TLR 180: TWENTIETH ANNIVERSARY ISSUE – Success as the new normal

January 16, 2017

I will admit, with some pride, that this newsletter is now in its twenty-first year. As I often say to prospective subscribers, if highly intelligent people are still paying to read it, it must be answering a need and I must be doing something right.

 

Its actual twentieth birthday was in July and this “special anniversary issue” has been in the works since then. However, because it is a retrospective analysis of the last twenty years and a generalized look into the future, it has inevitably fallen victim to the need to address current — and hence more urgent — issues, and has been repeatedly delayed. But here it is finally, and the half-year delay brought its own lesson: had this appeared in July, I would have concluded that the long period of economic expansion was winding down — yet in the final months of 2016, the Israeli economy has shaken off its lethargy and begun growing rapidly again, leaving all the forecasters and pundits flat-footed.

 

The main theme of this issue is understanding how the Israeli economy became one of the outstanding global success stories of the 21st century to date — and, more importantly and as the title suggests, to explain why success is now the normal state of what was, even twenty years ago, a crisis-ridden and sub-performing economy. There is of course no guarantee that this happy state of affairs will continue, but it is entirely possible and perfectly plausible that it will. In 1996, Israelis in general and Israeli economists in particular would have considered both the current reality and the bright future beckoning as implausible — if not downright impossible.

This is an ideal opportunity to acknowledge and thank the godfather of this newsletter — David McWilliams, then a young analyst at UBS, now a leading economist and media persona in Ireland and far beyond. It was his vision and encouragement that pushed an abstract idea into a real product.

Over the years, the original subscribers have mostly retired or simply moved on — and most of the institutions that used to be clients are no longer with us either. Fortunately, others have taken their place, so let me end by thanking all the readers over the years for their interest and support and wishing them — and the Landau Report! — every success in the coming decades.

 

 

Success as the new normal

 

 

Content:

 

 

Introduction – The Israeli economy since the 1990s

 

i. What happened: Key developments and trends from the mid-1990s to the mid-2010s.  

 

ii. The pillars of success:

 

Pillar one: the external sector —

 from chronic deficit to chronic surplus

 

Pillar two: the poster boy of the Washington Consensus   

 

Pillar three: the revolution in the domestic socio-economy

 

iii. Real problems and bogeymen

 

iv. Future trends                                     

 

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