Industry, recession and the failure of central planning

It is not a rocket science. You do not need a degree in finance or business admin. During an economic downturn, factories close. People are laid off.

Not only is unfair to the workers – and their families. Quite often local communities suffer the knock on effects. In turn, social services are inadequate to meet the challenges. Meanwhile, the government is…………………well, let’s come back to that.

For the moment, let us examine what is happening to Israel, as European markets dry up and domestic industries are cutting stocks. A vegetable canning factory near Safed has yet again had to appeal for help from the authorities. Phoenicia Glass, employing hundreds across ethnic lines, is short of nearly US$100 million.  Extra Plastic, Sederot, with over 120 workers and located in town that had the dubious pleasure of suffering consistent shelling from Gaza for years, is about to go under – even though the owners recently paid out a hefty dividend recently.

Blame poor management, unexpected changes in the markets, owners cleverly manipulating some accounting rules, etc – factories are shutting their doors. Meanwhile, the government is…………..

Would it be too cynical to state that the government is too worried about votes? After all, a general election is scheduled within the next 12 months. What bothers me is the lack of planning, when handling these situations. These crises can be predicted to a certain degree. So for example, surely if a factory cries for help, statutory payments can automatically be delayed for 60 days – maybe paid off later or just cancelled?

And where are the benefits to the workers? Offer them a small sum each and some space to start up a small business. Provide them some mentoring hours for free. Those are just three obvious suggestions that would cost the central treasury relatively nothing compared to unemployment pay, lower tax revenues from the community and the cost of other social problems.

Unfortunately, what the Israeli public is left with is sensational headlines and a dawdling cumbersome government mechanism that may or may not cobble together solutions and wrapped in wafer-thin spin. Meanwhile, the economy continues to suffer, along with hundreds of families.

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