ISRAEL'S OWN brand of democracy – one that sends hapless voters to the polls when political leaders spat – is expensive. National elections for the 19th Knesset were held two years ago, on January 22, 2013. The direct cost of ballots, 60,000 polling station workers and security officials, etc. was 250 million shekels plus lost output of 1.7 billion shekels because Election Day in Israel is a national holiday. The upcoming elections, slated for Tuesday, March 17, 2015, will also be a holiday. US elections are always held on the first Tuesday in November, a regular work day. A majority of countries hold elections on Sundays, to reduce the cost. This is not an option in Israel, where Friday, Saturday and Sunday are Sabbath days for the three main religions. But the real cost of Israel's national elections is driven by their uncommon frequency. Israel suffers from a bad case of “truncated democracy.” The symptoms are relatively short-lived governments whose cabinet min - isters have insufficient time to implement key reforms and new-broom ministerial mindsets that sweep away predecessors' achievements, however constructive. The 33rd government and 19th Knesset have an enormous backlog of reform legislation that will now be shelved, some of it perhaps indefinitely. According to polls, very few Israelis think there is a substantive reason to hold new Knesset elections. Indeed, truncated democracy did not always exist. From the First Knesset through the 15th, each new Knesset averaged about two different cabinets. Political rows caused some reshuffling of governments, but not elections. The Second Knesset holds the record, with four different cabinets in all. But for the past decade, since the 16th Knesset elected in January 2003, the collapse of a cabinet has brought new elections. The latest cabinet, Israel's 33rd, lived for just 20 months. Only the Shimon Peres government of 1995/6 had a shorter life, when Peres called a snap election in the wake of Yitzhak Rabin's assassination and lost to newcomer Benjamin Netanyahu. Also, in 1974, Golda Meir's government fell after only three months, in the wake of the trauma of the Yom Kippur War. Elections, a new Knesset and brand new government are always more disruptive than a cabinet shuffle. Press accounts suggest Netanyahu did try to rebuild a cabinet, offering deals to Avigdor Liberman's Yisrael Beytenu and the Haredi parties, to no avail. The last two Netanyahu governments have lasted for five years and eight months in total. Despite two finance ministers who lacked both knowledge and experience in economics (Yuval Steinitz and Yair Lapid), the record of these two governments is quite positive. The interest rate on government bonds fell sharply, from 4 percent in 2009 to only 2.7 percent today, reflecting capital markets' perception of lower risk. After two quarters of recession in 2009, Gross Domestic Product (GDP) grew faster than in other OECD countries. Unemployment in October was a low 5.7 percent, close to the record low of 5.6 percent in November 2013. The Tel Aviv Stock Exchange TA-100 index has doubled since April 2009 and government debt as a percentage of GDP has fallen. At the same time, food prices have risen by 32 percent since 2006 and housing prices skyrocketed 70 percent since January 2009. The shekel-dollar exchange rate has fallen 18 percent since July, which may help stimulate flagging export sales. I believe Israeli society has become more violent and its politics appear to reflect that trend. Since 2001, only Netanyahu's March 2009 government survived for a full four years. The remaining four cabinets lived just three years or fewer. Some 32 different political parties ran for election in 2013. Cobbling together a coalition has become like building a house of cards in a typhoon. Truncated democracy is also unstable democracy. According to an unofficial poll cited by Israel Radio, a majority of those who voted for Yair Lapid's Yesh Atid party, giving it 19 Knesset seats, decided to do so at the very last minute, on election day itself or even in - side the polling booth. Such impulsive voting fragments the Knesset and makes cabinets fragile. The 19th Knesset failed to pass the 2015 budget. As a result, the 2014 budget remains in force and in the interim one-twelfth of the budget will be spent monthly, until at least next July. Because the 2014 budget is an austerity budget, much-needed fiscal stimulation for Israel's anemic economy will be delayed by the elections for at least six months. The exception is the defense budget, which, as always, got its last-minute injection of 8 billion shekels during the 19th Knesset's death throes. An immediate crisis is the mounting deficits in hospitals, where some surgery has been postponed as a result – the 2015 budget allocation to relieve the problem is now in deep freeze and a last-minute 150 million shekel injection only postpones a long-term solution. Unlike accountants, who measure costs only when real money is spent, economists measure costs as lost opportunities. What is the opportunity cost of the conflict between Prime Minister Netanyahu and his dismissed finance minister Lapid? It is in part the draft laws for badly needed structural reforms that may never be implemented because of the elections. Here are some of the stillborn structural reforms that are victims of this personal dislike. At least three such major reforms were in key ministries led by Yesh Atid stalwarts: Health, Education and Welfare. Had Lapid swallowed his pride for another year, and had Netanyahu been more statesman-like, perhaps Yesh Atid could have had something concrete to show for its 20 months in government. Healthcare: Resigned health minister Yael German was a successful mayor of Herzliya and joined the Yesh Atid list. As health minister, she could have stumbled, as did finance minister Lapid, through lack of professional knowledge of a complex ministry. But, instead, she showed quiet leadership, was studiously non-political and chaired a widely praised committee named after her that built key reforms in healthcare, especially with regard to the scandal of private for-pay medical services in government hos - pitals. After a year's deliberation, the committee recommended a “full-timer” model, in which doctors devote all their time to patients in government hospitals in return for high compensation, with private