Israel: A Long Step Back

After more than a decade of sizzling national growth, Israel's planners decided late in 1965 that it was high time for mitun—which is Hebrew for slow down, and has become the government's slogan for a slew of measures designed to put the brakes on the economy. "The objective," explained Israeli Finance Minister Pinhas Sapir, "is simply to step back a pace in order to leap forward." So far, that step back has been bigger than anyone expected.

Like Britain's deflationary freeze, Israel's mitun was designed to right a lopsided economy living far beyond its means. Fueled by inflationary wage increases...

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