Zehut's Practical Economic Solutions
Translated and excerpted from Moshe Feiglin on Facebook Live, Thursday, 5 Kislev, Nov. 23.
Zehut is a party that supports personal liberty. The first expression of personal liberty is in the economic realm. A regime that feels free to dig its hands into the pocket or assets of the citizen, will ultimately get its hands on the liberty of the citizen. We see this in its most extreme form in the absolute Communist regimes, where death is king. It doesn’t matter if it was Stalin, Mao, Pol Pot, or North Korea, currently. The worldview that says that there is no G-d, I am in His place and therefore I allocate the assets, will ultimately decide not only what will be, but who will be (and who will not be). A direct line leads from China today, which is an atheistic, Communist regime, to a worldview that says that it is fine to raise opponents of the regime like geese and to harvest their organs for sale for the best price in the West. In other words, there is an intrinsic link between Zehut’s faith-based liberty worldview and the economy.
And what is the situation in Israel? On the one hand, Israel’s economy is a tremendous success and on the other hand, an extraordinary failure. Israel’s economy has expanded 10 fold in the past years. The heads of state can take the credit for this. Benjamin Netanyahu, who was the Finance Minister from 2003 to 2005 really can be proud. He freed up the economy - even though it was partly accomplished in a very inhumane way, with drastic cuts to the Social Security child allowance all at once. Children went hungry at that point. In all, though, the beginning of the opening of the market can be credited to him.
The continuation of the economic success is in the merit of the blessed Aliyah to Israel from Russia that began in the 90’s. That Aliyah brought an abundance of academics who were willing to work at any job.
Today’s abundance is not in the merit of Israel’s leadership, but despite it. Why do I say that Israel’s economy is an extraordinary failure? Because ultimately the abundance doesn’t trickle down to where it should be going. We work more than any Western country, earn the least and pay the most taxes. This makes it almost impossible for a young couple, for example, to acquire enough money to buy an apartment.
The most distinct expression of the State of Israel’s ability to take a huge success in macro and to turn it into a failure in micro is the simple fact that the olim – new immigrants - are not coming. Not only are they not coming, but the wave of immigration that we were beginning to feel from France has begun to return to France and to other countries.
In all of Israel’s 70 years, all the major waves of immigration came only from poor countries (I very much appreciate the high-quality ideological Aliyah from prosperous countries, but it is very small.) They came from North Africa, from Eastern Europe and from Russia. A wave of immigration has never arrived from Canada. Or from the US, Australia, or England. Only ideological immigrants come from there. Why? Because ultimately, the economy triumphs. If a person feels good in a foreign country, he is not going to come. This means that there is nothing more Zionist than a prosperous economy.
If a Jewish doctor makes Aliyah from France, he discovers that there are not many places to work because the Israeli economy has failed to create many new places to work. And if he does find work, he doesn’t understand how he can support his family with the small salary that he earns. Eventually he takes his entire family to Canada, where he finds a great job with an amazing salary. There is just one problem: His children will not be Jewish.
That is a complete failure of the State of Israel, a complete failure of Zionism and all because of the economy. Israel’s citizens should not have to deal with the phone call from the bank and from the mortgage. They should be able to cover all their monthly expenses, to go shopping for food without thinking how they will save money by not warming up their water in the winter – these are all things that the average Israeli thinks about – all this is happening in a wealthy State. If we do not enjoy the individual prosperity that will encourage people to make Aliyah, it is a failure of Zionism. The Nation of Israel is not coming to Israel because of this reason. The realization of the essence of our existence as a Jewish State is primarily in the economy.
Let us discuss two current examples of poor economic policy. The first is the issue of the disabled population that has been protesting their small government pensions.
Israel is a country of ‘elbows’, where everybody tries to get something. Big Brother, the State, gives. It controls all the resources. For example, it still controls all the land, which is the greatest productive tool of all. The State controls the land on which the office, the factory, the company – everything – is built. The State holds all of these resources and it is supposed to allocate them. Whoever fights harder is essentially trying to convince the State to put its hand deeper into someone else’s pocket and to transfer the proceeds to himself.
What is the mechanism that decides who will get what? What directs all the traffic of the pensions, the support and the welfare? Social Security. Social Security is the most draconian tax that exists in Israel. The first thing that every person has to do after he finishes his army service is to begin paying Social Security. Where does the Social Security money go? Does it accrue interest in some account of the Social Security Company? Do they buy gold with it? Do they invest in the international stock market?
More than 80% of this money simply goes to the government budget. It is a head tax. Of the 100% of funds collected by Social Security, less than 20% returns to the citizens. Of this less than 20%, approximately 60% goes to the Arab sector, whereas the collection from that sector is approximately 5%.
What is Zehut’s solution?
First of all, stop deceiving us. Social Security, which is called National Insurance in Israel, is not insurance. It is a National tax. This mechanism that calls itself insurance should finally publicize what is included in its policy. For what exactly am I paying this insurance payment? We tried to get that information out of the Social Security, but did not succeed.
After the policy is publicized, a tender – even international - must be advertised among insurance companies. People will still pay a base amount to the Social Security, which will be called Mandatory Personal Insurance. That policy will be the baseline. Then the insurance companies can compete between them on the enormous sum of money (the 80%) that is now going straight to government coffers. One company will entice customers to buy its insurance because it pays more for disability. Or a person will be able to insure himself for more disability coverage. Another company will specialize in extra service and a third in improved health coverage.
This is the true solution for disability, for health and more. To insure the existing baseline and to allow the free market to work for us. This is similar to the voucher method in education, which we have shown will allow for much larger salaries for teachers, smaller classrooms and freedom for parents to choose for their children the schooling of their choice. The same can be done for personal insurance. Those who wish will be able to pay for a higher old-age pension, survivor pension, unemployment - whatever they please.
The second current example of poor economic policy is the closure of the Negev Ceramic Factory in southern Israel. It is terrible for a person to lose his source of income. But the employees’ problem is not the closure of the factory. Businesses always open and close. No factory can promise that it will be in business for eternity. The problem is that in southern Israel, there is no demand for workers. There are very few factories, very few businesses, slow economic growth and very small demand for employees. Why?
The Negev Ceramics workers think that the solution to their problem is the government and the Workers Union. They do not understand that they are the problem; that because of the government and the Workers Union there are virtually no businesses in the Negev. In the Small Business Index, which measures the level of ease in opening and maintaining a small business around the world, Israel is in the 80th place. After Ghana and other African countries.
There are 400,000 small and medium businesses in Israel. They are the major employers in Israel’s economy. These businesses know that if they open their business in the Negev, beside the security problem, which is a separate issue - they will be dealing with heavy regulation and unforeseen taxes.
When an entrepreneur opens a business, he should know exactly what taxes he will have to pay. There should be a basic tax, without a plethora of regulations. Then it would be much easier to open a new business. Businesses will flourish and they will provide employment. Hi-tech businesses are perfect for the Negev. Agriculture is perfect for the Negev. They can grow cannabis there and open other farms using hi-tech agriculture and export throughout the world. There will be more and more work. All the indexes and all the international experience show this. The more that the government stays out of business, the more businesses flourish and provide employment for the people in their area.