Guy Rolnik / After the holidays
After the holidays we will learn whether the grassroots protest that erupted in the summer of 2011 sufficed to change the mindset of Israel's leaders.
After the holidays" inevitably arrives. A number of critical decisions and moves, among the most dramatic the economy has known for years, have been deferred to that time.
After the holidays we will learn whether the grassroots protest that erupted in the summer of 2011 sufficed to change the mindset of Israel's leaders. We will learn whether they fully grasp that the public has woken up, that it has access to social networks on Internet and that it's sick to the bone of seeing its future robbed by a coalition of fat cats living high on the status quo.
After the holidays we will find out whether Ehud Barak, Avigdor Liberman and Shas revert to their pre-protest type, using their power in government to benefit their personal interest and their constituents.
Every day more and more of the unconnected realize that they and their children face a future of hardship if things don't change. Will Barak, Liberman and the Shas ministers wield their power to dismantle the monopolistic structure of the Israeli economy, having realized that that the system of parties serving the interests of the powerful and well-to-do is passe?
After the holidays we will find out whether the prime minister and finance minister mean to build on the initial recommendations of the economic concentration committee, which were presented a month ago, or if they've tired of that topic and have moved on to think about their next spin, or job. The committee's interim recommendations, presented in mid-September, were a step in the right direction. But to enter the annals of Israeli economic history, the moves need to be bigger, faster and stronger.
After the holidays, the heads of the monopolies and corporate pyramids will have make a decision, whether to renew the battle against the public interest, or to change their mind-set are institute real change, instead of letting the mobs drag them there through virtual mud on Facebook.
We have no advice for the politicians nor certainly for the business leaders. They figure they know what they're doing better than we do. Like Zehavit Cohen until two weeks ago, they think it will pass, this sudden wave of public power. Then they can get back to the agenda that did so gorgeously by them in the last five years.
Maybe they're right. Maybe the wave will pass. Yet even if it's followed by restoration of quiet waters for a week, a month, a year or more, another wave will build up and it will be bigger, higher and stronger. That is because the economy is moving along dubious paths and because with each passing day, the number of faceless unconnected people just grows - but they're connected to Facebook. And with each passing day these faceless unconnected people increasingly realize that the yawning chasm between them and the connected isn't fated. It is the result of what Prof. Manuel Trajtenberg calls "a whole, organized…system designed over the years to serve narrow interests."
For people who view the events of the last few months as a window of opportunity to change our ways, the week before the holidays end are a good time to consider practical ways to save the free market, the business sector and the public sector in Israel.
Things are moving. There's a report from the Trajtenberg Committee - hurriedly set up by Benjamin Netanyahu, which delivered a report on the social ills that sent hundreds of thousands of Israelis into the streets.
There's the report from the economic concentration committee, about whether there is any and what could be done about it. These committees are the first steps the government has made for years that address the structure of the economy. They are a step in the right direction, just the first in a long journey.
Until a few months ago neither report would have been likely to lead anywhere. That's because they benefit mainly the unconnected, the unorganized faceless masses who have no lobbyists, ministers in their pocket, journalists sucking up to the powers or lawyers at their beck and call.
Moreover, the reports take aim at tycoons up to their eyeballs in loans, businessmen operating in non-competitive markets, public monopolies whose workers don't worry their heads with providing fair service at a fair, competitive price.
The people living high on the status quo brought out their best strategic weapon to crush the reports - arguing the precise opposite, for which purpose they do not cavil at recruiting from both left (socialists) and right (capitalists).
From the right we hear shrieks that the reports are anti-business. From the left come wails that the reports would destroy the public sector.
This is a good time and place to remind, at length and in detail, that the reforms Trajtenberg and the concentration committee indicate are designed to save and strengthen the free market, and the public sector.
A strong free market and a strong public sector are not contradictions in terms. They are vital for a sustainable welfare nation, which means a welfare nation that can help people over time without going broke.
The multiplication of monopolies and oligopolies, and expansion of business pyramids with finance and industrial holdings together, is bad for the image of Israel's business sector, and could spur anti-business sentiment. It would be a historic mistake, a slippery slope to economic ruin. The free market and business sector are the drivers of economic growth. They create the money that pays for the quality social services we all want.
The problem is that after 20 years of growing stronger, in recent years the free market in Israel has been weakening. The momentum created by exposing the economy to the world, capital market reforms, globalization and the high-tech revolution has ebbed. The government that blew life into competition and created the conditions for healthy market pressures, has grown weary and at times, craven. It has allowed the creation and preservation of concentration groups, and dozens of public and private monopolies that depress the economy and raise the cost of living.
It has been argued in recent months that the good of the business sector and the good of the monopolies and concentration groups are tied. This is dangerous. It is time for the fair businessmen of Israel, people who did not draw their power from ties in government or craven regulation, to rise to their feet and represent their sector. They must tell the people, mainly the protesters: We are the solution. Not the problem.The same applies to the public sector. The purpose of structural changes in it and its management isn't to weaken it, but to strengthen it.
Increasing the budgets for the public sector without improving its management and controls, planning and sustainability, is money down the drain at best, and destructive at worst. Taxpayers, for one thing, will simply bear a heavier burden.
Privatization is not an end in itself. It is supposed to improve service to the citizens. Sometimes it works. Some services should not be privatized. Some can be outsourced and some the government needs to supply itself. But whether they're outsourced or done by government, the responsibility for the supply of better services, and for protecting workers' rights, remains the government's. And when we say protect workers' rights, we don't mean the ones protected by powerful unions that have a knife at the nation's jugular. We mean all workers in Israel.
The Trajtenberg Report explains why regulation failed at introducing competition into monopolistic markets, and why privatization and outsourcing services didn't work. He then explains that if the government wants, it could create a competitive economic structure in which the regulator doesn't have to fend of monopolists but leave the pressure to the open market. Trajtenberg also tries to draw a map for government institutions, to supervise social services to be provided by the open market.
Naturally it's a lot more fun to kowtow to the radicals who say the government should do everything itself, and spend more money while about it. Or to the ones who protest against touching the monopolies because doing that would be anti-business.
But there's a third option: study the issues and admit there is no real conflict of opinion, because everybody wants to strengthen the public and private sector too. The only question is what models work and how the government and its agencies need to change over the next decade in order to supply better services and create a more competitive market.
In the business sector that's called "management", though here the range of planning is much longer than in business, and the need to explain everything to the public is crucial.
The pressure to keep things as they are is terrific. But the popular protest of summer 2011 has given the government, the third agenda and everybody who wants to change the state a nonrecurring opportunity to start the process.
The real opportunity of protest leaders Daphni Leef, Staf Shaffer and Itzik Shmuli and the hundreds of thousands they inspired to action isn't to increase the deficit or government debt, or to humiliate the powerful, or to lower the price of cottage cheese. Their opportunity is far greater: it make hundreds of thousands of smart, good-willed Israelis involved. To lead changes that hadn't been possible before. Today's structure is the result of equilibrium between the powerful organized forces, and the apathetic public. That balance needs to be upset and the way to do it is by connecting the unconnected to reality.
Of course, one could spend Yom Kippur and the holidays by reading about the terrible war of 1973, the atonement of some singer or model or tycoon or soccer player. But in five or ten years, you may wonder where you were on Yom Kippur after that summer of 2011. Did you seize the day to start to change the public discourse? To rescue Israel from the hands of the narrow interests that like things the way they are? Or did you leave that labor to the future, when things are even worse, and we all have our backs to the wall?
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