THE GOVERNMENT ISN’T GOING TO MAKE YOU WEALTHY
It budget time in Israel which means special interest groups line up with their hands open waiting for goodies to be delivered. We hear calls from our esteemed politicians how they are changing national priorities and will deal with long-neglected sectors of society. They will deliver money and all will be swell. We go through this charade every year and for some reason we still have poor people, an average, at best, education system, a struggling periphery, and a middle-class struggling to make ends meet.
Brilliance
Instead of taking individual responsibility, more and more people look for the government to solve their problems. As if some politician has the secret sauce and knows what is better for you than you know. Ever speak to a millionaire and ask how she became wealthy? I have and have yet to hear the answer, “I got rich because of the government.” So why on earth do we continue to abdicate responsibility to 120 people, most of whom never ran a business, met a payroll or know what it takes to create a real job and who have no idea what’s in our best interest?
Competition not subsidies
The current budget being debated is full of goodies for the middle-class. Lower bus fares and cheaper food are some examples of how the cost of living will drop. Only problem is that nothing is free. It’s not like the market is being opened up to encourage competition in the food sector. It’s not like Egged is lowering prices because of a new bus company undercutting their prices. The reason these prices are dropping is because the government controls the prices and decided to subsidize consumers. But who pays for this subsidy? We do, the taxpayer!
Where is Bibi?
The clear and proven way for economic prosperity for all is to grow the economy. The economy will only grow if it pays for entrepreneurs to take risk and open businesses. The government doesn’t produce anything, companies do. But with a stifling bureaucracy and a huge tax burden (sorry BOI head Flug, but our tax burden is oppressive) many prospective business owners are scared away from opening up shop. The clear way to incentivize these risk takers is to lower taxes, streamlining bureaucracy, promote growth and get out of the way. Unfortunately among many of our esteemed MK’s, entrepreneurs who have become wealthy have become demonized for being “piggish.”
Just how bad is it to start a business or attract foreign capital to be invested in Israel? Each year the Milken Institute publishes its Global Opportunity Index, where it ranks countries as to their attractiveness to foreign investors. Based on the results governments can initiate policies that will help them be a magnet to attract foreign investment. Israel has actually moved up a few spots over the last 3 years and now sits in 24th place. But in the category of Ease of Doing Business Israel places in 68th place, behind the like of Spain and Greece! Yes the very same Greece that is an economic mess. Can’t we do better?
The one person in the political arena who actually understands this is PM Netanyahu. According to a YNet article the prime minister lamented that the budget conversation is about how to split the pie, rather than how to grow it.
“We have to continue the (economic) growth, and that is why the level of taxing will not increase. When the money gets to the citizens, they will make better use of it than the bureaucrats would,” he said. “There are reforms (in the budget) that reduce the cost of living for the citizens of Israel. It’s important to reduce the prices of food, transportation and health, and increase the supply of housing.”
Well who is the prime minister? Instead of lamenting how the conversation is not about how to grow the pie, how about some leadership and start changing the narrative? Why isn’t Netanyahu out there pounding the table for a budget that promotes economic growth?
It’s time for our leadership to stop taking so much of our hard earned money in the name of social rebalancing. After hundreds of billions of Shekel being spent to help the middle class-to no avail, how about letting the middle-class keep their money and doing what they see fit to improve their own situation.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
