The Israel Center
for Social & Economic Progress
an independent pro-market
public policy think tank since 1984
Winner of the 2005 Award for Institutional Excellence and the 2006 Templeton Award for Student Outreach
Log in or Register
The Jerusalem Post19 Aug ’10
The reformers must know the importance of the reform’s success both for Israel and for their careers, and what damage they will incur if it fails.
public policy • reform
Israeli governments are notorious in their inability to decide or to execute decisions (over seventy percent of government decisions never get implemented). Wits say this is good, since in those decisions that the government implements it does so much harm that it is quite enough.
Not always. Remember the brave decisions to cut bloated government expenditures (a steady state since the nature of government is to inflate expenditures), as well as the reforms in financial markets made by then Finance Minister Benjamin Netanyahu. Those decisions, however imperfectly executed, have saved the Israeli economy in 2005 from a Argentina-like collapse.
But famous media pundits argue that the financial reforms, known as the Bachar reforms were actually a catastrophe. The facts speak for themselves. Not only have the reforms saved Israel and its banks from near economic collapse. They put the Israeli economy, after two decade of slow or no growth, of frequent recessions, on an amazing growth path of an average 5% annually. But even the dramatic growth in the size of assets held by the Israeli public, of 60%, from 1.2 trillion shekels before the reform to 2.2 trillion at present, despite a terrible world financial crisis, does not deter our famous commentators from calling the reforms “a catastrophe”.
Once again Netanyahu is facing an historic opportunity to reform the Israeli economy by breaking the inordinate concentration of economic – and political – power in the hands of less than twenty families. They control the huge pyramid style corporations that dominate the Israeli economy, representing about half the value of Israel’s traded assets!
Such a great concentration enables these corporations to wield monopoly power, and monopolies choke competition and the efficiency generated by it. Low efficiency is a major factor in the low productivity of the Israeli worker, about half that of the American, and of his low earning.
Monopolies inflate prices and exact a heavy “monopoly rent” on everything we consume, estimated at about a third of what the average Israeli earns. The low earning strata that devote most of their income to consumption suffer most. It is a major reason why so many working Israelis are poor.
Excessive concentration also endangers the total economy. Excessive concentration is at the heart of the serious problem Israel has: the problematic close relationships between big business, politicians, bureaucrats and the media, which is mostly controlled by our oligarchs. It corrupts both politics and the economy.
The Bank of Israel included in its annual 2009 report on the economy (published April 2010) a pioneering study that established the fact that Israel indeed suffers from excessive concentration and warned about its grave dangers. The study provoked a storm of protests and counter-arguments by the servants of our oligarchy. There were several biased efforts to discredit it.
Prime Minister Netanyahu picked up the issue and expressed several times, in public, his determination to address this severe problem. That he did this at a time when he is besieged by existential problems, such as the threat from Iran and by unusual coalition woes is evidence that he understands the great importance of this challenge. He did not flinch even after some economic pundits who habitually serve the interests of the oligarchs attacked him ferociously, charging that he had more important issues to address, like poverty and the miserable economic lot of the Orthodox and of Arabs, as if they do not realize that poverty is in large part as result of the monopolies exploitation. They even tried to deflect attention to the secondary issue of inflated executive pay common in publicly held companies, again hiding the fact that such salaries are also a function of excessive concentration and of the fact that it pays the oligarchs to pay their executives, mostly former government employee huge sums because the are not just executive but mostly “machers” (operators) who know how to milk billions from the government, so that they earn every shekels of their inflated cost.
The prime minister’s office has been preparing to appoint a commission charged with framing the terms of implementation of this reform. It will include representative of the Treasury and of The bank of Israel.
But months have elapsed and the commission is not formed yet. It is said that as usual turf and political prestige infighting is holding this historic reform back.
Some even claim that these struggles are fomented by powerful lobbyists and their partners in the bureaucracy who are looking for every way to kill the reform, postpone it or vitiate its powers.
The Jerusalem Post30 Jun ’15
Israel’s last elections proved how right David Ben-Gurion was when he said that, in Israel, whoever does not believe in miracles is not a realist.
PJ Media20 Jun ’15
The security challenges facing Israel obscure other deep concerns about the viability of Israel’s economic system.
The Jerusalem Post7 Jun ’14
Unless the laggard Israeli economy is reformed soon, its problems—including its morally debilitating corruption—may threaten its future.
Israel Hayom15 May ’14
What does it say about Israeli society and the system of government when a prime minister is convicted of taking bribes?
Israel Hayom23 Feb ’14
What kind of education should it offer and at what cost?
The Jerusalem Post9 Jan ’14
The productivity of Israeli workers is only two-thirds that of Americans, and their salaries are much lower.
The Jerusalem Post11 Jul ’13
As he completes an exceptionally difficult 8-year tour of duty during a worldwide financial crisis, Stanley Fischer has achieved a unique status.
The Weekly Standard7 Jun ’13
When Israel finally discovered a bonanza of natural gas about five years ago everyone was happy. But then fierce arguments broke out—and rightly so.
