Proposal by Likud to Invite Milton Friedman to Help Revamp Israel’s Economy Raises Outcry from Labor

The proposal by Simha Ehrlich, Likud’s number two man, that Nobel Prize winning economist Milton Friedman be named on advisor on economic policy to the Israeli government is being taken up as a rallying cry by the Labor Alignment and leftist groups for the forthcoming Histadrut elections.

With the upset defeat of Labor in last week’s Knesset election, there were some fears by Labor that its longtime hegemony in the Histadrut would also be shattered by Likud in the June 21 election for the general trade union federation. But now the proposal regarding Friedman, especially in light of the conservative American economist’s views that Israel needs to increase unemployment to combat its ever-growing inflation, has given Labor an issue which it believes it can use in the Histadrut election.

Ehrlich, an economist who is slated to become Finance Minister in the new government, said that he proposed Friedman because the economist’s views are close to those of Likud. Ehrlich and Yehezkel Flumin, another Likud economics spokesman, said that Friedman’s appointment would also demonstrate that Israel did not only look to world Jewry for financial support but was also willing to turn to prominent Jewish personalities for advice.

FRIEDMAN INDICATES HIS APPROVAL

Friedman has confirmed to Israeli newsmen that he is willing to be an advisor to the government. He told them that he believes inflation can be reduced by partial unemployment, cuts in government spending and decreasing government involvement in industry, including handing over certain government controlled companies to private industry.

Meir Tzaban of the left-wing Sheli movement immediately called for a meeting of the Histadrut Executive to discuss Friedman’s recommendations on unemployment. The left-wing group also noted that Friedman was an advisor to the Chilean junta. (Friedman, in a recent letter in The New York Times denied this allegation.)

LIKUD WILL NOT NEGATE LABOR’S GAINS

Histadrut leaders also stressed that they would not allow Friedman’s views on unemployment to be applied in Israel. This brought a statement today from David Levy, Likud’s candidate for Histadrut secretary general, that a Likud-led Histadrut will not allow increased unemployment and will not allow the government to abolish the cost-of-living allowances or to abolish subsidies to essential commodities.

Likud said that Friedman would work with Israeli economists. It said he would give advice and that the decisions would be made by the Likud leadership in the government in cooperation with the Likud faction in the Histadrut.