove itself and often the system led to the opposite result: The perpetuation of poverty and the increase in the income gap, so much so, that they caused a real affront to human dignity."

Peres and Herzog not only admit the bankruptcy of Labor's traditional policies that arrested growth and cost the Israeli taxpayer billions, but that former finance minister Binyamin Netanyahu's cuts in the profligate and corrupt benefits system were justified. You would think that this would make Peres retract his accusation that Netanyahu practiced a malignant "piggish capitalism." Dream on.

On first reading, some elements of the Peres-Herzog plan sound good. "The objective of our plan" they declare, is " reduce poverty and the social gaps in Israel... through the increase in the rate of participation in the labor force, the reduction of income gaps, the encouragement of employers to absorb workers, and helping in locate employment opportunities."

Even if you question the absurd, statistically manipulated, "poverty line," there is no questioning the fact that hundreds of thousand of working families cannot make ends meet in Israel. Poverty is especially common among two groups, the ultra-Orthodox, who prefer to have their males study Torah rather than work, and the Arabs, who prefer that their women not leave the home to work.

There are also many Israelis, especially in the aforementioned sectors, who find it more lucrative to receive unemployment benefits that exceed the minimum wage and then earn extra cash on the gray market. All these may be encouraged to join the labor force by a combination of a carrot (reduced taxes on work) and a stick (making benefits harder to get by able-bodied workers).

The problem is that when it comes to specific measures. The Peres-Herzog plan does not propose freeing the economy, so that enterprises could flourish and entice more workers into the labor force; or the reduction of taxes so that more workers will find it beneficial to work. Instead it proposes a series of massive and costly grab-bag of government programs that will involve large wasteful bureaucracies, increased inefficiencies and arrested economic growth.

The plan consists mostly of the usual government handouts, tax breaks for employers hiring additional workers. The initiators concede that these represent a huge opportunity for cheating, so they framed a law with 21 definitions of who should be considered an additional worker, and four additional pages of more elaborate definitions of the conditions for employers' eligibility, and what punishments they will get if they try to cheat by, for example, laying off workers in order to hire new workers to make the employer eligible for a tax break - all a feast, really for lawyers and lobbyists.

Also included are "meaningful" assistance for the disabled; increased old-age benefits; new instruments (whatever this means) for raising the income of low salaried workers; improved housing benefits and an enforced saving scheme that will enable every child to get a university education (the new fetish; as if without a university degree no one can find useful employment).

The one exception to this "more-handouts plan" is a proposed "revolution" in the field of vocational training. Here too, however, the plan relies on more, easily corrupted, government handouts.

Peres and Herzog admit that "the state's vocational training systems have not proven themselves, and they mostly do not fit the needs of the time and the economy." What a delicate understatement, given that hundreds of millions, if not billions, have been squandered on these schemes. So they propose to gradually hand over the task to "private independent bodies."

But to assure that these bodies will do a good job they will be directed by a government-appointed "experts committee," and obey stringent rules and regulations that will be monitored by government bureaucrats.

As happens whenever government funds projects, such as government housing, bodies formed as "private and independent" contractors will most probably be associated with Likud and Labor operatives. It will be mostly such bodies that will win the tenders and will be able to navigate the bureaucratic shoals. The "Committee of Experts" designed to direct these bodies will be stuffed with "public figures" subservient to politicians, and will be about as effective as the "public directors" that monitor the banks' activities.

In short, the Peres-Herzog plan will make NIS 4 billion more available to the politicians' for pork-barrel spending. Better still, it will leave enough poverty behind so that for the next election a new anti-poverty plan will assist in the election of our noble-hearted political protectors.