Some psychology theories claim that human beings are motivated by two powerful, yet opposing forces: the desire to avoid “pain” on one hand, and to attain “pleasure” on the other.  When it comes to making decisions on future returns, in particular stocks, Wall Street pundits use similar terms to describe investors’ motivations: Fear and Greed.  In a way, democratic elections are about voters deciding on future returns. They select the leader, or party, whose “stock” they bet on, hoping for a better future for themselves. The recent elections in Israel have indicated that Fear is far more powerful than Greed.FearAndGreed

Many were surprised when Israel’s Prime Minister, Benjamin Netanyahu (aka Bibi), announced the elections last November. The government was less than 2 years old, reaching barely half of its official term. There were no cardinal issues that could’ve explained the unraveling of the coalition supporting Netanyahu. The peace process was stalled, as it has been for decades; the economy was doing just fine; the latest military operation in Gaza was declared a “success”; the opposition in the parliament was rather weak; and there wasn’t any imminent political dispute that could topple the government.

The only reason for calling the elections seemed to be Mr. Netanyahu discontent with two of his main “partners” in this coalition – Mr. Yair Lapid and Mrs. Tzipi Livni. Yes, there was some friction between those three, but not substantial enough to call for elections, or so we thought. Mr. Netanyahu, who is a very shrewd politician, saw an opportunity and went for it. In hindsight – he was right.

The elections campaign that ensued was one of the most brutal in Israel’s history. Netanyahu’s political opponents saw an opportunity to beat him in his own game, calling for his replacement using a battle cry of “anyone but Bibi”. But when it comes to personal smear campaigns, Bibi’s opponents were simply outmaneuvered.

There were two main issues the elections were supposedly about: ‘National Security’ and ‘Social Justice’. The opposition, led by Israel Labor party (newly rebranded as the “Zionist Camp”) emphasized Social Justice. Netanyahu and his Likud party emphasized the National Security.

On the ‘Social Justice” front, the clash has been between two opposing economic philosophies – Neoliberalism vs.  Social Democracy. Neoliberalism calls for minimal government involvement in the economy, supports privatization of public services, and a free market economy. In contrast, Social Democracy calls for increased government involvement in the economy, expansion of public services and welfare, active support of workers’ rights, and progressive taxation in order to minimize inequality. Generally speaking, upper classes benefit from Neoliberalism, while lower classes benefit from Social Democracy.

Netanyahu has been an avid supporter of Neoliberalism. Perhaps his greatest accomplishment, first as a Finance Minister and later as a Prime Minister, has been the reform of Israel’s economy. He managed to move it away from its socialist roots, bringing it closer to a free market economy.  These reforms spurred growth in the GDP, reduced unemployment and helped Israel cruise through the 2008 global financial crisis. The downside of Netanyahu economic policies has been the growing divide between the rich and the poor – much like in the US. His opponents at the Labor party wish to rein-in the “unrestricted capitalism” that took hold during Netanyahu’s tenure. Their economic policies aim at expanding social services, and helping lower classes improve their socioeconomic status – much like in Scandinavia. Since national resources are finite, the Labor party policies will likely result in increased taxation and the potential transfer of wealth from the upper/middle class to the rest of the population.

The Likud and Labor parties hold opposing views on the ‘national security’ front as well. Netanyahu is convinced that the current Palestinian leadership isn’t a “true partner” for peace. Furthermore, the current instability in the Middle East calls for extra caution, and therefore withdrawing Israeli defense forces (IDF) from the West Bank is unthinkable. Given these assumptions, Netanyahu has been focusing on “containing the conflict” while gradually expanding Israeli settlements in the West Bank. The risks associated with this strategy are growing international Isolation, rift with the White House, and potential armed uprising in the West Bank.

Netanyahu’s opponents in the Labor party believe that Israel should do everything in its power to end the conflict with the Palestinians now. This implies putting every effort into the peace process, reducing or stopping the expansion of settlement in the West Bank, and striving to strike a deal with the current Palestinian leadership. The risk associated with this strategy, which leads to full withdrawal of IDF from the West Bank, is the onset of terror and rocket attacks on Israel, much like Gaza, but from 10 miles away from Tel Aviv.

When the election campaign started, the Labor party was quick to mount an all-out assault on Netanyahu. They decided to focus on ‘Social Justice’ themes, assuming the majority of the population will be enticed by the prospects of improving their socioeconomic status. In other words, they tried to appeal to the “Greed” sentiment within the average voter.

Initially, Netanyahu seemed to be taken by surprise by the breadth of the personal attacks on him. His opponents claimed that he is enjoying a lavish lifestyle while ordinary citizens can hardly make ends meet. But as time went on, Netanyahu started appealing to the “Fear” sentiment within voters. The ominous threats of a ‘Nuclear Iran’, ISIS and the potential emergence of a terror state in the West Bank certainly resonated with voters. The fresh memories of last summer’s military conflict in Gaza, which involved almost two months of daily rocket attacks on the heart of Israel, helped cultivate those fears.

Netanyahu’s “battle cry” during the final states of election campaign was “the left will divide Jerusalem!” It alluded to the potential withdrawal from the West Bank, which will result not only in terror attacks, but also with the breakup of Israel’s historical capital that was reunited in 1967. Netanyahu also emphasized that in light of the imminent threats from Iran and ISIS, Israelis must opt for a “strong leader” like himself.

The elections ended with Netanyahu and his Likud party getting 30 seats in the Parliament, vs. 24 to the Labor party. This was more than enough for Netanyahu to form a solid right-wing coalition.  Voting patterns suggest that upper-middle classes mostly voted against Netanyahu, even though his economic policies have mostly benefited them. While lower classes mostly voted for Netanyahu, even though his economic policies have mostly hurt them.

Undoubtedly, Fear has trumped Greed in these elections.