Taub Center Conference on Strategic Planning and Long-Term Thinking in Policymaking

On Monday, November 10, 2014, the Taub Center for Social Policy Studies in Israel held its annual conference at Mishkenot Sha’ananim as part of the Herbert M. Singer Conference Series. Addressing a crowd of senior Israeli policymakers and the general public, the speakers presented varying perspectives on the importance of strategic planning and long-term thinking in policymaking, as well as discussing the need to base such planning on facts and not on opinions.

Main findings and quotes from the Taub Center 2014 Conference on “Strategic Planning and Long-Term Thinking in Policymaking”

  • Prof. Dan Ben-David presented findings from his research, including new and particularly concerning data showing that since international testing began, Israel’s ranking in terms of pupil achievement in core studies has steadily deteriorated. Over the past 15 years, Israeli pupils consistently ranked at the bottom of the list of countries (Table 1). In addition, since 1999, Israel has had the highest achievement gaps in the Western world between pupils of different groups, and as Ben-David notes, “it is no surprise that Israel’s large educational gaps later manifest themselves in some of the highest inequality rates in the West.”
  • Prof. Momi Dahan critiqued the way that decisions are reached: “Israelis invest more effort in the process of buying a kettle than we do in designing policy. The future we desire is relatively obvious, but we’re not doing what we need to do in order to make it happen.”
  • Prof. Omer Moav criticized policymakers who, in his opinion, make decisions that are economically irrational.  Such policymakers include Minister of Finance Yair Lapid, MK Shelly Yachimovich, MK Tamar Zandberg and MK Stav Shafir: “Stav Shafir says that in order to ease the housing problem, we must regulate rent prices – but the impact of such a policy would be to reduce rent prices to below the equilibrium level. The fact is that everywhere that rent control has been implemented, it has led to a shortage of housing, poor construction and neglect of properties.”
  • Prof. Steven Popper spoke based on his experience of working with the Israeli government: “The institutions of government created in an earlier era, when Israel was founded, are not necessarily well-suited to challenges the country faces today.”
  • Minister Silvan Shalom: “If we pay less for electricity, water and gas – that will truly fight against the high cost of living.  Effective planning can help lower the price of goods.”
  • MK Avishay Braverman, Chair of the Knesset Economic Affairs Committee, criticized the government: “Israel is a corrupt society. Each minister works only for himself and each minister wants to be Prime Minister in a flash.  Long-term planning is of no interest to them, and instead, they compete to see who will be the first to have the best gimmick.” He said that “elected officials operate according to what looks appealing in the media, and not for the public good.”
  • MK Orly Levi-Abekasis, Chair of the Knesset Committee on the Rights of the Child, argued that the government failed to identify long-term failures in the housing market, even though the data was clearly visible.  She said, “We cannot consider policy for the long-term if we do not first look at today’s reality in comparison to the past.”
  • Mr. Ron Huldai, Mayor of Tel Aviv-Jaffa, said: “In Israel, things happen when there is a crisis. Widening the Ayalon Highway, cleaning up the Yarkon, the municipal sewage system – all are plans that began due to crisis.” He criticized the central government, arguing that the ministers are not selected based on their success in the role, and thus have no incentive to improve outcomes.

The Israeli Context: Findings and Key Issues

The conference opened with presentations by three of the most senior economists in Israel – Prof. Omer Moav, Prof. Momi Dahan, and Prof. Dan Ben-David. This unique session did not focus on their world views, which differ greatly from one another.  Instead, the three economists presented a unified call to the country’s leadership to establish strategic, long-term plans that will determine the future of Israel, to outline the stages that are necessary to achieve these goals, and to propose how they intend to move Israel in this direction.  In addition, they called for actions to be based on facts, rather than on intuition or widespread public opinion that is often mistaken.

