OpinionCommentary Israel’s Proposed Judicial Reforms Aren’t ‘Extreme’ They’ll provide a necessary check on a court with nearly unlimited power to dictate economic and political life. By Richard A. Epstein and Max Raskin
Hundreds of Israeli economists signed an “emergency letter” on Jan. 25 warning that Prime Minister Benjamin Netanyahu’s proposed judicial reforms will lead to economic calamity for the country. The authors worry about putting “great political power in the hands of a ruling group without strong brakes and balances.”
This statement is notable for two reasons. First, many of these economists supported political parties that opposed Mr. Netanyahu’s free-market reforms while he was finance minister from 2003 to 2005. These reforms have allowed the country’s economy to boom for almost two decades. Second, Israel’s unelected Supreme Court—not the Knesset, its elected parliament—is the branch of government that actually holds unchecked political power. Rather than endangering economic growth, these proposed judicial reforms provide a necessary check on the one court in the Western world with nearly unlimited power to dictate economic and political life.
The economists mischaracterize Mr. Netanyahu’s proposed reforms as an attack on the independence of the judiciary. But judicial independence does not mean a judiciary independent from constraints. As it stands, the Israeli Supreme Court’s dominance over the Knesset is unrivaled by any other parliamentary or presidential system.
Compare the U.S. legal system, the preferred forum of the global economy, with the Israeli system. In Israel, judges are appointed by a committee that consists of three unelected Supreme Court judges, two unelected lawyers from the bar association, and only four legislators and members of the government. In contrast, in the U.S. the president appoints judges to federal courts subject to confirmation by the Senate. These judges have the power to strike down laws, but they are guided by a written constitution. Israel has no formal constitution and so its judges are guided by their own judgments and the quasi-constitutional “Basic Laws,” which the Israeli Supreme Court itself can strike down. The American political-question doctrine counsels judges to stay out of economic and political affairs. This has not harmed the U.S.’s standing as an economic powerhouse. Israel’s judges, on the other hand, can strike down everything from military strategy to energy policy to trade agreements.
Energy policy is a good example of how Israel’s unchecked judiciary creates economic uncertainty. In 2016 the Israeli Supreme Court blocked the government’s plans to develop natural-gas fields, drawing huge criticism from the companies involved. The court dismissed the plan on grounds that it undemocratically bound future governments with a clause that ensured the agreement’s longevity. But in 2022 the court approved the anti-Netanyahu government’s maritime energy agreement with Lebanon, reinterpreting a Basic Law so that it didn’t require a democratic referendum in the case of an important change over territorial sovereignty.
These decisions superficially read like legal opinions but are, in effect, political judgments. They involve sensitive matters of national security and sovereignty that everywhere else are decided by the elected branches of government. A proposal that lets a majority of the Israeli parliament overturn these decisions can hardly be regarded as antidemocratic. Indeed, it is a core feature of Canada’s constitution.
The economists insist that credit agencies will downgrade Israel’s rating as a result of these reforms, citing Poland as an example. S&P downgraded Warsaw’s rating based on concerns over checks and balances in 2016. Their letter argues that the proposed reforms will lead to higher borrowing costs that will choke the high-tech industry, a pillar of Israel’s economic growth.
But the economists ignore the crucial truth that the reforms will bring Israel’s judicial systems more in line with Western norms. Their letter cites Nobel Laureate Douglass North’s claim that unchecked concentrations of power are bad for economies, implying the Knesset would become too powerful. But North was talking about the importance of stable institutions to promote entrepreneurial activity, not an oversized version of judicial supremacy. Like many public-choice economists, he was a strong defender of the rule of law, which isn’t the same thing as the rule of lawyers—or of unelected judges.
Whatever their imperfection, Israel’s new judicial reforms are another step in its journey toward concordance with more traditional conceptions of balanced government. In Marbury v. Madison, Justice John Marshall explained that “it is emphatically the province and duty of the judicial department to say what the law is” and not what the law ought to be. A similar sentiment found its genesis with Judah ben Tabbai in the first century B.C. Israelis would do well to heed the rabbi’s exhortation: When judging, do not act as an advocate.
Mr. Epstein is a law professor at New York University, a senior fellow at the Hoover Institution and a senior lecturer at the University of Chicago. Mr. Raskin is an adjunct professor of law at New York University and a fellow at the school’s Institute for Judicial Administration.
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