Herzog: Tech gains should ‘subsidize’ social programs

Labor party leader looks to entrepreneurs to help bolster the economy, play a role in helping the poor

From L-R: Isaac Herzog, Shlomo Gradman and Erel Margalit at the Semiconductor Club in Tel Aviv (Photo credit: Courtesy)
From L-R: Isaac Herzog, Shlomo Gradman and Erel Margalit at the Semiconductor Club in Tel Aviv (Photo credit: Courtesy)

Speaking at a high-tech event in Tel Aviv this week, Labor Party leader Isaac Herzog discussed what he would do to solve Israel’s economic and social crises.

Among Herzog’s ideas were ones that most of the 200 tech entrepreneurs and executives at the quarterly meeting of the Israel Semiconductor Club approved of – helping people of all income levels deal with the high cost of living and encouraging more manufacturing and production in Israel as it an important engine of growth.

But some questioned how Herzog would pay for the social programs, with Herzog himself wondering where the money would come from. One of those ideas – getting entrepreneurs who cash out in tech exits to pay for social programs – left some scratching their heads, wondering why a seasoned politician would present such an idea to a group in which at least a few members had earned substantial sums from selling their companies.

The reason for the high cost of living – and for what Herzog believes is a creeping recession engulfing Israel – is the lack of attention to the economy by Benjamin Netanyahu over the past six years and outsourcing all matters economic to “a television commentator who was clearly in over his head,” Herzog said, referring to ex-finance minister Yair Lapid.

“High-tech was once the engine of economic growth in Israel and has not been for a long time, probably since the late 1990s,” he said. “We have to make it into that engine once again. By concentrating production in Israel you are contributing to a more secure future for Israelis.”

Shlomo Gradman, chairman of the Semiconductor Club, stressed that the invitation to Herzog did not imply an endorsement of any type.

“We are not a political body, but we felt it was proper to invite Mr. Herzog in order to give our members an opportunity to hear different opinions about Israel’s economy and the tech industry,” he said.

Herzog, while familiar with the tech and business world, is by his own admission no expert in these areas, which is why, he said, he has drafted Labor MK Erel Margalit — former head of Jerusalem Venture Partners and one of Israel’s most experienced venture capital investors — as his special advisor on tech and business matters.

Speaking after Herzog’s presentation, Margalit agreed that things in the tech business aren’t what they used to be.

“I got my chance to succeed in business beginning in 1992, when the government had two clear objectives – changing the economy, and changing the politics of the country, especially regarding the Palestinians. Many of you in this audience also got your start during those heady days,” Margalit told the audience. “There was growth and the prospects for peace, and that was good for everyone. It’s that kind of atmosphere we want – and must – return to.”

One of Israel’s biggest problems, Herzog said, was that “Netanyahu is scaring everyone off from doing business with us, because he is constantly talking about the threats that Israel faces.”

“Israel can only do so much when it comes to peace talks – but in economic matters, the government can, and should, take a much more active role in solving problems,” he added, for example, in helping Israel’s poor senior citizens.

“Many of the elderly in this country are living on NIS 2,500-3,000 a month, and that is not enough,” Herzog said. “We have plans to help take care of the the elderly and to institute a national pension plan, something I suggested in the past but Netanyahu was opposed to.”

Herzog also addressed the problem of ageism, especially in high-tech, where, as one audience member said: “They throw you out at age 40, and that’s the end of your career.”

Herzog wants to see a network of government-funded retraining programs that will enable these “elderly” workers to remain productive.

But all this is going to take money. Where that money will come from is a question Herzog is seeking answers for, he told audience members.

“I know some people here are not going to like hearing this, but there are some people who are better off than others because they made a lot of money when their start-ups had an exit,” he said.

“I know everyone says that taxing them is a bad idea because they will just take the money abroad,” he added. “We need some ideas about how to do this. I am open to hearing from you about how to do this.”

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