Israel Debates Risk Aversion vs. Long-Term Planning in Economic Policy
Translated & summarized from NEWSru Israel by baba
Israeli regulators are divided between eliminating risks at any cost, like a proposal to abolish cash, and long-term resource planning. The Tax Authority suggested banning cash for potential tax gains, but the Bank of Israel rejected the idea. Meanwhile, the Electricity Authority is regulating data center power growth until 2030, and the Health Ministry has set targets for specialist doctors until 2035, focusing on critical fields and regional needs.
The story in 5 lines · by baba
- Tax Authority Director Shai Aronovich proposed eliminating cash to boost tax revenue by 20-30 billion shekels annually.
- The Bank of Israel rejected the cash ban proposal, citing lack of professional justification and global trends.
- New regulations will limit new data centers to 1,300 megawatts by 2030 to manage electricity grid demand.
- The Health Ministry aims to increase specialist doctors to 32,000 by 2035, prioritizing less popular fields.
- Past risk-aversion policies in Israel led to reduced competition and higher prices for consumers.
Israeli regulators are grappling with two distinct approaches to economic management: one focused on eliminating risks at any cost, and another emphasizing long-term resource planning. Tax Authority Director Shai Aronovich recently proposed eliminating the 200 shekel banknote and eventually all cash, citing potential annual tax revenue gains of 20-30 billion shekels. This idea resurfaced following the discovery of large sums in 200 shekel notes at the home of Kfar Saba Mayor Rafi Saar and his wife. While acknowledging cash's use by criminals and terrorists, the Bank of Israel has repeatedly blocked such initiatives, with Governor Amir Yaron stating that no country has fully eliminated cash and some are even reintroducing it, citing Scandinavian examples where mandatory cash acceptance laws were enacted.
This push for zero risk is contrasted with a more forward-looking strategy by other government bodies. The Israel Electricity Authority has set new regulations for data center power allocation until 2030, limiting new centers to 1,300 megawatts to prevent overwhelming the national grid. This decision follows an overwhelming demand for power, with applications reaching three times the country's average consumption. Investors must now make significant deposits to secure power allocations, and data centers will be required to have disconnection mechanisms during peak load.
In parallel, the Ministry of Health has published long-term goals for specialist physician numbers until 2035, aiming to increase the total number of doctors from 37,000 to 53,000 and specialists from 20,000 to 32,000. The plan prioritizes growth in less popular but essential fields like vascular surgery, pediatrics, and psychiatry, while also addressing regional disparities. This proactive planning aims to ensure the country trains specialists for its own needs, rather than primarily for export, a concern highlighted by the demand for certain specialties in the global market. Previous attempts to eliminate risk, such as overly strict banking regulations after 1983 and stringent food safety rules after the "Remedie" case, led to reduced competition and higher consumer prices.
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