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Dragging Israel Back to Its Socialist Past

Just as the United States is solely focused on the debt-ceiling crisis, judging by press reports, Israelis seem equally oblivious to foreign policy this week. Protests about a housing shortage have been making quite a ruckus and forcing the government of Prime Minister Benjamin Netanyahu to scramble to deal with the problem. The housing demonstrations–on the heels of other complaints about the price of food–make it appear as if Israel is in dire economic straits. But by all accounts, Israel’s economy is in good shape. Economic growth continues at a steady pace, and the stewardship of the country’s finances by Netanyahu and Finance Minister Yuval Steinitz have been widely praised.

So what’s behind this effort to undermine Netanyahu? Leftist commentator Gershon Gorenberg gives us a clue with his piece in the American Prospect. According to Gorenberg, the problem is not just this government, but the last two decades of efforts to transform Israel’s economy from a third world socialist basket case to the first world dynamo it is today. To this way of thinking, the inequities that can occur when free enterprise is allowed to create new wealth are abhorrent. His piece (which attempts to pick up the fraudulent theme championed last week by Ethan Bronner in which the protesters are seen as an echo of the Arab Spring), and the tone sounded by many of the protesters, reflect nostalgia for the good old days–when profit was a dirty word.  Like the demonstrators in the streets of Greece, their goal isn’t a more prosperous Israel but an expansion of an already bloated welfare state.

Netanyahu understands the shortages of housing are not the fault of the greedy capitalists who are blamed by the Israeli left but the vestiges of the government-run economy that still acts as a brake on growth. He wants to eliminate regulations, while Gorenberg and the protesters want more regulation that would return the nation to its “social democratic roots.” That’s not just bad housing policy; it is, if applied to a broad range of criticisms of Netanyahu’s domestic policies, a recipe to put Israel in the position of a bankrupt state such as Greece.

As anyone who knows its history, Israel has already been there. If it is currently in the best economic shape of its short history, it is because its recent governments have understood there can be no going back to the “social democratic” nightmare that once created multi-year waits for phone installations and other vestiges of a largely state-run economy. As the Jerusalem Post notes in an incisive editorial, the protesters and those egging them on have no coherent program to offer as an alternative to the government’s policies. Instead, all they have are “empty populist slogans articulating nothing more than inchoate discontent.”

If Israel is to continue on its current path toward greater prosperity, Netanyahu should stand his ground. While there can be no denying that problems exist and must be addressed, those who care about Israel’s future should not give encouragement to those who are trying to drag the Jewish state back to its troubled socialist past.


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