The Israeli government is raising its deficit to 2.4 percent, and raising government spending to 54.4 percent of the GDP. It is funneling hundreds of millions of dollars to anything it can think of. The absurdities of increasing public expenditures can be found in our August 21 NBN (“Unprecedented Government Expenditures”). Now let’s take a look at where all this money is going.

Plan #1: Prime Minister Sharon himself will head a new “Ministerial Committee on Aiding Failing Industries.” NIS 200 million has immediately been allocated to government guarantees for grants to medium and small businesses that are failing.

Plan #2: Also, a search will be conducted for 5,000 people without education, who are unemployable, and they will be located, rounded up  and given an education (cost: NIS 18 million).

Plan #3: NIS 850 thousand will go this year alone for the state to pay the salaries of factory workers who have no work, so they can take unpaid [sic] vacations rather than being let go.

Plan #4: The cabinet approved make-work programs for adults in the Antiquities Authority and National Parks Authority. Labor Minister Benizri wants to employ 4000 people in this but Finance wants to think about the number first.

Plan # 5: The Employment Service will pay private headhunting firms to find jobs for 2000 people.

Plan #6: An another note, NIS 350 million will be taken from the Ports Authority for defense needs. (At some future point port fees will be reduced.) Incidentally, this plan illustrates graphically the meaninglessness of  decreasing US non-military aid while concomitantly increasing military aid.

Plan #7: On yet another note, two bankrupt plywood firms are merging, the government will give them NIS 10 million of taxpayer money, the banks another 10 million (banks are state owned in Israel), and the Histadrut will give 10 million. The Histadrut is demanding, in turn, that duties be imposed on imported plywood. The Ministry of Trade agrees.

Plan [?] #8: Last but not least, the cabinet is getting two new ministers, raising the number of cabinet members to 28 and 12 deputy ministers, as the Central Party receives its payoff for supporting the coalition. One third of the 120 members of Knesset are no longer functioning in the Knesset but are now part of the executive branch.

All the above have been collected from one day’s newspaper, August 22, 2001.

Now let us take a quick look at what the above means:

Plans 1 and 7 above mean the government is rewarding inefficiency, ensuring employees of failing firms never find worthwhile work elsewhere, allowing company managers to increase their salaries while their firms collapse, and teaching yet another generation of Israelis that they do not have to be responsible for their productivity, wages, or future. Or rather, that the way to take responsibility for one’s employment, food, religion, housing and even entertainment -  is to turn to the state and demand them.

Number 2 means the government, which has failed to educate students and failed to retrain adults, will now once again educate the people it has already failed to educate….if it can find them first. Perhaps they should hire the headhunters referred to in plan 5, to hunt for these people. The inversion of setting employment headhunters to the task of finding unqualified people fits nicely with other aspects of Israeli economic policy.

Speaking of plan 5 above, this plan means the government admits what IASPS proved beyond any doubt in Policy Studies no. 36, on the State Employment Service: that people who found jobs in Israel did it through newspapers and private placement firms, not through the service, and that the service found jobs for almost no one who did come to it. Now the government has decided that the service is going to hire headhunters. So why does Israel need the service? Simple: it provides jobs for 960 people, who otherwise would have to be employed as per plan 4 above, in archaeological digs and parks.

Either way, they are all make-work programs. Some people sit in parks and others in Employment Service offices; no one contributes anything to the GDP, but everyone gets paid by the taxpayer.

We skipped plan 3 above. This is pretty clear, but just to be sure our readers understand there was no typo above: The cabinet decision does indeed mean that workers who have nothing to do because their factories are not producing anything, will go on paid unpaid vacations. In order to avoid calling them “fired” or “let go” or “unemployed,” the government has decided to call them “vacationers” and since the factories have failed and cannot pay for these vacations, the government will have  taxpayers fund the vacations. Otherwise, as we have seen, these people too would have to be put to work digging up old bones or working in parks (as per plan 4), or in the Employment Service offices (plan 5). But there aren’t enough digs and parks, so the answer is – vacations.

Now, in addition to all the make-work programs, we have a make-vacation program.

Plan 6 shows that the government ministers making these decisions about spending taxpayer money have no idea what they are doing and have never read any research or dealt with reality. IASPS Policy Studies no. 41 proved – again beyond any doubt – that one of the major problems facing the Port Authority is that any time local ports turned a profit, or came close to it, the money was taken from the ports and spent elsewhere. With no real investment being made in the ports they have fallen to pieces. The real solution is to take the ports out of government hands and privatize them, allowing each port to compete with the others and reinvest their profits so as to be able to compete better. Privatization is of course out of the question, especially since the fewer companies that use the ports, and fewer boats that come, because of the poor service and infrastructure, only move the ports closer to plan 1 above, where they will get back the NIS 350 million as state grants to failing industries.

Plan 7 is another version of plan 1, in which the state forces taxpayers to pay for companies that have no economic reason for being there, other than to provide jobs for people who otherwise would be employed by the state in archaeological digs, parks, the Employment Service or taking vacations (plans 1,3, 4, and 5). In this case the taxpayer is likely to be forced to pay twice, first for funding the merged company (which by the way, has decided to keep both separate companies functioning; no room for efficiency here) and then by paying higher prices for all wood products in Israel as duties raise the price of imports. (See an upcoming IASPS Policy Studies on import duties.)

Plan 8, finally, is yet another example of make-work programs in action. The cabinet saved the Employment Service the worry of running after private headhunters to find work for several members of a self-destructed party with no public support, who obviously would be out of work after the next elections. Notice to the Employment Service as per plan 5 above: 2 down, 1998 to go. After all, had the cabinet not made these two people ministers and given them cars and chauffeurs and office staff, they might have had to go to work on the archeological digs, in the parks, or in the Employment Service or ports, or worse – to go on vacations.

In sum, we have an entire country designed from the start to produce as little as possible as inefficiently as possible, in which no one, from factory worker to Cabinet minister, takes responsibility for his decision or his life, and in which the government confiscates the property of the few who are left paying taxes in order to give others Potemkin factories, archeology, Employment Service bureaus, vacations, educations and cabinet posts.

Happy days are here again.

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