The Torah in Deuteronomy says: “For the poor shall never cease out of the land…” (15:11). Ever realistic, the Bible insists that poverty may be an unavoidable – if transitional – part of the human condition.
It may afflict anyone in a variety of circumstances: the young before they get integrated into the economy; mid-career adults who suddenly lose their station in life because of social or personal changes as happens to formerly thriving executives of failed industries, or to prosperous upper-middle-class women suddenly left by their husbands without sufficient resources or skills to cope. In a word, poverty is a difficult and complex problem that resists quick, universal, fix-it solutions.
The Bible therefore insists it is our duty to mitigate the harshness of poverty. “Thou shalt surely open thy hand unto thy poor and needy brother in thy land” (15:11). Do it directly, personally – not by relegating the poor to an anonymous welfare agency which will take care of it with moneys taken from others, at no direct cost to us.
But that was eons before political correctness mandated that we must pay lip service to the war on poverty but personally do little about it. In fact, our search for quick and easy solutions allows populist politicians and a new class of bureaucrats, academicians and their media allies to exploit poverty for ideological, political and remunerative purposes.
The war on poverty is such a bonanza for them that they are understandably reluctant to see anyone make a determined effort to reduce it significantly, especially if this implies any reduction in government welfare hand-outs.
It you think these are harsh charges consider the media outrage and the derision that met Finance Minister Binyamin Netanyahu’s promise that he intends to reduce poverty substantially by encouraging rapid economic growth, catapulting Israel into the ranks of the 10 wealthiest nations in the world.
Netanyahu had the temerity to suggest that after over 50 years in which Israel devoted as much as 30% of its bloated government budget (55% of its GNP) to welfare transfer payments – among the highest in Western-style economies – after billions spent on fighting poverty only to have made matters worse, with the number of the poor increasing and the income gap growing, the time has come to adopt more effective policies.
Netanyahu cited as a model the transformation of Ireland, not long ago one of Europe’s poorest countries, into one of its wealthiest, and noted that this astounding achievement was made possible by Ireland’s adoption of free market economy policies. Ireland sharply reduced welfare payments, dramatically cut taxes, enhanced competition and thereby created a pro-business environment.
For this transgression a pack of media mavens, notably Ruth Sinai of Haaretz savaged Netanyahu, claiming his adoption of the Irish model would result – as indeed it has resulted in Ireland, they claim – in increased, rather than diminished, poverty.
Ireland, Sinai warned, leads the European Union in the percentage of those at risk of poverty, namely those whose income falls below 60 percent of the median. Not only is the level of poverty in Ireland high, she claimed with glee, but its dimensions are spreading as the Irish economy grows and becomes richer.
Wonder of wonders: the economy grows and becomes richer, but the number of the poor increases. Should we not conclude that economic growth is bad, that it should be immediately stopped and Ireland returned to the state of equality in poverty? That was the case in communist countries which practiced, at least theoretically, the kind of leveling that the social lobby remembers with nostalgia.
Definitely yes, if you subscribe to the statistical nonsense that is called the “Genie Coefficient” from which the poverty line is extrapolated. It is a contrivance that misrepresents the number of the poor by making it dependent on relative rather than real values, so that if a Bill Gates should settle in Israel importing with him his enormous wealth, tens of thousands of Israelis would fall under the poverty line. That would happen without any change in our real situation, and only because the median income rose when Gates’s wealth lifted the total.
The Genie Coefficient is also grossly misleading because the survey which determines the median income includes only urban households’ income, not independent wage earners and farmers.
The survey also does not include non-cash income, or the income from participation in the black economy, which some economists appraise as 15 percent to 30% of the official GNP. And it makes the dubious claim that people will report their true income to government if they are assured secrecy. So the survey really provides a highly downward tilted estimation of income.
Only political inclination or a wish to be trendy can explain how a serious body such as the Central Bureau of Statistics can lend its name to such a questionable device – one that is misleading and causes so much harm, especially to the poor.
Instead of attacking Netanyahu, Ruth Sinai and her like had better learn more seriously what poverty really is, and how the economic growth that Netanyahu is trying to generate is the only true hope for the poor for extricating themselves from a debilitating culture of poverty.
A sound economy is crucial for Israel's future. Since its inception in 1984, ICSEP has helped shape the country's consensus towards economic liberalization and deregulation.
Daniel Doron Director
Daniel Doron helped found Israel's Shinui (Change) Party, serves on various economic advisory boards, and publishes regular articles in the press.
The Israel Center for Social & Economic Progress
an independent pro-market public policy think tank since 1984
Winner of the 2006 Templeton Award for Student Outreach and the 2005 Award for Institutional Excellence
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