He knew how to annoy and challenge Ministry of Finance and Bank of Israel officials, but under Prof. Avi Simhon, the National Economic Council became irrelevant to the task of dealing with the fundamental and long-term economic problems of the State of Israel.
Prof. Simhon decided to give up on the strategic aspect of the Council's mandate. Work on long-term matters was reduced to a minimum. It could be argued that this is a legitimate decision. The main function of the chairman of the National Economic Council is to advise the prime minister. One would hesitate to say that Simhon's client, Benjamin Netanyahu, felt that he was in need of advice on economics from anyone.
The National Economic Council was therefore left with little to do. It dealt with some major projects, but its flagship program, the Bay of Innovation plan for Haifa, was held up by opposition from the Ministry of Finance and the Israel Land Authority. Simhon himself became a critical voice that challenged the consensus of the Ministry of Finance and the Bank of Israel.
He dismissed all the warnings of the other economists in the government, supporting expansion of the fiscal deficit and the distribution of checks to every citizen, and he thought that it would not be a disaster if the shekel were allowed to strengthen to NIS 2.5 against the US dollar.
Simhon did not want another body that wrote reports. He's right that there's no lack of such entities within the government and outside it, but anyone who thinks that the National Economic Council is just another entity of that kind is badly mistaken. The Council is the only body in the government with the status and capability required for dealing with the fundamental problems of the Israeli economy and Israeli society: narrowing the income gap between haredim and other sections of the population, for example, or preparing to deal with an ageing population, or dealing properly with the huge deficit of the National Insurance Institute - all these are problems that no ministry can solve by itself, and the only way to address them is by means of a single body with professional standing that will centralize, coordinate, and lead. The politicians cannot do this. Their planning horizon is the next election, and voters want results here and now.
The Ministry of Finance cannot do this either. It is engrossed in planning and executing the state budget. The Ministry of Finance also has a conflict of interests: it has to tie up the next budget, and that is often at odds with Israeli society's long term needs.
Previous chairs of the National Economic Council, Eugene Kandel and Manuel Trajtenberg, demonstrated that it is possible to lead strategic moves. Simhon decided to forego that in advance. Meanwhile, Israel's fundamental problems go unsolved, and in fact only grow. It's doubtful whether Israel can afford another National Economic Council chair like Avi Simhon.
Published by Globes, Israel business news - en.globes.co.il - on July 4, 2021
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