Lapid: Trickle down economics doesnt work

Finance Minister Yair Lapid: Israel's economy grew by 26.8% in the past ten years, but Israelis' salaries rose by just 2.1%.

"When I entered the Ministry of Finance, I was surprised that Israel had no economic strategy," said Minister of Finance Yair Lapid at the Caesarea Forum this morning. "After months of work, I want to state the Ministry of Finance's economic strategy for the coming years in two sentences: we want Israelis to earn more and have a better quality of life. How will we do this? We'll create an innovation-based economy.

"Innovation isn't the goal, innovation is the tool. Systematic innovation is the economic engine that creates an economy that puts the middle class in the center, and the middle class earns more and won't be trampled by the cost of living. We must also provide suitable infrastructure for the good life. This will happen if we reach a situation in the Israeli tax systems will ensure that the middle class will be the first beneficiary of the success of the innovation society."

Lapid continued, "Israel's economy grew by 26.8% in the past ten years, but Israelis' salaries rose by just 2.1% over the same period. In other words, the people who boosted the country's profits by over 26%, earned 2% from their effort. They built the Israeli economy, they turned it into a success story, they put it on the top of the developed countries, and they earned nothing from it.

"The rich grew richer, the poor grew poorer, people in their 30s today are the first generation of Israelis who live less well than their parents. Not only that, they live at their parents' expense and are still stuck in their parents' homes. This must change."

Lapid drew the conclusion, "The time has come to admit that the idea that the rich should be allowed to make unlimited profits and the money will trickle down to the poor simply doesnt work. It's failed in the US, it's failed in the UK, it's failed in Israel. The money flows to the top and stays at the top. We need to invest the money in the middle class Tax breaks should not go to the rich, but to the middle class. Government investment should focus on what the middle class needs: education, transport, housing, a lower cost of living. Poverty and gaps should not be perpetuated through welfare and support, but be beaten by helping the poor find work that raises them to the middle class. Closing gaps is the country's paramount interest."

Published by Globes [online], Israel business news - - on November 7, 2013

Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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