Take From the Rich?

Will taking from the rich and giving to the ‘middle class’ produce ‘social justice?’ You don’t have to study economics to know that ‘there are no free lunches.’ No matter how it is done it is going to hurt somebody somewhere.


By Moshe Arens

(A version of this column appeared in Haaretz on August 9, 2011.)

For a moment you might have thought that Robin Hood of Sherwood Forest was stalking Rothschild Boulevard – he who robbed from the rich and gave to the poor. Except that unlike Robin Hood, the campers in their tents on Rothschild Boulevard and other places in Israel want to take from the rich and give to the “middle class.” “The people want social justice” they cry in unison, coached by whoever is on the platform.

Will taking from the rich and giving to the “middle class” produce “social justice?” Or maybe there is an easier way, by taking from the ultra-Orthodox, or from the settlers in Judea and Samaria, and giving to the “middle class”? Or maybe “social justice” can be obtained painlessly by simply making the whole government bureaucracy more efficient, and having the “middle class” enjoy the benefits of this efficiency drive? Or cut the defense budget? But you don’t have to study economics to know that “there are no free lunches.” No matter how it is done it is going to hurt somebody somewhere.

What does an introductory textbook on Economics, Eco 101, have to say about social justice? I am willing to bet that in most of them the phrase “social justice” does not even appear. We have heard it from Karl Marx and Vladimir Lenin, and we have watched the Communist experiment in the Soviet Union, admired by millions around the world for many years, until the Soviet structure collapsed of its own weight. The cost of the experiment is still being tallied up to this day. Now it has been replaced in Russia by the rule of the oligarchs. No “social justice” there.

So what does economics, the dismal science as Thomas Carlyle called it, have to contribute in this matter? Every year economists receive Nobel prizes for their contributions. Two Israelis, Daniel Kahneman and Robert Aumann, have been so distinguished. Most Israelis feel that Stanley Fischer, the governor of the Bank of Israel, is deserving of this prize for steering Israel through the stormy waters of the world’s financial crisis these past years. Were they among the 300,000 calling for “social justice” on Kaplan Street in Tel Aviv the other night? Or maybe the organizers of these demonstrations know something that even illustrious economists do not understand.

It is true that economics is not an exact science, like physics, chemistry or biology. Nevertheless, over the years a body of knowledge, some encased in “laws” has evolved. Certain conclusions have been empirically established.

Communism does not work and market economics works. Even the Chinese “communist” leaders have reached that conclusion. It is true that the recent economic crises that have hit the “capitalist” world have again raised voices that maybe “capitalism” is not the answer. And “swinish capitalism” is creeping into the lexicon of some Israelis. But who wants to return to Socialism?

Some Israelis are beginning to wax nostalgic over the years when the Histadrut Labor Federation ran and owned most of the country, and “everybody was poor.” Now that was “social justice!” But those with a good memory remember that then everyone was poor, except for those with the right party connections. And the running joke before the Six-Day War was that the last one to leave the country should turn out the lights at Ben-Gurion Airport. The period was far from idyllic and we have come a long way since then, primarily due to the adoption of market economics.

So what’s wrong? Maybe the middle class really is being “ripped off?” Because of a lack of regulation of the market where it is needed. Because of an overconcentration of capital and power in the hands of a few. Because of the existence of cartels that fix prices and bank charges. Because of an overeager treasury bureaucracy that thinks it knows how to drain money from the middle class that is defenseless when it comes to bearing the burden of taxes, direct and indirect. A bureaucracy that believes that Israel cannot afford a proper public transportation system. All these seem to have overloaded the middle class. Maybe that is what they have in mind when they call for “social justice.”

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