Like a banana republic
Op-ed: PM can put end to BOI governor farce by turning to Israeli economists rooted in this land
Prime Minister Benjamin Netanyahu
has a new candidate for Bank of Israel governor – and once again a person who raises a lot of questions and doubts. Prof. Mario Blejer served unsuccessfully for six months as president of Argentina's central bank during the serious economic crisis in the country; earlier, he filled several positions in the International Monetary Fund, and later in Britain's central bank.
Indeed, his name is mentioned every time a governor is replaced in Israel,
but he is far away from Israel: He lives in Argentina, writes in its newspapers, and defines himself as Argentinean for all intents and purposes. Although in recent years he served as a private advisor and is a regular guest at the World Economic Forum meetings, his status is nowhere near that of outgoing Governor Stanley Fischer,
and he has no advantage – he has disadvantages – over many economists living in Israel.
Credibility Issues
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Prof. Eytan Sheshinski, Israel's top economist, has called the plan to appoint Prof. Blejer as Bank of Israel governor "an act of a banana republic."
Seemingly, Netanyahu's office has not only presented Blejer, but "four candidates" for the position – but just seemingly. Michal Abadi-Boiangiu, for example, has been successfully running the Accountant General's Office in the Finance Ministry, but she is no economist, she has no knowledge or experience in the central bank's policy, and she doesn't see herself as a current candidate for governor.
Her name was only included on the "list of candidates" in order to show the public that Bibi is not opposed to women governors in general. He is only opposed to one specific woman, Dr. Karnit Flug, the deputy Bank of Israel governor, and the woman who could be governor. A clear PR spin.
As part of the discussion over the next governor, it has been claimed that the candidates should or shouldn't belong to the "Chicago school," and should stick or shouldn't stick to "monetarism." Using these terms at this time is like using the cavalry's lexicon in a digital battlefield: The economic perception which maintains that the amount of money determines the level of prices in the economy and has no effect on the real activity – the essence of the monetary school of thought – is irrelevant to the economic reality in the beginning of the 21st century.
The disputes between the economic Right and Left focus today on issues like the way the government and central bank respond to crises and recession, the roles of the budgetary deficit, the depth and extent of regulation, the place of social values on the economic list of priorities, etc. The public in Israel wants to know the governorship candidates' current opinions on these issues, not where and what they studied a generation or two ago.
Netanyahu has already turned the Bank of Israel governor's selection process into a farce; he can still restore it to its former glory by turning to Israeli economists, men and women, who are rooted in this land and experience its troubles. We are not short of such excellent people.
