Sunday, December 18, 2005


For capitalism with a Jewish heart


I am not a communist, but something has gone terribly wrong lately with capitalism. Take the Carrefour supermarket chain in France, which earned $1.8 billion in 2004 but pays its employees so poorly that some of them can't afford to shop where they work. Take the fact that worldwide businesses are spending less and less of their revenues on wages, creating vast numbers of working poor and fostering 'jobless' economic recoveries.

Maybe it began in 2001 - when my attention was distracted by the Palestinian war against our buses and cafes - with the collapse of energy-trading giant Enron. Dirty accounting (and worse) threw 6,000 workers out on the street.

Or maybe capitalism's conceit goes back to the collapse of the Soviet empire in 1990. The disappearance of ideological competition from Marxism-Leninism may be one reason capitalism has become increasingly pitiless. If competition is inherently good - in the marketplace and in the marketplace of ideas - its absence has made capitalism a self-satisfied monopoly.

I'm not interested in economic dogma, which I don't understand anyway, but in the lives of ordinary people trying to make ends meet. Back in 1932, during the Great Depression, New York governor Franklin D. Roosevelt summed up capitalist economics this way: 'The first theory is that if we make the rich richer, somehow they will let a part of their prosperity trickle down to the rest of us. The second theory [is that] if we make the average of mankind comfortable and secure, their prosperity will rise upward... through the ranks.'

Trickle up or trickle down.

Trouble is these days the trickle seems to have dried up at both ends. In Israel, productivity (and profit) has risen far higher than wages, while thousands of actual jobs formerly held by Israelis have been exported.

You need only read Larry Derfner's report in last Friday's UpFront magazine to grasp how many thousands of Israelis will be making Pessah this week thanks only to a network of charities; or to understand that working is no longer an answer for many people because almost a third of salaried Israelis earn NIS 1,900 a month or less.

From time immemorial there have been those who rule and those who are ruled. Similarly, in the economic realm there have always been people with money and poor folks. That's the harsh, inescapable reality of life. And the experiment called communism - to create an egalitarian world with the abolition of private property - was a colossal failure.

Yet it seems capitalism absent communist competition is getting meaner. We always knew selfishness could be an effective way to organize society - something the Reds never understood. But lately selfishness seems to know no bounds. Five thousand workers at the British carmaker MG Rover, for instance, will be out on the street - partly, they allege, because their bosses robbed the company blind.

If I do what's good for me, and you do what's good for you, and we both act rationally - the outcome, according to capitalist economists, should be good for both of us. Maybe globalization has thrown a wrench into the system. The ability to function beyond national boundaries, and thus communal ethical standards, seems to have warped the capitalist economic model. Capitalism run amok seems to encourages wealth accumulation while discouraging old-fashioned personal and corporate responsibility.

Yesterday's Post carried a business story about how 'Wall Street suffered its worst single day in nearly two years,' with the Dow dropping 191 points, its worst performance since May 2003. The AP dispatch continued: 'Bond investors were pleased with Friday's results, however, as the bond market continued to rally.' Huh?

Maybe capitalists get away with so much stealing from workers and stockholders because many of us have given up trying to understand the business and finance pages of our newspapers. But force yourself to read and you'll learn that last week 15 New York Stock Exchange traders were indicted for stealing; that Maurice 'Hank' Greenberg, the head of AIG ('the world's leading international insurance and financial services organization'), lied about AIG's earnings while sneaking $2 billion worth of company stock to his wife.

The Economist called him 'A crafty, patient executive.' Right.

I'M NOT out to overturn capitalism - there's nothing to replace it - but can't we make its application, at least in the Jewish state, less exploitative? For instance, Israeli law does not obligate a boss to pay a sick worker his full wages the first few days he's away from the workplace (even if he brings a doctor's note). But a compassionate Jewish capitalist could opt to pay a sick worker his full pay.

Sunday morning Israelis woke up to news that a threatened strike at the country's banks had been postponed by order of the National Labor Court. Now, I've never met a bank teller I liked, but the jobs of 4,000 bank workers are in jeopardy because 'free market reforms' will change the kind of business banks are permitted to do. Compassionate, Jewish, capitalists should worry about the fate of these men and women.

The average gross monthly salary is down NIS 309 to NIS 7,439 (about $1,695). The 'good news' is that the number of really low-paying service industry jobs has increased by 2.4 percent. At an April 10 news conference Finance Minister Binyamin Netanyahu promised Israel would soon be one of the 10 richest countries in the world. Nice. But will we still be the country with the greatest disparity between rich and poor, where 57 percent of Israeli households finish the month in overdraft?

I know it isn't fair, but over-exposure to Eretz Nehederet, the Thursday night television satire program in which a Netanyahu look-alike portrays the minister as a dissolute, smooth-talking, obfuscator, makes it hard for me to take the real character seriously.

So I asked economist Jonathan Lipow about Netanyahu's idea of, for instance, cutting entitlements to stimulate economic growth. 'There is NO evidence,' Lipow practically shouted in an e-mail exchange, 'that cutting entitlements per se stimulates economic growth. Period.'

Even where Netanyahu's strategy may be right, his implementation is wrong, said Lipow. 'There would have been far more gain, and far less pain, in child-allowance cuts had the government maintained funding levels for those children already benefiting.'

Lipow thinks a fairer approach to grow the economy while not penalizing the workers would be for the government to use redistributive taxation.

Like - I suspect - many people, I find economic theory impenetrable. But Lipow's approach strikes me as capitalism with a Jewish heart.

The specter I see haunting a capitalism unchallenged by communism is gluttonous take-no-prisoners greed. Call me na•ve, but I want Israeli politicians to design an economic strategy that doesn't offer us false choices: a government that either taxes and spends with abandon, or one that embraces pure laissez-faire rigidity.

I want a little less economic dogma and a little more Jewish heart.

– From an April 18, 2005 Jerusalem Post column

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