Stanley Fischer on the Israeli economy
The word is that Stanley Fischer will be nominated to be #2 at the Fed, good news in my view. Here is Ari Shavit recounting his meeting with Stanley Fischer:
…he [Fischer] utters the relevant figures in slow, measured, Anglo-Saxon Hebrew. In the years 2004 to 2008, Israel’s average annual growth rate was 5.2 percent. While the world was in crisis in 2010-11, Israel’s average annual growth rate was 4.7 percent.
…Fischer tells me there are four reasons for this success: reducing government spending dramatically (from 51 percent of GDP in 2002 to 42 percent in 2011); reducing the national debt significantly (from 100 percent of GDP in 2002 to 75 percent in 2011); maintaining a conservative and responsible financial system; and fostering the conditions required for Israeli high-tech to continue to flourish.
There is then a discussion of how Israeli R&D and starts-ups are so strong and how dynamic the tech sector is. Fischer then turns to the problems:
“We have four problems,” he says. “Our education system has deteriorated, and it endangers our ability to sustain technological excellence. The employment rate among ultra-Orthodox men is only 45 percent. Most Arab women do not work. Fewer than twenty business groups control much of the local market and thus restrict competition. Right now the high-tech miracle helps to conceal these four problems that are weighing down the wider economy. But in the long term, these problems endanger Israel’s ability to remain prosperous and successful.”
That is from Ari Shavit’s excellent new book My Promised Land: The Triumph and Tragedy of Israel, reviewed here.