BACKGROUND
orgotten Promise?
Yitzhak Rabin said bringing unemployment
figures down would be his top priority.
'But there's no hope in sight.
LARRY DERFNER
'ThIsrael Correspondent
itzhak Rabin said
many times during
the recent election
campaign that the fight
against unemployment —
\ now running at 10.8 percent
would be his number one
nriority. Last week, the
Rabin government revealed
what it plans to do on that
front: little if anything at
,J
L "Whoever thinks
_unemployment can be
brought down in dramatic
1 fashion is simply mistaken,"
Minister
L , kid Finance
"Baiga" Shochat,
explaining the 1993 budget
proposal he had drawn up,
with Mr. Rabin's endorse-
ment. The cabinet approved
the budget draft, and it now
„goes to the Knesset for final
- passage by the end of the
. year.
Even according to the Fi-
nance Ministry's projections,
which often have a way of
• falling short of reality,
" unemployment will only go
down to 10.7 percent in the
coming year, to 9.8 percent
r in 1994, and to 9.1 percent in
'---- 1995.
So where was this "new
1-
national order of priorities"
the government had talked
so much about?
The new order has been
D evident in the peace talks
with the Arabs, in the at-
, titude towards West Bank
• settlements, and in relations
• with the U.S. But Mr. Rabin
always pledged that a new
foreign policy would pay off
'2' economically for Israelis
in the billions saved by stop-
? ping the construction of set-
tlements, and in the billions
gained by getting the U.S.
loan guarantees.
I
Israelis, at least those who
believed in Mr. Rabin and
the Labor Party, expected
• that they would feel the
benefits of all this new
money, and soon. Eli Dayan,
Labor's Knesset whip, urged
the government, for its own
political good, to fulfill this
expectation. "People have to
(' feel their lives improving
within six months," he said.
-
I
r
3
But the Finance Ministry
has thrown cold water on
these hopes. The savings
from the settlement cut-
backs, it says, will be banked
to slice the budget deficit
(which is tiny — 2.5 percent
of the budget, a pittance
compared to the kind of
deficit the U.S. carries). The
loan guarantees will be used
to borrow foreign currency
for Israeli businessmen
needing to import materials.
No windfalls here. No
major infusions of cash, no
massive public works pro-
jects to put people back to
work. No 1950s Labor Party
economics, none of that
"socialism" that the Likud
had beaten Labor over the
head with for so many years.
Instead, the government is
cutting the overall budget,
promising tax reductions,
Unemployment
became a
worrisome issue in
the summer of
1989 when the
figure reached 9
percent.
and including only limited
investment in labor-
intensive public projects like
new roads and telecom-
munications. This is a
classic conservative econ-
omic policy, leaving it to pri-
vate industry to get the
economy going and create
jobs.
"Today there is a world
economic consensus that a
government should not do
anything except manufac-
ture weapons and pave
highways. It seems that
Baiga (Finance Minister
Shochat) has bought into
this prescription," wrote Gi-
deon Eshet, economics cor-
respondent for Yediot
Aharonot, Israel's largest
daily newspaper.
"Over the last 20 years,
the shift to the right in econ-
omic thinking has affected
even the world's nominally
left-wing governments. It
just took a little longer to
reach Israel," said Michael
Shalev, a senior lecturer at
Hebrew University in the
politics of economic policy.
In the 1950s and 60s, the
glory days of the Labor Par-
ty, unemployment wasn't a
problem in Israel. There was
a social contract between the
state and the citizen: the
citizen was required to give
years of his life to the army,
to fight in periodic wars and
face regular terrorist at-
tacks, and to do so without
"luxuries" like cars, ap-
pliances, fine clothes and
vacations.
But in return, he was
promised the basics of a de-
cent life: a job, an inexpen-
sive apartment, and very
cheap health care, transpor-
tation, education and food,
which were all heavily sub-
sidized by the government.
Israelis had a low but
roughly equal standard of
living.
Today, the social contract
has changed. The citizen
still has to spend years in
the army and put up with
war and terrorism, but now
his basic minimum is gone.
Unemployment stays very
high, government subsidies
are all but wiped out, hous-
ing prices are exorbitant,
and good health care and
education are available only
to those who can afford pri-
vate doctors and
"enrichment" classes.
While the average stan-
dard of living has shot up,
with most Israelis owning
cars, dressing their kids in
Levis and Reeboks, and
many taking annual vaca-
tions abroad, there is at the
same time a large, growing
underclass.
After the U.S., Israel has
the largest proportion of
poor people, and the greatest
income gap between rich and
poor, of any developed coun-
try in the world.
So why can't, or why
won't, a Labor government
do what it did in the 1950s
and 60s: pour government
money into public works pro-
jects and private industry so
that unemployment stays at
5 percent or less?
"The economy of the 1950s
A worker helps to renovate an old house in Safad.
and early 60s was based
mainly on gifts — a huge
amount of money came into
this country, with no strings
attached, from German
reparations and foreign Jew-
ish contributions," said Mr.
Shalev. The hundreds of
thousands of unskilled im-
migrants could be "obliged"
to take low-paying jobs in
factories and farms, he add-
ed.
Today, most of the $3
billion a year from the U.S.
"goes directly or indirectly
to import American military
hardware," Mr. Shalev con-
tinued, "and the money from
Jews abroad is peanuts com-
pared to what's needed."
The belief that nearly
everyone can have a job, that
poverty can be marginalized,
that the middle-class
majority should spend its
taxes on behalf of the poor
minority, seems to be a rem-
nant of "socialist," "leftist"
or "liberal" thinking, which
might have been popular in
the 50s, but isn't in the 90s.
"It appears that Israeli
governments feel that high
unemployment is in-
evitable," Mr. Shalev con-
cluded.
One excuse made for the
current high unemployment
is the influx of some 450,000
immigrants in the last three
years. But the fact is that
unemployment became a
worrisome issue in the
summer of 1989, just before
the immigrant flood began,
when the figure reached 9
percent. Labor's Yossi
Beilin, then deputy finance
minister (now deputy foreign
minister), caused quite a bit
of dismay when he said that
Israelis would have to get
used to living permanently
with such a high level of
joblessness.
Today, when the Finance
Ministry talks about 9 per-
cent unemployment, it's not
a bitter pill that must be
swallowed, but an optimistic
forecast, a goal to be reach-
ed, it is hoped, sometime in
1995.
❑
THE DETROIT JEWISH NEWS
31