In face of recession, Israel plans tax cuts, further liberalization of economy

While the United States just passed a trillion dollar stimulus package that includes funding for projects such as $650 million for digital converter boxes, $50 million for the National Endowment of the Arts, and $1.3 billion for Amtrak, Israel’s Benjamin Netanyahu is planning on turning around Israel’s economy through tax cuts and liberalizing the real estate market. Fortunately for Israelis, Netanyahu’s steps to reduce the size and scope of government as finance minister put the country in decent shape to weather this current recession:

By the time Netanyahu left the finance ministry in 2005 to protest the government’s withdrawal from the Gaza Strip, he had sold or begun selling El Al Israeli Airlines Ltd., the biggest carrier; Bezeq Ltd., the biggest telecommunications provider; and Israel Discount Bank Ltd., the third-largest lender.

“It’s very important to create an internal engine by reining in the size of government, cutting taxes and the bureaucracy,” said Ohad Marani, who served as the top aide during Netanyahu’s first year as finance minister. “He’s very much for small government.”

By cutting spending, Netanyahu helped reduce Israel’s budget deficit to 1.8 percent of GDP in 2005 from 5.1 percent in 2003. The TA-25 plunged 5.2 percent the day he announced he was stepping down. The deficit may reach 5 percent of GDP this year, Ben Bassat estimates.

California video game censorship law struck down

In the popular mindset, video games are still a child’s medium, which makes them especially vulnerable to censorship efforts by the government. These attempts to restrict the sale of “violent” video games persist despite the fact that they’re routinely struck down by the courts, and thankfully, that’s what happened to a similar law in California:

The law would have prohibited the sale or rental of violent games to anyone under 18. It also would have created strict labeling requirements for video game manufacturers.

In a written opinion, Judge Consuelo Callahan said there were less restrictive ways to protect children from “unquestionably violent” video games. For example, the justices said the industry has a voluntary rating system and that parents can block certain games on video consoles.

The video game industry is sensitive to this, and they’ve taken great strides to implement a rating system that gives parents an accurate idea of what they can expect from a particular game. Furthermore, modern game consoles provide parents with the means to implement controls to ensure their kids play games rated appropriately for their age.

Increased government regulation would impose additional unnecessary costs on game manufacturers, who already budget millions upon millions of dollars for game design and production. Furthermore, it would impose an unnecessary burden on retailers, who can legally sell rated-R movies to minors, but wouldn’t be able to sell them a copy of Halo 3. In other words, minors could spend $15 to buy a DVD of Hostel,in a genre widely referred to as “torture porn,” but couldn’t spend $60 to buy a game where you play the role of a futuristic cyborg-soldier fighting aliens.

While we’ll no doubt see nanny-staters seek to implement similar laws throughout the country in the future, at least this time, the good guys won.

Let’s not rush into nationalizing banks

No doubt the banking sector is in dire straits, and this year we’ve seen banks take nearly a billion dollars in bailout money, share prices tank,  some banks fail, and others get acquired. Unfortunately, many giants still seem to be on the edge of failure, which has led some prominent government officials and economists to enthusiastically support nationalizing some of the largest banks, including Bank of America and Citigroup.

Nobel Prize-winning economist Paul Krugman, for instance, has claimed that nationalizing banks is as “American as Apple Pie.” While this statement has me worried about what this country is turning into, I also worry about rushing headlong to nationalize banks that could, theoretically bounce back. What’s more, there’s no proof that the government will run banks any better than they’re being run now (especially with the increased government oversight) and plenty of reasons to believe government will do a poorer job.

U.S. News and World Report has put together a list of reasons why “Bank Nationalization Is So Scary,” which are things the public and politicians tend to forget when pondering the perceived benefits of nationalization. While banks will undoubtedly go through a continued rough patch for years to come, once the economy gets back into shape, banks will follow. To nationalize banking giants would be shortsighted and has the potential to create larger problems than the ones we currently face.