Steven Plaut

Amir Peretz, who was crowned head of the Labor Party in a surprise upset over Shimon Peres in the Labor Party primaries, is a party hack who built his career mainly by establishing a power base in Israel's corrupt Histadrut trade union federation. He has always been instantly recognizable in the media thanks to his huge Zapatista moustache. He seems to have been made for caricaturists. "I love the moustache," he once confessed to Dalia Karpel of Haaretz. "A small moustache wouldn't suit me...."

Born in Morocco, Peretz immigrated with his parents to Israel at the age of four. He served as a warehouse and maintenance officer in the Israeli military, sustaining a leg injury in the Sinai in 1974 when his personnel carrier was involved in an accident.

Peretz first came to public attention in 1983 upon his election as mayor of the economically distressed working class Negev town of Sderot. In 1988 Peretz was elected to the Knesset: he was a token Moroccan Jew recruited by Labor leaders concerned with the party's difficulties attracting working class "Mizrachi" or Oriental-Jewish voters. (While styling itself the party of the working man, the Labor Party has long been the bastion of the middle and upper-middle-class Ashkenazi establishment.)

Recognizing that his prospects for a senior position in Labor were close to nonexistent, he joined the disaffected faction set up by Haim Ramon in the early 1990's. Ramon considered himself a serious he was being blocked by the party machine. Ramon and his sidekick Peretz decided to challenge the Labor establishment inside the Histadrut trade union federation with their own dissident slate named "New Haim" (or "New Life," a play on Ramon's first name).

In the Histadrut union elections, the Ramon team beat the Labor machine and seized control of the trade union federation. By then the Histadrut, once a powerful state within the Israeli state, was little more than a weak and corrupt anachronism, stripped of its control of Bank Hapoalim, Israel's largest bank, after the "bank share scandal," and having lost control of many of its insolvent pension funds, which had long served as slush funds for Histadrut commissars, and of its captive "General Sick Fund," Israel's largest health service provider.

In 1995 Ramon resigned from the leadership of the Histadrut, making his way back into the Labor Party’s upper echelons and leaving Peretz in charge. Peretz in 1999 decided to use his power base in the Histadrut to challenge the Labor Party and set up his own competing "labor" faction, named Am Echad (One Nation).

Using funds appropriated, Jimmy Hoffa style, from trade union accounts, Peretz spent his way into the parliament as a small two-seat (later three-seat) party. His victory was, however, large enough to force Labor to co-opt Peretz and his people and offer them reserved Knesset seats in the elections slate.

In parliament Peretz only bothered to show up for about 11 percent of the votes and was dubbed the "laziest member of Knesset."

Politically, Peretz, who likes to describe himself as a "social democrat," is associated with the Israeli Oslo Left, and was long a board member of Peace Now and the left-wing New Israel Fund. His ideas on economics are little different from those of nineteenth century socialists and syndicalists, and he dreams of turning Israel into some sort of hybrid combination of Sweden and Belarus. He has no patience for and no understanding of market economics.

While mouthing socialist slogans about the working class, Peretz actually built his power base mainly on the elitist "unions" of highly skilled, lavishly paid professionals – i.e., feather-bedded workers in government-owned or sponsored monopolies such as the Israel Electric Company, whose "workers," including engineers and technicians, are probably the most grossly overpaid group of people in Israel. Peretz made common cause with the "workers" in this and other sectors – such as the seaports and airports – in which market competition is suppressed by the Israeli government. He single-handedly shut down Israel's airports so often that foreign businessmen were refusing to come to Israel altogether, not from a fear of terrorism but from a fear of getting stranded when the airports were shut down.

Will Sephardic voters be enticed by a Peretz-led Labor Party? Don't count on it. Labor may have long viewed Peretz as a magical key to opening the door to bring in Sephardic voters, but Oriental Jews in Israel remain far more likely to vote for the Likud and the religious parties.

The more likely effect of the Peretz nomination will be to drive away much of Labor's Ashkenazi rank and file – and some of the leaders as well. A good chunk probably will end up in the semi-Marxist Meretz Party whose parliamentary strength had shrunk almost to the endangered-species level.

While mouthing the slogans of the Left about Oslo, "disengagement" and the "peace process," Amir Peretz clearly means to make anti-market economics and "social issues" his main banners. One should bear in mind that the Israeli Left does even more damage when it gets concerned about "social issues" than it does when it pursues "peace." The way it invariably pursues "social issues" is through seeking massive tax increases and budget outlays for "social needs" coupled with massive interference in market mechanisms.

But Peretz's ambitions go well beyond that. Should the Israeli public ever be foolish enough to allow Peretz to seize the reins of power, he will quite simply destroy the Israeli economy. He would order massive across-the-board wage increases detached from productivity considerations, which would drive countless businesses into receivership while raising unemployment to astronomical levels. He would promote the interests of state monopolies and seek to nationalize more industry. He would suppress competition and attempt to restore the quasi-Bolshevik system of price controls and rationing that nearly caused Israel to collapse during its first years of independence, controls wisely trashed by the socialist Mapai leaders of the 1950's when they came to the realization that these could not possibly work.

Peretz would also seek to expand the powers of the Histadrut, which all the while would operate under his fiefdom, turning it back into a state within the Israeli state – an unelected anti-democratic second government, a dictatorship of the unionized middle-class pseudo-proletariat.

It is precisely because of his promises to establish a system of socialist command-and-control central planning that some of Israel`s most foolish professors and journalists have endorsed him with such enthusiasm. Dreaming of creating a Scandinavian-style welfare state combined with "class warfare" against the big bad "industrialists," and led by a bullying trade union mafia, these armchair revolutionaries see Peretz as the last great hope of leading Israel out of the First World and back into the Third.

Steven Plaut is professor of economics at Haifa University. This is an edited version of an article that appeared in The Jewish Press.