Overdraft Mania
The average Israeli family needs to spend more than it takes in
to make ends meet.
HANNA SEMER SPECIAL TO THE JEWISH NEWS
T
he average Israeli family,
that mythical entity creat-
ed by the Central Bureau
of Statistics, now needs
some NIS 6,070 (approximately
$2,000) a month to make ends
meet.
Assuming income tax, this ne-
cessitates a gross income of
around MS 8,000.
This kind of income does not
typify most Israeli families. In
TV newscasts, people are gener-
ally shown waving their less-
than-NIS 2,000 paychecks.
This being the case, how can
the average Israeli family spend
more than it earns? The most
likely explanation: being over-
drawn at the bank.
Most reasonable folk, finding
their bank balances at zero,
wouldn't draw any more funds —
or would do so only on rare and
special occasions.
But the average Israeli over-
draws month in and month out,
as if this were the normal state
of affairs. His beloved overdraft
is just another available source
of funds.
On the run-up to holidays, the
supermarket chains tempt Is-
raelis to buy products as if they
were facing a state of siege.
It's "buy now, pay later" and,
in the meantime, you might win
a lottery or strike for higher
wages.
But not even such spending
sprees explain the overdraft phe-
nomenon in Israel.
As of late June, credit accounts
in Israeli banks stood at NIS
8.185 billion. Debit accounts,
however, stood at MS 25.222 bil-
lion, three times as much.
For 1993, the balance was sim-
ilar, but MS 3 billion short on the
debit side. Overdrawing was un-
affected by geography: as much
was overdrawn in Dimona and
Kiryat Shmona as in Tel Aviv
and Jerusalem.
While we atone, as we must,
for this sin of living beyond our
means, we might wonder whom
we learned this wisdom from.
The answer, dearly, is: all Israel's
governments.
The early ones hardly had a
choice. Their coffers were empty,
and the nation needed to be fed.
Later, however, living beyond
one's means turned into a habit
Israelis haven't, it seems, been
able to kick.
The term "economic indepen-
dence" is no longer current. In-
credibly, it used to be one of
Israel's national goals. Old-fash-
ioned leaders, people like David
Ben-Gurion, held that depen-
dence works against sovereign-
ty. They were naive enough to
believe that foreign aid should be
accepted for development, secu-
rity and absorption, not for bet-
tering one's standard of living.
Israel is not a world leader in
living standards, but comfortably
in the middle, below the Swiss,
the Scandinavians and the Amer-
icans, and, according to World
Bank data, above the people of
New Zealand, Greece, oil-rich
Saudi Arabia
($5,000 below Is-
rael in per capita
income), Ar-
gentina and, of
course, countries
of the former
Communist bloc.
Turning to the
Third World, an
Israeli's standard
of living is 36
times higher
than that of a
Chinese.
These compar-
isons are based
on Gross Nation-
al Product, but in
Israel's case, we
must add vari-
ous
"entitle-
ments"
—
grants, donations and German
reparations. With these, Israel's
annual standard of living goes up
to some $15,000 per capita.
Not bad at all, with private
consumption constantly going up
(and public consumption going
down, mirroring Israel's backing
away from social-democratic con-
cepts, not to mention socialist
ones).
By some standards, Israel is a
developed country. Its entrepre-
neurs roam the globe. Its in-
vestors are already establishing
plants abroad, at times as part of
multinational enterprises.
Yet Israel still holds out its cup
for a grant here and a loan guar-
antee there, paying little lip ser-
vice to economic independence.
The government has done well
in lowering unemployment rates,
and it is engaged in an important
drive against inflation. It has also
done rather well in aliyah ab-
sorption, overall.
But none of this changes the
fact that the average Israeli fol-
lows the government's lead in
considering deficit funding nat-
ural, acting as if expenses should
naturally be higher than income.
On the national level, this is
dangerous. Were Israel's current
sources of massive foreign aid to
dry up, the fall would be shat-
tering.
Economic independence, there-
fore, must not remain an empty
slogan. It must be restored to its
former status of a declared na-
tional goal. ❑
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