Could Jimmy McMillan Run In Israel?

Now that Jimmy McMillan, infamous leader of “The Rent is Too Damn High Party,” faces eviction from his rent-controlled apartment in New York City, perhaps he should move to Israel and try his political luck.

Given McMillan’s past antisemitism, the odds might seem to be against him. However, Israelis may be ready for his message–and Jewish voters, at least in the U.S., have supported candidates with antisemitic connections before.

In recent days, thousands of Israelis have taken to the streets in mass demonstrations to protest against high rent–and the high prices of a variety of consumer goods, starting with cottage cheese. The cost of living has been high in Israel for years, but the protest movement is something new–perhaps inspired, oddly enough, by the demonstrations of the Arab spring, which also began with socioeconomic protests in Tunisia and Egypt.

Yet Israel’s economy is in great shape, far better than other developed economies. Its unemployment rate is at an all-time low of 5.7%, and its economy is growing at rates in excess of 5% per year. Israel’s national budget deficit is low, and falling. The Israeli housing sector avoided the subprime mortgage crisis and is experiencing a rise in prices–a cause for public frustration, perhaps, but also a sign of economic health.

Israel’s success is the result of decades of economic reform, as the country shook free from some of the bad habits of its socialist youth. Prime Minister Benjamin Netanyahu deserves a big share of the credit; the reforms he championed as Ariel Sharon’s finance minister from 2003 to 2005 prepared Israel to weather the ongoing global tempest. The country also benefits from a bold entrepreneurial culture and vibrant high-tech sector.

Nu–so, what is wrong? Israel’s government is still far too involved in the economy–especially in housing and other traditional industrial sectors. The country is also trying to maintain an unsustainably large welfare state. Moreover, Israelis of all political stripes tend to appeal to the central government to intervene in whatever problems they encounter.

In other words: the rent is too damn high because the state is too damn big.

In addition, Israel is plagued by oligopolies in several economic sectors–oligopolies that are partly sustained by big government policies. Hayek’s paradox is apparent: the more central planning, the less actual control. And with so much economic power in so few public and private hands, corruption is a persistent problem. Law enforcement alone is not the answer: Israeli society as a whole must continue to be weaned from statism.

Yet that is the opposite of what many of the protestors in Tel Aviv seem to think. They are calling for “social justice,” price controls, and more government control of housing. They are waving the red flag of socialism and accusing Netanyahu of being an “extremist capitalist.” These are exactly the kinds of tried, tested, and failed approaches that will deepen consumer frustration, and drag the rest of the Israeli economy down as well.

Israelis have been voting with their feet for decades, leaving for extended sojourns in the United States, where greater economic freedom has, until recently, offered more opportunities and a better standard of living. Ironically, some Israelis–with the support of local left-wing Jewish organizations–are now staging small solidarity demonstrations in various American cities to support socialist policies that they have already rejected.

Israel needs a Tea Party–not a Tahrir Square; a revolution that frees market forces, not one that increases the power of the central government.

As Netanyahu himself has observed, “Not only does social justice not oppose a free market, social justice depends on the free market.”

The opposition, borrowing the weasel-words of the American left, accused him of hurting the “middle class” through his (successful!) economic policies.

Netanyahu faces a tough political task. To save his coalition government, he will have to introduce policies that address popular grievances; to save Israel’s economy, he will have to reject policies that many of the protesters are demanding.

It is not a challenge that can be solved through clever “third way” messaging and messy economic half-measures. Yet Netanyahu must succeed–or else Israel might as well bring in Jimmy McMillan.