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Corona mystery: The government is not helping and yet the money is gone - Walla! Business

2021-01-21T22:19:39.713Z

The Israeli government is not exactly the most generous country when it comes to assisting businesses affected by the Corona crisis. Its deficit, on the other hand, is higher than that of countries that have poured much more money on their citizens. Avichai Snir and Ronen Bar-El try to solve the riddle



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The Corona Mystery: The government is not helping and yet the money is gone

The Israeli government is not exactly the most generous country when it comes to assisting businesses affected by the Corona crisis.

Its deficit, on the other hand, is higher than that of countries that have poured much more money on their citizens.

Avichai Snir and Ronen Bar-El try to solve the riddle

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  • Corona

  • Deficit

Avichai Snir

Friday, 22 January 2021, 00:16

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Bastat owners' protest.

Carmel Market, Tel Aviv November 17, 2020 (Photo: Yotam Ronen)

About a week ago, my good friend Dr. Ronen Bar-El sent me a message in which he wrote: "Get ready to look for another job." Below the message, he added a link. When I clicked on the link, I came across an article from which I learned that the government deficit reached about 160 in 2020. billion.



I called Ronen and I told him that the government we have really good reasons to spend money. yet, because of the corona people do not work, and therefore should help both people and businesses to be crashing because of not to leave the house. Ronen told me I was right, give me a moment to feel won the argument , Then asked: "But how do I explain this graph?" "Which graph?" I asked him. So he showed me Figure 1, which shows on the horizontal axis, the number of deaths from Corona per million inhabitants in each country, and on the vertical axis the deficit Of each of the governments.

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Corona deaths versus deficits in various countries (Photo: PR, John Hopkins, International Monetary Fund)

After giving me a chance to look, he told me this: "Suppose the Corona deaths represent how badly each Corona country was hit, and how much people had to fear for their lives in case of infection. You can see that Israel is in a relatively good place - it is one of the countries that has Least deaths relative to population size.So how can it be that our deficit is still larger than France, Switzerland, Belgium and the Netherlands? These are countries that have also been hit harder than us, and also have a more generous welfare state than ours, which means they have spent more on us Assistance to employees and businesses. "

I replied that he was right, because even the Ministry of Finance admitted that compared to other countries, spending in Israel on assistance to businesses and workers is quite average.

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It's good to spend money before an election

"Apparently our finance minister understood that if he listed any expense he wished as an expense on Corona, then no one would complain."

I thought of possible explanations, and after a moment I said: "Maybe it's because our product is more damaged, we have more closures."

"You made me laugh," Ronen replied.

"Our GDP will decrease by about 5% in 2020. Switzerland's GDP will decrease by about 6%. The GDP of the Netherlands, France and Belgium will decrease by about 7%. What to do, our GDP is less sensitive to their own corona - also because we have a lot of businesses "Where workers can work from home, and also because of us there is much less dependence on tourism. Just think what damage has been done to the French and Swiss than the tourists can not come to ski."



I did not want to admit that I have no answers, so I asked him how it could really be.

"I do not know," he replied.

"Part of it, it's probably because Kahlon made such a mess, that now the Treasury is recording all the losses he made at the expense of the Corona. The other part is because of all the expenses unrelated to neither workers nor businesses, and that the government spends because it's good to spend money before the election. Our treasurer has understood that if he records any expense he desires as an expense on Corona, then no one will complain. "



"If no one's complaining, why are you telling me all this?"

I asked Ronen.

"Because you may not be complaining," he replied to me.

"But you're going to pay for it. I'm going back to what I wrote to you in the message. For your own benefit, instead of talking to me, start looking for another job."




Dr. Ronen Bar-El, The Open University



Dr. Avichai Snir, Netanya Academy and Bar-Ilan University.

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Source: walla

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