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Last update - 02:48 12/12/2003

Rhetoric race

By Ariel Rubinstein

On the night of November 30, the Petah Tikva police prevented the holding of a pirate car race. A disgruntled driver who was interviewed on the radio said: "People want to show what they've got. And this is something that is accepted all over Europe. It's only in Israel that they're closed to any motor sport." Does this remind you of anything? How many times has the finance minister persuaded you with the argument: "What absurdity exists here in Israel that doesn't exist anywhere else in the world?" or "We are the only country in the world, incidentally, that is in this situation."

If there is something that exists here that doesn't exist anywhere else in the world, it is worth asking whether it is desirable here. Before the sweeping use of such an argument, it is worth knowing from where to take data. In an article in the mass circulation daily Yedioth Ahronoth, Finance Minister Benjamin Netanyahu chooses to compare the loss of strike days in Israel with none other than two countries whose histories are models of democracy: Germany and Italy. The riddle of where he got his data was solved by Ehud Gil in Haaretz Magazine: The numbers appear on the Internet site of The Institute for Advanced Strategic & Political Studies in Jerusalem. This is an institute that defines itself as an organization that "pursues the limitation of Israeli socialist statism supported by U.S. aid, by means of free market reform and a robust missile defense."

The "union economists" obfuscate the meaning of the data, which from the outset were mistaken (all the employees of the public sector were defined as "essential"). And thus it turns out that Netanyahu makes international comparisons at a research institute that in its logo has the motto "Woe unto them that call evil good, and good evil" (Isaiah 5:20). Strange. Is there something evil about the research department of the Bank of Israel?

It is worth showing the whole picture. The finance minister says that in the United States the public sector does not have the right to strike. But in the United States there are quite a few states where the public sector (sometimes even the police) has the right to strike. And when a comparison is made between those states in the U.S. that do have the right to strike in the public sector and those that do not, it turns out that there is not a big difference between the numbers of working days that have been lost because of strikes. Yes, even in America there are illegal strikes. It is easy to imagine how a government that in 2001 "succeeded" in fining only 35 employers for violating the Minimum Wage Law will prevent illegal strikes.

And Netanyahu really should note that comparing us to the United States could be a double-edged sword. "Our National Insurance Institute (NII) takes NIS 43 billion in allotments - that is, NIS 10 million more than the defense budget." In fact, the national budget states that the government's support of the NII is only NIS 21 billion, and this includes the billions that are given to elderly new immigrants and income tax credit points. But let us assume that the finance minister is ignoring the fact that the National Insurance is also an insurance program and a pension plan, and that he is relating to all the old-age allotments and the payments to the handicapped as if they were NIS 43 billion in handouts by the national charitable organization. And let us assume that he sees all the income of the NII as just taxes. And let us further assume that he has cut the defense budget by a few tenths and has arrived at NIS 33 billion. Even then, the comparison to the United States is a bit "problematic" for the finance minister: In the United States, in 2001, Social Security payments were higher by one third than defense expenditures!

And if the "world" is a clinching argument for prohibiting strikes, privatizing the nation's assets and cutting old age allotments, then why not apply this logic to other things in which Israel is outstandingly different? In Israel, inheritance tax is zero, whereas in most countries of the Western world there is a significant inheritance tax. In Israel, the NII old age allotment is the lowest in the Western world. And we almost forgot - Israel is also distinguished by still investing all its energies in annexing inhabited territories.

In the demagoguery race, Netanyahu is the winner, and this race is no less dangerous.

Professor Rubinstein, of the school of economics at Tel Aviv University, delivered these remarks at the annual symposium of the Finance Ministry budget division.