Prof. Dan Ben-David, Taub Center Executive Director, presented findings on long-term social and economic trajectories in the areas of economic growth, inequality, employment, education, and transportation infrastructure.  In the words of Prof. Ben-David, “the government must understand the extent of the continuing trends of the last 40 years and internalize that these are unsustainable. There is an urgent need for serious, professional solutions for these issues.”  Prof. Ben-David presented some of the worrying findings that emerge from his research, for example, that the rates of disposable income inequality in Israel are amongst the highest in the world.  A new finding by Ben-David that is especially concerning is that since international testing began, Israel’s ranking in terms of pupil achievement in core studies has steadily deteriorated.  Over the past 15 years, Israeli pupils consistently ranked at the bottom of the list of countries (Table 1).  In addition, since 1999, Israel has had the highest achievement gaps in the Western world between pupils of different groups, and as Ben-David notes, “it is no surprise that Israel’s large educational gaps later manifest themselves in some of the highest inequality rates in the West.”

Prof. Momi Dahan focused on the work of the government.  In his words, “Israelis invest more effort in the process of buying a kettle than we do in designing policy.  The future we desire is relatively obvious, but we’re not doing what we need to do to make it happen.”  Dahan went through a series of steps for creating policy, ranging from planning for the future to following up on the policy with research and evaluation.  He noted that policymakers today do not receive policy alternatives, which has a critical influence on the functioning of Israel’s democracy.  He gave the example of the “Zero Value Added Tax” (VAT) plan for housing, noting that it was proposed without any groundwork, such that even the costs and benefits are unknown.  In closing, Prof. Dahan said that policy should be made in a manner similar to consumer behavior: policy makers should examine several alternatives via assessing costs and needs.

Prof. Omer Moav also spoke about the importance of understanding the facts when making decisions.  “We all want a country with greater welfare and fewer gaps between groups,” he said, “but in the public discourse, there is confusion between means and ends, and there is no one checking that the means are moving us towards the ends.”  For example, he said, raising the minimum wage is, on the surface, a step that advances welfare.  In practice, however, it could lead to a rise in unemployment and in the cost of living.  Prof. Moav distinguished between those who “create value” and those who “live off the value of others.”  Among the latter, he pointed to farmers who have a monopoly on certain crops and who avoid potential competition by blocking imports. He also singled out worker’s committees as well as public sector tenure, which prevents advancement for the benefit of the public. Prof. Moav also criticized the voices calling for government regulation of rental prices: “Stav Shafir says that in order to ease the housing problem, we must regulate rent prices – but the impact of such a policy would be to reduce rent prices to below the equilibrium level. The fact is that everywhere that rent control has been implemented, it has led to a shortage of housing, poor construction and neglect of properties.”  In his words, “if we were to adopt the approach of protecting jobs, even at the expense of societal welfare, there would be no rise in the standard of living.  The rise in the standard of living is made possible through progress – and blocking progress is what harms welfare.”

Guest Speaker

Keynote speaker Prof. Steven Popper of the RAND Corporation provided an international perspective, including examples from other countries on the importance of long-term planning and the need to rely on facts in strategic decision-making. He opened with the question “How can we make the Israeli government think in a simple and focused way?”

Prof. Popper spoke about goal-setting as a first and critical step in strategy formation, and noted that establishing measurement and evaluation criteria for strategy is important.  He also discussed the importance of a planning process that is not dependent only on internal government knowledge, but which is also aided by external advisors and is flexible and adaptive.

Regarding Israel, Prof. Popper urged local policymakers to adopt an international approach to strategic planning, which can help them make decisions quickly on the basis of long-term goals, analysis and assessment. In his words, “The institutions of government created in an earlier era, when Israel was founded, are not necessarily well-suited to the challenges the country faces today.”  He also noted that adaptation and efficiency do not come from improvising in the short term.

Popper identified several challenges to strategic planning in Israel today, among them: a tendency to be reactive and not proactive; difficulties in coordination across government ministries; insufficient use of research; inadequate outcomes measurement and evaluation of policy; and policy formation for an extremely heterogeneous society. Despite the many challenges, Prof. Popper reminded the audience of recent positive developments due to the government’s efforts of October 2012, among which are the establishment of a strategic planning department in the Prime Minister’s office and attempts to increase demand for strategic planning within government bodies. “In the past, Israel saw itself as a unique phenomenon, but today the government and policymakers are hungry for international comparison and to understand Israel’s performance in the global context,” he concluded.

Planning in Practice

The participants in the policymakers’ session discussed the topic of strategic planning and long-term thinking in policy formation, relying on the findings that were presented at the conference as well as on their rich understanding of the field.

