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Only an economic projector will be able to save the citizens of Israel from the failed finance policy

While Katz and Meridor are busy making justifiable accusations against each other, the Israeli economy is approaching bankruptcy due to the dangerous combination of the health crisis and the huge deficit.

The recovery process will begin when they split the position of head of the budget department, and a senior economist will be appointed to a project that will carry out the required system robbery.

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• Ministry of Finance

• Israel Katz

• Shaul Meridor

Prof. Yaron Zelicha

Monday, 31 August 2020, 20:23

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In the video: Conflict between MK Miki Zohar and Minister Israel Katz in the Finance Committee (Photo: Knesset Channel)

The scathing letter from the resigning head of the budget department, Shaul Meridor, to Finance Minister Israel Katz, in which he wrote about the red lines that were crossed and the rules of budget management that were crushed - in the face of the minister's claims about Meridor's conduct, .

On the one hand, Shaul Meridor represents to me everything that is wrong with the capital-government phenomenon in Israel.

He is perhaps the man responsible more than anyone else for the scandalous gas agreement of 2009, for which the citizens of Israel are paying double and triple the price of gas for the real price of about a decade.

Moreover, he is also the one responsible for the fact that in recent years the monopolies in Israel have received an embrace that was unparalleled.

Finally, Meridor is the man who has managed Israel's economic policy in recent years.

A policy that crushed growth, even before the corona crisis.

In 2019, growth per capita in Israel reached only 1%, compared to the potential of 4%, while the deficit peaked at years.

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Claimed red lines had been crossed.

Meridor (Photo: Yonatan Zindel, Flash 90)

If that wasn’t enough, during the Corona crisis itself he demonstrated outrageous economic management ability.

From this goat we will not produce milk, say sages.

Does anyone have a shred of confidence that Meridor has the ability to formulate the economic plan needed to save the Israeli economy and rehabilitate Israeli society?

On the other hand, Finance Minister Katz does not understand that the proper administrative rules are intended to protect us, the citizens, and that he, the Minister of Finance, has been appointed as the gatekeeper of the State Treasury.

Roughly speaking, he is playing with the state coffers as his own, without financial responsibility and without any policy-making that will help the present of millions of citizens in distress, and help build the economic future of future generations.

80,000 small businesses are about to close in the coming year, hundreds of thousands may lose their permanent jobs and during this time, Minister Katz and Meridor are waging stupid power struggles on the backs of the citizens.

More on Walla!

NEWS

The head of the budget department at the Ministry of Finance resigned: "Red lines have been crossed, citizens will pay"

To the full article

With a rough hand playing at the state coffers.

Katz:

Israel's economic policy over the past decade, of which Meridor is the clear marker, has embraced the country's tycoons, monopolies and robbers, and as a result has shattered our growth potential and widened the gaps between us and the West.

Israel's per capita GDP in nominal terms reaches $ 42,000 a year, but the price differences between us and the West reach up to 25%.

In other words, the purchasing power of our GDP per capita is equivalent to only about $ 32,000, which is exactly half of the GDP per capita in the United States, which stands at about $ 65,000 per capita.

Such a relatively low rate of GDP per capita relative to its counterpart in the United States was experienced by Israel at the height of the crisis of the second intifada in 2002, and somewhere in the late 1950s.

So far is the colossal failure of the leaders of the Israeli economy.

This, even without mentioning that in this decade housing prices rose (150 average salaries versus less than half the Western average) and time bombs were dropped threatening to smash our pensions (as countless citizens will discover as they approach their forties and fifties).

"Scandalous Financial Conduct."

Ministry of Finance (Photo: Wikipedia)

The corona virus, and moreover the mismanagement of its results, deepen the crisis further and further with the passage of time.

Until the Israeli economy begins to resemble a sinking ship, of which the mice abound just before fleeing.

Instead of the two "personalities", Katz and Meridor, internalizing that the Israeli economy is approaching huge steps for bankruptcy, they are busy throwing just accusations at each other.

It would have been better if a man had dealt with his failures, instead of blaming each other.

Bottom line, both - in their policies and approach - are not the people who will save the Israeli economy from its terrible distress.

The solution that can rescue Israel from the catastrophe

What must be done to get out of the economic catastrophe?

What the Israeli government has done with great success the previous two times it went bankrupt, in 1985 and in 2003.

During the 1970s and early 1980s, it was a combination of external crises (the Yom Kippur War and the First Lebanon War), and a failed economic policy that led Israel to a complete economic collapse and 400% inflation.

In the early 2000s to 2003 it was a combination of an external crisis (the second intifada) and a failed economic policy, which led to a collapse in early 2003. In many terms, the crisis in 2003 was even more severe than in 1985, especially because the rate of per capita GDP as well as the relative decline Of GDP per capita in Israel vis-à-vis the United States were more severe.

At the beginning of the current crisis, government debt was about 60% of national GDP.

After about five months of failed crisis management, we are already standing at about 80%.

In view of the scandalous financial conduct of the Ministry of Finance and the Government of Israel, we are on the safe path to a red line where government debt will reach 100% of the national product.

"He who sits on the tree cannot shake it."

Netanyahu (Photo: Amit Shabi, Yedioth Ahronoth)

Just for comparison, when I took up my position as Accountant General and Director of Israel's Economic Policy in 2003, after three years of intifada and failed economic policy, the debt stood at almost 100% of the national product.

For the transitional government and the current government, only five months of Corona "were enough" to bring the economy close to the same dimensions of catastrophe.

The obvious and immediate step to begin the recovery process of the economy lies in splitting the role of the head of the budget department in the treasury between the head of the budget department, and the person who will manage the macroeconomic policy.

Just as was done in 1985 and 2003.

In 1985 it was the American economist, Prof. Herbert Stein, who was brought in to run the economic policy outside the Treasury, in 2003 it was the writer of these lines.

The then Minister of Finance, Benjamin Netanyahu, who appointed me to the position, even told me at the time when he justified my external appointment that "there is no choice, whoever sits on the tree cannot shake it."

I have nothing but to repeat his advice.

Meaning: The change can only be brought about by those who come from outside the Treasury, with a different set of values, a different economic policy and a fresh perception.

To truly change and create a new reality, you need managers who do not sit on the tree, but come from outside and shake it.

"The Israeli economy is beginning to resemble a sinking ship."

Covered with masks in Tel Aviv (Photo: Reuven Castro)

Another necessary condition for the success of the requested change is the appointment of two people who will come from outside the state bureaucracy.

First, a senior economist who has not grown up in the Ministry of Finance and its budget department will be appointed economic projector and will take over the full macroeconomic powers to carry out the required system robbery.

Secondly, the CEO of a large business company, and should especially from large high-tech, which does not depend on the local swamp, appointed head of the budget and bring the treasury business norms accepted and conduct a responsible economic, anchored in the concepts of new and different from what it was before.

The policy of capitalist extremist governments Netanyahu decade The latter, has come to an end and must change.We must set new budgetary priorities, carry out fundamental tax reforms, and bring about structural changes that will break the power of monopolies.We

must restore the confidence of small and independent business owners in reducing the tax burden on them, and the burden of monopolies. must regain the confidence of households government's ability to navigate, and restore its growth outlook soon.

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