Israel’s Capitalist Revolution

With the anniversary of the Six-Day War upon us, it is easy to forget the anniversary of another event nearly as important in the history of the Jewish state. On May 14, 1977, Menachem Begin led the Likud party to its first national electoral victory, defeating Labor (then known as Mapai), which had reigned uninterrupted since 1948. Zev Chafets explains how Begin put the country on the path to becoming the economic powerhouse it is now:

Perhaps the worst accusation [his political opponents] leveled against Begin was that he was a capitalist. That was a bit ironic for a man who was born broke and stayed that way all his life. Even as prime minister, Begin bought his suits on an installment plan.

From Israel’s founding until the 1977 vote, Mapai or its affiliated Histadrut labor organization tightly controlled most of the country’s agriculture and industry, health care and social welfare, infrastructure and development, education, housing, and radio. No detail was too small for the socialists: in 1964, the government banned the Beatles on the grounds that they would subvert the morals of Israel’s pioneering youth.

Begin, who had spent an instructive year in a Siberian Soviet gulag during World War II, was skeptical of such power. He had simple instructions for his finance minister, Simḥah Ehrlich: free the economy and make life better for the common people (by which he meant Likud voters).

Ehrlich, who owned a small optics factory in Tel Aviv, was a short, sixtyish man, pink-cheeked, fastidious, and laconic nearly to the point of silence. He . . . was devoid of formal education or economic training. The Israeli media began calling him a follower of Milton Friedman, the free-market guru who had recently won the Nobel for economics. But Ehrlich, who couldn’t read or write English, didn’t know the first thing about Milton Friedman. . . .

Although Ehrlich’s reforms led to what Chafets describes as a “fiasco,” they paved the way for the more successful reforms of the mid-1980s—which saved a cratering Israeli economy—and for the even more sweeping changes of the 1990s, which allowed for the birth of today’s “start-up nation.”

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More about: Capitalism, Israel & Zionism, Israeli economy, Israeli history, Menachem Begin

 

Palestinian Leaders Fight Economic Growth

Jan. 15 2019

This month, a new shopping mall opened in northeastern Jerusalem, easily accessible to most of the city’s Arab residents. Rami Levy, the supermarket magnate who owns the mall, already employs some 2,000 Israeli Arabs and Palestinians at his other stores, and the mall will no doubt bring more jobs to Arab Jerusalemites. But the leaders of the Palestinian Authority (PA) are railing against it, and one newspaper calls its opening “an economic catastrophe [nakba].” Bassam Tawil writes:

For [the PA president] Mahmoud Abbas’s Fatah officials . . . the image of Palestinians and Jews working in harmony is loathsome. . . . Instead of welcoming the inauguration of the shopping mall for providing job opportunities to dozens of Palestinians and lower prices [to consumers], Fatah officials are taking about an Israeli plan to “undermine” the Palestinian economy. . . . The hundreds of Palestinians who flooded the new mall on its first day, however, seem to disagree with the grim picture painted by [these officials]. . . .

The campaign of incitement against Levy’s shopping mall began several months ago, as it was being built, and has continued until today. Now that the campaign has failed to prevent the opening of the mall, Fatah and its followers have turned to outright threats and violence. The threats are being directed toward Palestinian shoppers and Palestinian merchants who rented space in the new mall. On the day the mall was opened, Palestinians threw a number of firebombs at the compound, [which] could have injured or killed Palestinians. The [bomb-throwers], who are believed to be affiliated with Fatah, would rather see their own people dead than having fun or buying attractively-priced products at an Israeli mall.

By spearheading this campaign of incitement and intimidation, Abbas’s Fatah is again showing its true colors. How is it possible to imagine that Abbas or any of his Fatah lieutenants would ever make peace with Israel when they cannot even tolerate the idea of Palestinians and Jews working together for a simple common good? If a Palestinian who buys Israeli milk is a traitor in the eyes of Fatah, it is not difficult to imagine the fate of any Palestinian who would dare to discuss compromise with Israel.

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More about: East Jerusalem, Israeli Arabs, Mahmoud Abbas, Palestinian Authority, Palestinian economy