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Budgeting Amidst Triple-Digit Inflation: The Case of Israel
Published online by Cambridge University Press: 27 January 2009
Extract
Government budgets have acquired a key role in the activities of policy makers. They have also attracted a great deal of attention from political scientists. Perhaps no other feature of policy making is so completely described and analysed. For both policy makers and political scientists, the budget is the ultimate Scoreboard, showing which agencies, programmes, or groups are getting more or less of what the government has to offer.
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- Copyright © Cambridge University Press 1984
References
1 A representative bibliography appears in Wildavsky, Aaron, Budgeting: A Comparative Theory of Budgetary Processes (Boston: Little, Brown, 1975).Google Scholar
2 Caiden, Naomi and Wildavsky, Aaron, Planning and Budgeting in Poor Countries (New York: Wiley, 1974)Google Scholar, especially Chapter 3.
3 Bank of Israel, Annual Report, 1981 (Jerusalem: Bank of Israel), p. 40Google Scholar (Hebrew); and National Consultants Ltd., ‘Weekly Outlook to the Stock Exchange’ (Tel Aviv: Bank Leumi, 3 02 1983 (Hebrew)).Google Scholar
4 State Comptroller, Annual Report No. 32 (Jerusalem; State Comptroller, 1982), p. 14Google Scholar (Hebrew). Note that these figures do not include much of the spending of municipal authorities or government-owned companies.
5 The 1981 devaluation was 105 per cent, while the CPI increased 117 per cent. For 1982, the devaluation was 114 per cent while the CPI increased 131 per cent.
6 The Bank of Israel (Annual Report, 1981) reports that government spending increased 104 and 144 per cent in 1979 and 1980, while the GNP increased in the same years 98 and 140 percent. The lack of correspondence between these figures and those for government budgets as reported by the State Comptroller referred to in footnote 4 above reflect the wider scope of Bank of Israel research, its concern to measure spending that is ‘off budget’, and its use of the calendar year instead of the Israeli fiscal year for its analysis.
7 In the year ending with the third quarter of 1981, for example, incomes increased 98 per cent while the CPI increased 116 per cent. (See Bank of Israel Annual Report, 1981 (Hebrew).)
8 See the comments of Arnon Gafne, former Director General of the Finance Ministry and Governor of the Bank of Israel in Ma'ariv, 9 November 1982; and Dvar, 27 May 1982 (Hebrew). For an economist's discussion of the causes of the recent inflation, see Michaeli, Micah, ‘Inflation and Money in Israel after the Reform of 1977’ (Jerusalem: Falk Institute, 05 1981 (Hebrew)).Google Scholar
9 Heclo, Hugh and Wildavsky, Aaron, The Private Government of Public Money: Community and Policy inside British Public Administration (London: Macmillan, 1974)Google Scholar; and Weller, Patrick and Cutt, James, Treasury Control in Australia (Sydney: Ian Novak, 1976).Google Scholar The material for the description and analysis reported below comes from interviews conducted by the author with personnel in the following organizations: Finance Ministry (including the Budget Department and the Accountant General's Department); Ministry of Housing and Building; Ministry of Health; Interior Ministry; Bank of Israel; State Comptroller; El Al-Israel Airlines; and the municipalities of Tel-Aviv and Jerusalem.
10 Lindblom, Charles E., ‘Decision-Making in Taxation and Expenditure’, in Public Finances: Needs, Sources, Utilization, National Bureau of Economic Research Special Conference Series, no. 12 (Princeton: Princeton University Press, 1961).Google Scholar
11 Sharkansky, Ira, The Routines of Politics (New York: Van Nostrand, 1970).Google Scholar
12 In Israel the ‘General Director’ is the senior official in a ministry, just below the Minister. General Directors are appointed and removable by the Government upon the recommendation of the Minister. Typically they have a professional background relevant to the work of the ministry, and thereby serve as a bridge between the political and technocratic layers.
13 Wildavsky, Aaron. The Politics of the Budgetary Process (Boston: Little, Brown, 1964).Google Scholar
14 In January 1982 an Israeli taxpayer reached the top (60 per cent) marginal bracket at an annual income equivalent to $15,700 and at that point paid an overall rate of 37 per cent of gross income.
15 La'Or, Uri, ‘On Budgetary Problems in a Period of Inflation’, Economic Quarterly, 100 (05 1979), pp. 124–6 (Hebrew).Google Scholar
16 See Crecine, John P., Governmental Problem-Solving: A Computer Simulation of Municipal Budgeting (Chicago: Rand McNally, 1969).Google Scholar
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18 Hecht, A., ‘Local Government in Israel and its Problems’, Local Finance, X (12 1981), pp. 3–14.Google Scholar
19 Budgets for Local Authorities for 1982 (Jerusalem: Ministry of the Interior, mimeo), pp. 6–10 (Hebrew).Google Scholar
20 The emphasis on improvisation, at the expense of systematic planning, is not entirely a product of high inflation. It has deep roots in Israeli government practice. See Akzin, Benjamin and Dror, Yehezkl, National Planning in Israel (Tel Aviv, 1966), pp. 11–12 (Hebrew).Google Scholar
21 Wildavsky, , The Politics of the Budgetary Process.Google Scholar
22 Caiden, and Wildavsky, , Planning and Budgeting in Poor Countries.Google Scholar