MK Silvan Shalom, Minister of National Infrastructure, Energy and Water, Minister of Development of the Negev and Galil, and Minister of Regional Cooperation, said: “Sometimes we make decisions that appear to be short-term, but often they are actually long-term decisions, because the projects themselves are for the long term.” He used the example of water, where Israel has a long-term plan and, thanks to desalinization efforts, the country does not suffer from a water shortage today despite the low rain fall of the past few years.  Minister Shalom linked long-term planning to the issue of energy – the building of power plants, desalinization plants, and the like – and the ability of the government to provide services for its citizens.  He said that “if we pay less for electricity, water and gas – that will truly fight against the high cost of living.  Effective planning can help lower the price of goods.”

MK Prof. Avishay Braverman, Chair of the Knesset Economic Affairs Committee, was critical of the way information is provided to the public: “People say – look, low unemployment, reasonable debt to GDP ratio, growth is good.  But the question is who benefits from this growth?  For years, they have lied to us by highlighting the average wage.  Only now have they remembered to examine the median wage, which shows that the situation is not so bright.”  He declared emphatically that “Israel is a corrupt society,” and he criticized elected officials who operate according to what looks appealing in the media, and not for the public good.  He claimed, for example, that “gas in Israel is a monopoly – the price is much higher than in other countries.”  Relating to long-term planning, Braverman said that “every minister works only for himself, every minister wants to be the Prime Minister in a flash.”  To address this situation, he suggested “less legislation and more norms. Knesset members pass legislation and they become famous, but they fail to consider the long term. We need people who aren’t just thinking about the next office they will run for.”

MK Orly Levi-Abekasis, Chair of the Knesset Committee on the Rights of the Child, sniped at her government colleague, Minister Silvan Shalom: “According to Minister Shalom, we can shut down the Taub Center because the situation is wonderful.  In the world that I live in, the reality is much different.”  In her talk, she addressed the importance of comparative data in policy planning, and said that “when I try to deal with a particular subject, such as public housing, and I want data, I request it from the Knesset research department.  But it turns out that there are tremendous gaps between the data from the Knesset research department and data from the Ministry of Finance or the State Comptroller’s office.”  She added that “the people in the Ministry of Finance don’t do their homework – it is absurd and bizarre.”  Regarding the issue of housing, Levi-Abekasis said, “We cannot consider policy for the long term if we do not first look at today’s reality in comparison to the past.  In a 2006 Taub Center study, there was discussion of failures in the mortgage market and recommended options for addressing them, so don’t tell me that we could not have predicted what happened.”

Jerusalem Mayor Nir Barkat described the vision for the city of Jerusalem that was outlined during his administration.  Barkat explained how he utilized strategic planning to strengthen the city in three core areas in which it has a relative advantage: culture and tourism, life sciences research, and development of remote service centers.  In Barkat’s words, “even before we get to budget discussions, there are plans.  Every division must present plans that have the power to impact, that can be measured and that are attainable.  On a quarterly basis, we convene and examine what succeeded and what didn’t – we then create an interim summary and make adjustments as needed.”

Mayor Ron Huldai, Mayor of Tel Aviv-Jaffa, stated that “in Israel, things happen when there is a crisis. Widening the Ayalon Highway, cleaning up the Yarkon, the municipal sewage system – all are plans that began due to crisis.”  He criticized the central government, arguing that the ministers are not selected based on their success in the role, and thus have no need to try to improve outcomes.  A key point in Huldai’s talk was the importance of decentralization of government. In his words, “all of the authority is in the hands of the State, while all the ability to implement is in the hands of the local authorities.  Therefore, it is very important to transfer authority over to the local government.”

Prof. Nathan Sussman, Director of Research at the Bank of Israel and a professor at Hebrew University, noted the importance of the banks’ credibility in the public eye in order to ensure their long-term stability.  He said that at the Bank of Israel “we follow and monitor the government budget from the perspective of five to six years into the future.” He also spoke of the important trends that are sure to have a significant impact in the coming decade: the aging of the population, sources of capital that will spur the economy over the next decade, changes in the savings patterns of the Israeli public and more.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.
 

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