Hundreds of senior economists issued another letter in which they expressed their fear of economic damage following the legal reform.
Since the publication of the first manifesto, many indications have accumulated that the damages to the economy may materialize with greater intensity and speed than we anticipated.
Since the publication of the first manifesto, many indications have accumulated that the damages to the economy may materialize with greater intensity and speed than we anticipated.
In recent weeks, the first signs of capital flight are evident, which requires the Bank of Israel to continue raising interest rates at a rapid pace.
Even if the markets eventually stabilize in the short term, the experience gained from other countries where the independence of legal and economic institutions has been compromised, as well as economic research from the past decades, indicate that in the long term there is likely to be long-term damage to the growth path of the economy and the quality of life of the residents of Israel .
It's not too late to stop the train before the abyss.
Below is the text of the letter:
At the end of January 2023, a manifesto was published by companies and academic faculty members who expressed deep concern about the enormous damage that could be caused to Israel's economy due to the coalition's legislative initiatives.
The manifesto was signed by hundreds of companies and faculty members, including Nobel laureates, Israel laureates, former senior executives at the Bank of Israel and the public service, past and present presidents of the Israel Economic Association, deans, and heads of departments.
This broad agreement between economists and economists is unprecedented.
These warnings were joined by many voices from around the world, including credit rating agencies, foreign capital funds that ordered companies to take money out of Israel, and Israeli companies that are taking money out of Israel and are considering moving operations abroad. Added to this are warnings from Israel's friends around the world, including President Biden and President Macron, of The OECD organization, and the global economic press, including the Economist who believes that the reforms "will harm the country from home and abroad," the Financial Times who states that "these are gloomy days for Israel," and Bloomberg who raises "concerns about regime change."
Unfortunately, the warnings we gave were not heeded and the coalition continues with the legislative initiatives while blatantly ignoring the warnings from the country and the world about the expected damages to the economy.
For example, in the February 20 meeting summary notice of the Knesset's Finance Committee, it was determined that "the Finance Committee determines that there is no connection between the reform of the judicial system and damage to Israel's economy, and that an attempt to connect the two things is a political attempt," and this after four economics professors voiced At that meeting there were warnings of serious damage to the economy, and not a single professional person appeared at the meeting and expressed a different position.
In fact, the coalition not only did not stop the legislative process, but recently there were proposals to harm the independence of other institutions besides the judicial system.
Thus there were proposals to intervene in the Bank of Israel's interest rate policy, to appoint a political businessman to the post of chief statistician, to interfere in the management of the National Library, and to harm the independence of public broadcasting and academia in Israel.
This behavior only exacerbates the damage to the Israeli economy.
Since the publication of the first manifesto, many indications have accumulated that the damages to the economy may materialize with greater intensity and speed than we anticipated.
In recent weeks, the first signs of capital flight are evident, which requires the Bank of Israel to continue raising interest rates at a rapid pace.
Even if the markets eventually stabilize in the short term, the experience gained from other countries where the independence of legal and economic institutions has been compromised, as well as economic research from the past decades, indicate that in the long term there is likely to be long-term damage to the growth path of the economy and the quality of life of the residents of Israel .
It's not too late to stop the train before the abyss.
The Israeli economy has reached significant achievements in recent years.
Reforms that will increase the number of judges, prevent the unnecessary continuation of legal proceedings, facilitate the resolution of disputes and streamline the enforcement of contracts and the protection of property rights, can help the economy to flourish and prosper.
Therefore, not only do the legislative initiatives not address these important problems, but they prevent important criticism of the executive authority and weaken the protection of property rights.
For example, without a strong and independent judicial system, the government may in the future damage pension savings, own real estate, or impose retroactive taxes on other economic activity.
We call on the government of Israel to listen to the many voices of warning from home and abroad, including the voices of senior economists whom the Prime Minister used to consult over the years. The experience gained in other countries where politicians ignored the warnings of economists - as happened in the UK just a few months ago - shows that such disregard may cost us all dearly.
It is appropriate for the Israeli government to consider its steps, lest we all regret that we were not wise in time to prevent a serious injury to the well-being of the residents of Israel and to our common future.
Among the signatories: Prof. Jacob Frankel, Prof. Eitan Shashinsky, Prof. Manuel Trachtenberg, Prof.
Marty Eichenbaum, Prof. Eugene Kendall, Prof. Nicole Adler, Prof. Omer Moab, Prof. Avishai Braverman, Prof. Zvika Eckstein, Prof. Alice Barzis, Prof. Avi Ben Best, Prof. Udi Nissen, Prof. Danny Zidon, Prof. Michel Strabachinsky, Prof. Reuven Grunau, Prof. Rafi Melnik, Prof. Natan Zussman, Prof. Yossi Spiegel, Prof. Moshe Hazan, Prof. Itai Ater
were we wrong
We will fix it!
If you found an error in the article, we would appreciate it if you shared it with us