The Weekly Standard22 Apr ’13
The economic future of Israel now rests in the hands Netanyahu, Lapid and Bennet. Will they succeed in fulfilling the most difficult and complex mission of liberating Israel’s economy?
Israel Hayom2 Jan ’13
The Israeli government could eradicate poverty by breaking the monopolies and spurring competition.
The Jerusalem Post7 Dec ’12
Our socialist and statist heritage bred our inefficient system. But foreign aid and remittances were serious enablers. The struggle against political and economic concentration could finally permit Israelis to overcome this destructive heritage.
Israel Hayom8 Nov ’12
The time to prepare the reforms is now, so that after the Israeli elections, the prime minister can immediately devote his time to moving them forward.
The Financial Times21 Jun ’12
Israel Hayom6 Jun ’12
To grapple with the impending crisis, Israel’s government must improve the nation’s competitiveness.
The Jerusalem Post7 May ’12
The Wall Street Journal3 May ’12
Reform-minded Prime Minister Benjamin Netanyahu is stymied by bureaucrats and monopoly tycoons.
Middle East Quarterly30 Mar ’12
As the high hopes for a brave new Middle East fade rapidly, Western policymakers must recognize that promoting market economics and its inevitable cultural changes are far more critical to the region’s well-being than encouraging free elections or resolving the Arab-Israeli conflict.
The Jerusalem Post17 Feb ’12
The choice is between an efficient, growth-inducing market economy or a welfare state, meaning a huge government that actually harms the poor and inhibits prosperity.
The Jerusalem Post25 Oct ’11
Aversion toward the rich has had strong roots in Zionism since its early leaders embraced Marxist practices.
Is capitalism in crisis? Of course.
The Jerusalem Post10 Aug ’11
The tent-dwellers’ revolt calls for the enforcement of ‘the will of the people’ (like all autocrats). It refuses to rely on Democracy.
The Jerusalem Post9 Aug ’11
David Lewis, the exceptional entrepreneur and philanthropist, and head of the Isrotel Group dies at 87
The Jerusalem Post20 Jul ’11
Although MKs appear concerned over rising costs, it was they who allowed this injustice to occur in the first place.
The Jerusalem Post28 Jun ’11
Who is to blame for the shameful situation in which millions of Israeli workers – who earn about half what American workers earn – have to pay double for goods?
The New Republic19 May ’11
A Middle East peace strategy that could actually work.
The Jerusalem Post15 Mar ’11
Israel needs to slash its state budget by as much as possible if it wants a chance at fighting waste and corruption.
The Jerusalem Post9 Mar ’11
Too little attention has been paid to how Egypt’s socialist past and welfare-state present shaped the current rebellion.
The Jerusalem Post7 Feb ’11
The Herzliya Conference has become an important international event, but one central issue is absent: Israel’s debilitating economic concentration.
The Jerusalem Post22 Jan ’11
It’s highly unlikely that government can ever learn to make long-term plans and execute them efficiently.
The Jerusalem Post23 Dec ’10
How can one dare compare narrow-minded religion with the all-embracing faith of universality and equality that is socialism?
The Jerusalem Post1 Dec ’10
Many of the social and economic troubles we are experiencing are due to the public’s lack of understanding of the need for economic literacy.
The Jerusalem Post17 Oct ’10
The PM’s courageous decision to tackle economic concentration was misrepresented by several of our media publications—owned of course by tycoons.
The Wall Street Journal8 Oct ’10
Economic concentration hurts the country’s viability and the chances for peace.
The Jerusalem Post4 Oct ’10
A damaging ethos of ‘welfarism’ and distributive politics has come to dominate not only academia but our cultural, military and even our business elites.
The Jerusalem Post13 Jul ’10
Kagan’s admiration for Justice Aharon Barak’s philosophy may have revealed her own predilection for radical judicial activism.
The Jerusalem Post30 May ’10
We must dismantle the oligarch-owned monopolies that impoverish the Israeli consumer and choke our economy.
The Wall Street Journal18 May ’10
The OECD’s invitation to Israel is a “seal of approval” but the country still needs more reforms.
The Jerusalem Post10 Feb ’10
The world’s astonishment at Israel’s response to the Haiti disaster is insulting. What we saw there was Israel’s true face.
The Jerusalem Post10 Jan ’10
Individual initiative and freedom are essential for creativity—in hi-tech as in all other spheres.
The Jerusalem Post14 Oct ’09
As far as Rose Friedman was concerned, public kudos did not matter that much. She persisted in being a rose, no matter what.
The Jerusalem Post22 Sep ’09
Lasting peace must grow from the bottom up, from an “economic peace process” that proves what advantages peace has to offer on a daily basis. It cannot come from signing peace agreements with radical and corrupt entities propped up by corrupting Western handouts.
Recognized by the IRS as a charitable organization pursuant to Section 501(c)(3) of the Internal Revenue Code.
Tax ID # 13-3129249
Copyright © 2001-2022
The Israel Center for Social & Economic Progress
“Where there is
there is no Torah.”
Pirkei Avot (Ethics of the Fathers)
Contributions made out to Friends of ICSEP can be mailed to:
Fox Associates, 100 Front St., West Conshohocken, PA 19428, USA