Yesh Atid: Lapid Taketh, Lapid Giveth Away

Yair Lapid effectively claims he and his party were only stopped from saving the state by Netanyahu. The truth is very different.

If the political fate of the universe were dependent on campaigns, Yair Lapid would be the first Trans-Galactic President · Taking credit for reforms that started before he took office, glorifying damaging reforms, and seriously misunderstanding the problems behind the housing crisis are just some of the problems of the former Finance Ministry’s campaign · On the difference between slogans and getting (beneficial) things done

מתקשה להבין שהבעיה זה הביקוש, לא ההיצע. יאיר לפיד על רקע אתר בנייה בראש העין, השבוע. צילום: פלאש90
The problem is investment demand, not housing supply. Yair Lapid at a Rosh Ha’Ayin housing project. Photo: Flash90

Yair Lapid knows how to run his party. He knows how to run an effective campaign. From an initially inferior position, in the face of serious public criticism and the rise of copycat ‘Lapidist’ parties, the head of Yesh Atid has succeeded in rallying his base and is now embarking on very effective election campaign. The failing Finance Minister of yesterday has become the energetic reformer, only stopped from making a bigger difference by the malicious Prime Minister. It’s working: Per present polls, Yesh Atid is looking at 12 or more seats this election. The problem with Yesh Atid is not its campaigns, but what happens between elections.

The Number is the Message

Yesh Atid’s website displays a long and impressive list of reforms pushed by the party. 202 in all, some listed in color and marked as “done” and others listed as “stuck,” marked in a somber black and white. The message is clear: We’ve done a lot, and we would have carried out even more reforms if not for Netanyahu.

The number may be the message, but the truth has been buried under its weight. A detailed examination of the reforms – 74 in number – in the fields of housing, cost of living, health, small businesses, as well as a sampling of reforms from other areas, shows that this list is a massive act of deception. Among these reforms, only 12 might be called beneficial, while 24 of them are outright destructive. Many of the other reforms are those of other ministers which Lapid is attributing to himself: copy-paste reforms (presenting previous reforms as new ones), gas-brake reforms (such as stopping the expected rise in employers’ taxes which Lapid himself approved), and many “reforms” which are merely a continuation of present policy or budget allocations.

Any minister or party could pull the exact same sleight of hand using such methods. Here’s how it works: a long list of reforms and reform proposals created over many years will land on the desk of any new minister—and all the more so a Finance Minister. Some of the reforms weren’t implemented while others were partially implemented but require updating and changes. Some will never have a budget while others don’t cost money but arouse opposition in the “sector”—that is, people within the Ministry’s purview. Some of the reforms are beneficial, while others are destructive. Some will waste money for nothing—others will improve our lives at no cost.

מה לפיד היה עושה אם הוא לא היה מפטר אותו? נתניהו בישיבת הממשלה השבוע. צילום: אלכס קולומינסקי, פלאש90
Yair Lapid’s convenient scapegoat. Binyamin Netanyahu at a cabinet meeting. Photo: Alex Kolomisnky, Flash90

“Do Something” vs. “Doing Something That Works”

But the true test of a minister’s accomplishments is not the number of reforms or the amount of money he has spent, but whether he actually did any good. For Yair Lapid what matters is “getting things done”—right away. Whether any of these things actually benefit anyone is far less important.

In the field of small businesses and personal imports, Lapid implemented a number of successful reforms. Even if most of them were nothing more than a continuation of existing reforms, they clearly fell within the purview and understanding of Yair Lapid, the successful self-made man. However, when it comes to other areas which require an understanding of how an economic system works and how positive and negative incentives affect the market, Lapid ends up focusing too much on “getting things done” rather than “doing things that work”.

Thus, for instance, Yair Lapid takes pride in promoting a reform to “reduce food prices”. He’s placed additional products under a fixed-price regime and increased the government price controls on existing products in that regime. In his opinion this will help consumers, small suppliers and small farmers. You don’t need to be a free-market advocate to understand that this is nothing less than an economic scorched earth policy, the product of pure economic stupidity. Like every neophyte to government, Lapid is convinced he can change the time-honored rules of supply and demand through government fiat and fight high prices and cartels with government directives, even though decades of experience show that all this will only increase centralization, harm consumers, and eliminate small businesses.

לפיד פעל להגברת הפיקוח על מוצרי המזון, בניגוד לכללי השוק החופש. צילום: משה שי, פלאש90
Solving cartel price fixing with governmental price fixing. Photo: Moshe Shai, Flash90

Don’t Know Much about Housing

Another prominent example is housing. Most of the reforms in this field were dead on arrival, since they are all aimed at solving the problem of housing supply, when what is driving the housing bubble is housing demand. In other words, the problem is not that not enough homes are being built or being built in the wrong places, but that alternative channels of investment for savers—such as savings plans with interest—are not worthwhile. Let me take this even further: Even if we greatly increase supply—for instance, if the number of new apartments being built doubles—apartment prices will still rise. In fact, the real estate bubble will get even worse.

Finance Minister Lapid has the power to deal with the real problem, which is the basic human need to invest one’s money in a way which will increase one’s available wealth for old age. But since he doesn’t understand the problem, there is no way Lapid could propose a solution. And there are solutions. Instead of digging in on a pointless plan like zero VAT or the dead-on-arrival idea to promote building for renting, Lapid could raise interest rates. If that’s too extreme for him, he could also reduce taxation on savings (known as “capital gains”) or issue designated bonds. He would thus increase the attractiveness of investment channels other than real estate, instead of focusing on real estate in isolation.

אפילו ביש עתיד מחביאים אותה. שרת הבריאות לשעבר, יעל גרמן. צילום: איציק הררי, פלאש90
Even Yesh Atid find her embarassing. Former Health Minister Yael German. Photo: Iztik Harari

Intentions Do Not Equal Results

The centralizing approach which aims to replace positive incentives with government directives is apparent in every corner of Yesh Atid activity. One of the fields which Yesh Atid takes pride in is the Equal Burden Law. According to the party, the law led to an increase in the number of Haredi Jews who enlist in the IDF: “In the 2013 draft, there was a 39% increase in Haredi enlisters.” That’s certainly an impressive accomplishment, given that the Equal Burden Law passed in 2014—so there’s no way it affected enlistment in 2013. It’s also doubtful that the law is accomplishing its goal now that it was passed. The number of Haredi Jews enlisting was steadily rising in the years before the law passed. Since the law passed, Haredi enlistment has stopped growing and may even shrink.

The heavy hand of this tyrannical tendency for centralization in Yesh Atid is particularly apparent in the field of health. Health Minister Yael German has caused damage at every step, with plans which betrayed both a tyrannical streak and a serious misunderstanding of economics. Her control mania threatened to crush the Israeli health system as a whole. It is no coincidence that Yesh Atid is avoiding discussing German’s “accomplishments” in this field.

And we couldn’t finish this list without reference to Education Minister Shai Piron. Piron has made his name with a list of reforms based on the precept that if we give everyone an A+, everyone will be gifted.  Piron has reduced the requirements for matriculation exams alongside the declaration that it is possible to be accepted to university (including in STEM fields) on the basis of the now worthless matriculation exams. It’s to Yesh Atid’s credit that it hasn’t taken pride in Piron’s determined fight against parents trying to ensure quality education for their kids or his war against private kindergartens. They know their voters—and the latter actually know a thing or two on the subject.

Yair Lapid knows how to run a campaign. He knows how to butter up his voters, tell them what they want to hear and listen to what they have to say. But in order to actually make a difference beyond winning an election, it’s not enough to open up your ears. You also need something in between them.

English translation by Avi Woolf.

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