The Problem with Israel’s Present Binance Ministry

No, that’s not a typo in the headline. Israel’s Treasury (Finance) Ministry has become disastrously bifurcated. In fact, that’s the case from two (“bi”) different perspectives.

First, as has been well described in this newspaper several few weeks ago (https://blogs.timesofisrael.com/splitting-up-ministries-will-undermine-effective-governance-and-public-service), splitting the tenure of the minister in charge of Israel’s finances can never be a good idea. Certainly, Prime Minister Netanyahu should understand that as well as anyone, given his successful tenure as the sole Treasury Minister two decades ago during the Second Intifada and Israel’s consequent, severe recession. Thus, it can only be personal, political desperation that led him to agree to such a two-headed, rotation solution to the problem of how to resolve the demands of both Aryeh Deri (SHAS)and Bezalel Smotrich (Religious Zionism) – both of whom insisted on the position.

Has Deri’s recent exclusion (by the Supreme Court) from serving as minister resolved the problem? Not really. First, the government has just started the legislative process to circumvent the court’s decision by removing from the courts the ability to oversee (and stop) the government’s appointment of ministers. If that doesn’t work (or the law, if passed, can only be applied to the next government and onwards), the governing coalition could try to get Smotrich to agree to having someone else from SHAS becoming Treasury Minister during the second half of the government’s four-year tenure. In short, the consecutive two-headed ministry “solution” isn’t dead by any means.

However, beyond the administrative drawback of switching ministers midstream, there lies a far greater problem: the economic philosophy of these two individuals (and their parties) are almost diametrically opposite. Smotrich makes no bones about his economic ideology being neo-capitalist (the vast majority of his party’s religious supporters are middle class and upwards). Conversely, Deri and SHAS have always stood for a strong welfare state to serve his almost exclusively lower-middle (and even lower) class voters. Thus, if indeed the ministry rotation does take place, it would entail the economic ship of state trying to make a 180 degree turn mid-tenure. That’s not a recipe for any sort of economic growth, because everyone can see how the policies in the first two years will be reversed in the latter two years, and act accordingly.

But let’s say that Smotrich does end up serving out the full term. Surprisingly, that doesn’t negate his being “Binance Minister”; it’s just that the duality expresses itself in a different way. How so?

Back in early December, Smotrich made the following startling statement: “The more we apply the Torah, the more we will have economic abundance.” The problem with this is not merely that the State of Israel, while Jewish, is still run by secular law; the real difficulty is that the “Torah” has a decidedly non-capitalist ethos! For someone who espouses neo-capitalism as his underlying economic creed, this is tantamount to an anachronistic oxymoron!

Here are just a few Torah-based economic commandments:

1- At the 50^th year Jubilee, all economic debts are nullified.

2- Interest payments are forbidden on loans.

3- Economic “regulation” is rampant in the Torah e.g., from demanding immediate payment for services rendered; the firstborn must receive double the inheritance of the other siblings; etc.

4- Family plots of land (in Hebrew: nakhala) cannot be permanently sold to outsiders.

5- Women can inherit only if there are no sons (the daughters of Tzlophkhad).

6- The Torah clearly does not believe in unabashed, laissez-faire economics; it repeatedly emphasizes the requirement to look out for the poor (e.g., Boaz commanding his workers to enable Ruth to glean wheat from his field).

One can bring numerous other principles, laws, regulations, policies etc., from the Bible that express an economic ethic that is almost antithetical to the capitalism that Smotrich has embraced. In short, if the Treasury Minister himself has a split personality regarding his economic “policy,” one can safely call the institution he runs the Binance Ministry. And when there is no consistency in managing the economy, then we can surely predict that economic growth (forget about abundance) will go by-by…