for-pay medical care banned in those institutions. The Knesset approved this plan by a small majority. Now, its future is greatly in doubt. Will the next health minister push a proposal that carries German's name? It's doubtful. Education: Political novice Shai Piron tossed a huge number of reform ideas into the air in his short term as education minister. Among his proposals: Drastically curtail the number of matriculation specialties; computerized classrooms; lower the teacher-pupil ratio; self-managed elementary schools; Holocaust studies in kindergarten; and differential budgets for schools in poorer municipal - ities. Very few of them, if any, will be fully implemented. Piron was unpopular among Education Ministry insiders because of his inability to prioritize and his imbalance between ideas and implementation. Welfare: welfare minister Meir Cohen appointed a committee headed by Israel Prize laureate Eli Alalouf to find ways to alleviate poverty. The ambitious goal was to reduce the incidence of poverty in Israel to the OECD average within 10 years. Some 19 percent of Israelis are below the poverty line, compared with the OECD average of 11 percent. Only Mexico has a higher incidence of poverty. The committee recommended boosting welfare payments by some 6 billion shekels yearly for five years. Naturally, the Finance Ministry (headed by Lapid) nixed the idea as unrealistic. The structural causes of poverty remain untouched. Interestingly, a major anti-poverty reform not related to the cabinet has been imple - mented. The Histadrut labor union, together with the Manufacturers' Association, agreed in early December to boost the minimum monthly wage 16 percent from 4,300 shekels ($1,076) to 5,000 shekels ($1,252) over the course of the next two years. This averted a general strike threatened by the Histadrut. Government employees were initially exempted from the agreement, but, with the elections in mind, Netanyahu later decreed they should be included. Economics: The Lang Committee, headed by Economy Ministry director-general Amit Lang, found that it is import regulations, not import duties, which impose high costs on the consumer and issued a wide range of rec - ommendations to slash red tape. The Cost of Living cabinet approved the reforms. But will they be put into practice? Economy Minister Naftali Bennett said “we (the ministry) will be the lobbyist for the Israeli consumer.” Will the next minister feel the same? Will he embrace reforms labeled with the names Lang and Bennett? According to columnist Merav Arlozorov, in TheMarker financial newspaper, in the past two Netanyahu cabinets, of 66 draft laws tabled, only 35 were passed into law by the Knesset. Half the reforms were stillborn. The reason, according to Arlozorov, is the short- lived governments. Some of these reforms may yet be passed into law, but vitriolic politics will get in the way. New ministers cannot stand working hard to pass into law reforms that bear the label of their predecessors. And, perhaps, health minister Yael German made a key mistake by chairing her own healthcare-re - form committee whose report now bears her name. What are the chances that a Likud health minister will implement the German Committee Report, even if it makes eminent good sense? TheMarker founder Guy Rolnik blasted Lapid for announcing a long list of proposed reforms, including those in banking, only on the day he left the Finance Ministry. “The missed opportunity is colossal,” Rolnik claimed, noting Lapid had a “terrific tailwind from the public” but wasted it. Some 80 to 90 percent of the economic and social challenges Israel faces, Rolnik wrote, lies in the three reforms Lapid noted in his swan song speech: Crony capitalism, the inefficient public sector and interest-group control of the economy. Where were you, Lapid, and your party, until now? Rolnik asked. It is interesting that former Likud communications minister Moshe Kahlon, whose new party will be called “All of Us” (Koolanu), has made banking reform a key part of his platform. Meanwhile, while old reforms are stillborn, new ones are on the way. “Be like Kahlon,” Netanyahu once said to his ministers, in praising how Kahlon created competition in the once-oligopolistic cell-phone industry, lowering users' monthly bills drastically ( See The Jerusalem Report, July 16, 2012 ). Kahlon now has a cupboard-full of pro - posed reforms, including an Internet bank and postal bank to boost competition, and a plan to lower housing prices, built by true experts, such as Gal Hershkowitz, former director of the budget in the Finance Ministry. In the 34th cabinet, will Kahlon join and will he have more than 20 months to implement his ideas? In this political morass, Israel's solid, underrated Civil Service provides much-needed continuity. The fiercely criticized Finance Ministry technocrats, for example, have finished crafting the 2015 budget and, when the new Knesset assembles in April or May, it will have a budget awaiting it, though the new finance minister will doubtless try hard to put his or hers own personal touch to it. And, shortly after the 2015 budget is approved, debate will begin on the 2016 budget. An Internet search found this quote from a House of Commons speech by a British Member of Parliament named “C. Tennyson” (not the poet): “...if elections are too frequent, the people will take no interest in them; that is to say, they will produce neither excitement nor irritation but go off too smoothly.” Tennyson got it half-right. Voters are, in general, irritated by this needless election. But not excited. A series of no-holds-barred American-style debates between top political leaders on the key issues (two-state solution, land-for-peace, capitalism, rich-poor gap, reviving high-tech) would be exciting. So would election campaigns based on detailed programs and action plans rather than personal attacks. And some really new faces, perhaps like Professor Manuel Trajtenberg, whose 2011 report on socioeconomic inequality was widely praised, but only partly implement - ed. But none of those are very likely. Instead, we will get mindless jingles, endless television clips, ugly billboards, and tele - marketing calls during naptime. And, by the way, Tennyson's speech was made on July 23, 1833 – 181 years ago. Not much has changed. The writer is Senior Research Fellow, S. Neaman Institute, Technion
