Is it the Economy, Stupid?

Economic developments since the mid-1990s constituted a cause of concern emanating from the low growth path Israel seemed to be settling on. Then, at the end of 2000, the war of terror began, and led to, first, two years of negative growth, and then a third year of meagre growth. the hardships that these developments, as they always do, visited upon the poor were compounded by a finance minister who was determined to reduce the culture of dependence that had developed in Israel over three decades. He thus cut transfer payments in an attempt to force the able among the poor to join the labour force. Under his stewardship, transfer payments declined from 13 percent of GDP to 11.7 percent of (reduced) GDP. And annual transfers per poor person declined, in nominal terms, from just over NIS 32,000 to just over NIS 28,000. That is a decline of 12.5 percent-truly radical. The impression was thus created that the 2006 election would be fought primarily on economic issues, and the rhetoric seemed to confirm this. In particular, Labour chose as its standard bearer the outgoing chairman of the Histadrut, the labour unions confederation, who campaigned almost exclusively on socioeconomic issues. The media, too, stressed these issues. In the end, the election results cannot be conclusively interpreted as having been driven by economic considerations. True, the GIL (pensioners) party, really more a lobby than a political party, rode into the Knesset on social issues. But Labour only managed to just about keep its parliamentary strength, casting doubt on the virility of these issues. Reprinted by permission of Frank Cass & Co. Ltd.