Benjamin Netanyahu, former Israeli Prime Minister and current
Finance Minister, known as "Bibi", has taken on the daunting task of dismantling Israel's socialist
welfare state and trying to turn Israel's sick economy around
Targeting Israel's bloated public sector, he has been aggressively
cutting taxes, eliminating government jobs, slashing social spending, cutting welfare entitlements, and
seeking to privatize state-owned industries – all at breakneck speed.
He said Israel will have to find a way to get more people working
and off welfare, particularly in the Arab and Orthodox Jewish populations, which tend to have large
families and high unemployment.
Netanyahu warned against "returning to the fleshpot of welfare
payments," charging that welfare payments had created a dependent non-working class.
Netanyahu credits New Zealand's former Finance Minister Sir
Roger Douglas as the inspiration for these bold moves.
He had a meeting with Douglas in Jerusalem earlier this year.
"Sir Roger has bold ideas," he said. "He really gets down to the bone. To the core of it."
Netanyahu singles out another valuable tactic by Sir Roger –
"you cannot do reforms too fast" – a strategy he pulled from Douglas' book Unfinished Business.
There are indeed parallels between Israel and New Zealand of
1984. New Zealand had a welfare states and ponderous bureaucracies that had brought the country's
economy to the verge of collapse.
In Israel, recent loans of $9 billion to Ariel Sharon's government
from the US just barely averted economic disaster – but it was an expensive band-aid that didn't
really address the basic problem.
Netanyahu must find ways to breathe health into the economy.
Twenty percent of Israel's population is living below the poverty level – and fifty percent of
Palestinians are in similarly dire straits.
In particular, the social-security system is facing bankruptcy.
"We put professional managers in, and now we're going to
privatize the management of those funds. It was a threat hanging over our heads," exclaimed Netanyahu.
Sir Roger argued that if you empower the underclass to have
choice and if you encourage entrepreneurs in education and in health to offer their services in
impoverished areas or rundown areas, they will do a much better job than the Government would, if this
is done over time.
International Society for Individual Liberty
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Israeli Government Adopts "Rogernomics"
