Social protests: A redux

There is thus much reason for average Israelis to be upset. In fact, Lapid conceded as much, saying his budget negatively impacts the middle class.

Social protests 370 (photo credit: Michael Omer-Man)
Social protests 370
(photo credit: Michael Omer-Man)
Last Saturday night, thousands of Tel Avivians took to the streets in a repeat of the 2011 social protests that captivated both the nation and international media, but which garnered few tangible results.
At that time, makeshift tent “cities” were erected throughout Tel Aviv, most prominently on the posh Rothschild Boulevard, to protest social and economic inequality, particularly the high cost of living which puts excessive strain on the country’s middle class.
Now, following the release of Finance Minister Yair Lapid’s proposed 2013- 2014 budget – which increases deficit spending from three percent to 4.65% (down from an initially suggested 4.9%) but nonetheless calls, among other things, for a 1.5% across-the-board tax hike as well as a 1% increase (to 18%) on the VAT on all consumer goods – the call for “social justice” has been renewed.
To a large degree, these calls are warranted.
Reports by the Organization for Economic Cooperation and Development (OECD) have consistently shown that income inequality in Israel is among the highest in the developed world, and that the gap continues to widen. In 2011, for example, Israel was named as one of only two OECD countries in which the real income of those at the bottom of the economic ladder decreased since the mid-1980s. Israel has also been shown to have one of the highest rates of child poverty among the 35 member countries of the OECD, with nearly a quarter of children living in households subsisting below the official poverty line.
A 2012 report by the Kedmi Committee, headed by then-Industry, Trade and Labor Ministry director-general Sharon Kedmi found that Israeli consumers paid 10%-20% more for food than their counterparts in the rest of the OECD.
In “Sharing the Burden,” (May 7) The Jerusalem Post editorial board provided a vivid example of the country’s inequitable distribution of wealth. Citing a recent Finance Ministry report, the article highlighted that “four of Israel’s largest corporations – Teva Pharmaceutical Industries, Intel Israel, Israel Chemicals and Check Point – paid an effective tax rate of just 3.3%, while smaller businesses paid a corporate tax of between 13% and 20%.” The ministry report also revealed that these four companies received 70% of the NIS 5.6 billion in tax exemptions under the law for encouraging capital investment.
In a previous editorial, “Where’s the Money?” (May 1), the Post’s editors argued that this imbalance is not limited only to the private sector and that “conspicuous waste exists among public sector fat cats.” According to that article, public sector employees, defended “ferociously” by the Histadrut, the country’s labor federation (which, according to the Post, “has evolved into a monopolist oligarchy of the 13 most powerful unions”), are assured of “sweet deals” that the average Israeli “cannot even dream about.”
As an example, the article cited Ashdod Port’s harbor pilots, who “each earn between NIS 60,000 and NIS 77,000 a month – more than the prime minister, IDF chief of staff or Supreme Court president.”
These “sweet deals” aren’t limited to the ports, and span the entire unionized Israeli economy.
There is thus much reason for average Israelis to be upset. In fact, Lapid conceded as much, saying his budget negatively impacts the middle class, the key constituency which he courted and championed during his successful election campaign.
“I think there’s something legitimate in the anger directed toward me – we’re hurting people in their pockets,” Lapid said at a press conference after releasing his budget. “Yes, the middle class was hit,” he admitted.
Notably, standing next to Lapid on the podium was Ofer Eini, chairman of the Histadrut.
In order to yield results, however, the renewed protests must not become politicized or descend into anarchy, as was largely the case with the Occupy Wall Street protests that took place last year in US. Otherwise, the inherent message of the movement becomes compromised for lack of balance, rationality and hence serious loss of credibility.
Unfortunately, there are already signs that this is occurring.
To begin with, prior to last Saturday’s demonstration, the organizers of the event released a statement describing Lapid’s budget as “murderous,” and advised the government, among other things, “to stop pouring money into isolated settlements.” Red flags were prominently flown throughout the crowd.
Most importantly, the protestors’ demands must be reasonable and specific, rather than dramatic and fantastic.
For example, demonstrators at the rally chanted the slogan, “There’s no future with Lapid and Bibi [Netanyahu],” which assimilates purely subjective political undertones into that which is legitimately an objective, nation-wide and otherwise essentially economic reform movement. If the social protests are to succeed, they must be of the people for all the people, independent of political affiliation.
Moreover, those involved must lend credence to the fact that the socialist policies of Israel’s founders nearly bankrupted the country and that it was not until Netanyahu implemented in the 1990s free-market policies (inspired by Thatcherite antecedents & Reaganomics) to promote economic competition that Israel’s monetary position improved, leading to the massive economic expansion and innovation that has come to define the country today.
Furthermore, the current strength of the Histadrut is largely a by-product of nearly five decades of centralized economic policies that resulted in a bloated public sector, bestowing upon unions the power to leverage the government in negotiations under the extortionion of decimating the economy through nation-wide strikes.
There is also the need for the protests to remain exclusively an Israeli initiative, rather than being directed, like many of the country’s foreign-funded NGOs, by external influence. In 2011, for example, evidence surfaced that American Democratic strategist Stanley Greenberg played an instrumental role in initiating the protests.
In this respect, a September 2011 Ma’ariv investigative report claimed that plans for the demonstrations were spawned at a Tel Aviv meeting between Greenberg, Eldad Yaniv, former bureau chief for Ehud Barak, as well as former Barak strategist Moshe Gaon and other left-wing activists. The report alleged that Greenberg advised the Israeli Left to shift the public discourse away from diplomatic issues to a socioeconomic agenda in order gain the support of a majority of the population, which ultimately would translate into electoral success.
Tellingly, Greenberg was hired, prior to February’s election, as a campaign strategist by Labor leader and self-proclaimed political figurehead of the “social justice” movement Shelly Yacimovich.
Which brings us to the most glaring paradox of the renewed protests; namely, Yacimovich herself. This past March, Yacimovich turned down an offer by Netanyahu to join the coalition and become finance minister. Instead, she chose to sit in the Opposition, while now hypocritically criticizing economic measures that she would otherwise have had far-reaching control over (and may well have had to implement herself).
Last week, Yacimovich went so far as to slam Lapid’s proposed budget as “cruelty” and accused him of “back-stabbing the public.”
Yet members of Yacomovich’s faction chose to direct their ire at her, rather than at Lapid. Labor MK Erel Margalit said that “Shelly owes an apology to the middle class in Israel. She received an opportunity to come into the government and take care of the middle class....
When she said no, she left the job for Lapid.”
Labor MK Isaac Herzog said that “In retrospect, Shelly needed to seriously consider joining the government. It was a mistake not to seriously consider Netanyahu’s offer.... She could have built a different government, been a terrific finance minister....”
In a slip of the tongue, Yacimovich recently offered a window into her decision: “My brothers the workers, I don’t understand economics, as I told you honestly....”
Overall, then, there remain incongruencies projected by the renewed social activists which should be addressed by them if they aspire to trigger the changes which the Israeli economy so desperately needs; the most conspicuous of which is that the longstanding, socialized economic policies of the nation, ostensibly so admired and lauded by many of the protestors (and championed by like-minded politicians) are, in fact, largely responsible for the contemporary economic morass plaguing our country.
The writer recently made aliya from Canada.