David Vs. Goliath

The Jerusalem Post
20 Jul ’05

The Goliath of the Israel economy, the Poalim-Leumi bank duopoly, was certain that in this battle too, as in former battles over the last 20 years, it would easily vanquish the outnumbered forces of reform.

What a shock, then, that despite its overwhelming force, a daring adversary with a slingshot overwhelmed it.

Filed under:

media • reform

Caravaggio's David with the Head of Goliath c. 1610. oil on canvas. Galleria Borghese, Rome, Italy

Tuesday’s passage of the Finance Ministry’s Bachar Commission reforms through the Knesset Finance Committee was nothing short of a miracle. These proposals hold the potential of transforming Israel’s economy and society.

The Goliath of the Israel economy, the Poalim-Leumi bank duopoly, was certain that in this battle too, as in former battles over the last 20 years, it would easily vanquish the outnumbered forces of reform. What a shock, then, that despite its overwhelming force, a daring adversary with a slingshot overwhelmed it.

The David vs Goliath image is only partially applicable to the dramatic story of the financial market reform. The small group of reformers, public policy advocates, economists, businessmen and a few media people at first had little chance of pushing through the reform they had so tenaciously advocated for years. But thanks to the determination of a politically courageous finance minister and his loyal assistants, the battle against the powerful bank lobby was now engaged.

Still, as Finance Minister Binyamin Netanyahu – who deserves most of the credit because it was his own head that he placed on the political block – will probably acknowledge, his efforts would have been so much more arduous, and the results less impressive, had he not enjoyed effective public support from this small group of reformers, and from a surprising new student coalition that emerged at a crucial stage to give the reform a vital extra push.

Don’t forget that the banks enjoy immense power as the sole providers of credit in the economy. Everyone, but everyone, depends on them and fears to oppose them. They spent millions on top lawyers, accountants, foreign and local experts, lobbyists and PR people to discredit the reform often through misinformation, distortions – even lies and threats.

The media, except for a few courageous economic journalists, generally ignored the dramatic story of this historic reform and the bankers’ efforts to undermine a democratically sanctioned reform by strongarm tactics. This despite the fact that the bankers have been plundering the public, have caused a huge annual transfer of wealth from productive Israelis to the few families and entities which own the banks, and have irresponsibly wasted most of Israel’s savings, causing the economy to experience prolonged recession, huge unemployment and low wages.

TO THE best of my knowledge, not a word about the reform battle was uttered by business organizations such as the Manufacturers Association, or unions such as the Histadrut Labor Federation (which owes a mint to the banks) despite the fact that the struggle greatly affects economic growth, employment and wages.

Again, to the best of my knowledge, not a word was uttered by the vociferous social welfare lobby and its dozens of advocacy groups, chief among them the New Israel Fund, which raises over $20 million from US and British Jews, ostensibly to protect the poor by, for example, fighting against Netanyahu’s budget cuts (which, it turned out, actually improved the lot of the poor).

Nor was a word heard from the Rabbinate, from our universities (whose professors are always glad to join any left-wing petition) or from other guardians of the public good.

This is why the emergence of a persistent effort by a small group of reformers who initiated the reform and accompanied it all the way, facilitating its success against immense odds, is so incredible and encouraging. Their efforts received important public exposure through the work of student groups that spontaneously organized into a coalition to stress the importance, and advance the understanding, of economic issues; first and foremost the proposed reform of financial markets.

The pioneer group was Citizens for True Social Justice, organized mostly by graduates of university student seminars dealing with “The Free Market and Its Critics” (which I and others have taught for the last three years). After organizing several small demonstrations and sponsoring a series of ads opposing the Histadrut’s efforts to undermine economic reform by carrying on debilitating and extremely costly general strikes, Citizens for True Social Justice sponsored a huge protest tent in Rabin Square in Tel Aviv in May 2005. For several days the tent was the seat of seminars designed to explain to the public the purpose of the bank reform and 10,000 signatures were collected on a petition supporting it.

Since then, Citizens for True Social Justice have sponsored ad and billboard campaigns, and held several public demonstrations. The group has also presented the Knesset and its Finance Committee with position papers and personally appealed to Knesset members not to buckle under the immense pressure by the banks.

At a crucial moment the movement was joined by a student coalition made up of the National Student Union, Kol Koreh and Nova, representing over 80,000 students. The dedicated coalition leadership spent many days in the Knesset where, thanks to the chairman of the Knesset Finance Committee, Rabbi Ya’acov Litzman, they were invited to participate as observers and provide input, thus serving as the only counterpart to the huge representation the banks fielded daily in the committee’s deliberations.

Perhaps among all the miracles that accompanied the passage of the reform bill the participation of these activist students is the most significant. Such involvement may presage the appearance on the public stage of a very powerful segment of society that, until recently, was notoriously passive and disinterested in economic matters.

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