The Bottom Line / 6 comments on the joys of competition
Long Live Competition 1: The Bank Hapoalim money-laundering scandal made headlines in all the newspapers, but the handling of Vladimir Gusinsky varied greatly. Yedioth Ahronoth carried a big picture of him on the front page and another on an inside page, and he was presented as the "central suspect in the affair".
Long Live Competition 1: The Bank Hapoalim money-laundering scandal made headlines in all the newspapers, but the handling of Vladimir Gusinsky varied greatly. Yedioth Ahronoth carried a big picture of him on the front page and another on an inside page, and he was presented as the "central suspect in the affair". In Haaretz, he was the lead story's headline with a headshot on the front page, as well as a picture in the paper's business supplement "TheMarker."
In Maariv, Gusinsky's role in the affair is much humbler. He appears in small print, with no photo, as one of three "tycoons involved in the matter being investigated." Gusinsky is a shareholder in Maariv.
Long Live Competition 2: When the deportation of illegal aliens began, some "social types" said it was not just and wouldn't help, because Israelis wouldn't agree to take cleaning jobs anyway. But yesterday an Israeli cleaning woman from Tel Aviv, a mother to three, said "since the foreign workers were expelled, our lives are better. If I once didn't dare make a peep and asked for just NIS 30 per hour, today I can ask for NIS 40 and for special cleaning for the Passover holiday even NIS 50 - and I get it."
And that is how it is supposed to work: the competition for household help raise their salaries, which will attract more Israeli workers who will break the cycle of unemployment.
Long Live Competition 3: Recent research by the International Monetary Fund indicates that privately held banks are better-run that state-owned banks. The research looked at many countries with various economic systems over long periods of time.
The reason is that competition increases with privatization.
Long Live Competition 4: Major German bank Deutsche Bank did not profit off its acquisition of 6.5 percent of Bank Leumi. It sold the shares to its own clients at less than it paid the state, and when you calculate that in with the commission it received, the bank closed the transaction with virtually no profit.
That is the power of competition. The very offering of the deal to six major international entities forced them to bid close to market price, reducing profit margins to next to nothing.
It also became clear that the bank's economists didn't make a good deal for its clients. Bank Leumi shares traded six months ago at 25 percent below their current rate.
They weren't bought then. Which also proves that it is impossible to rely even on the banks' economists.
Long Live Competition 5: Arava farmers say that if the state provides them with another 10 million cubic meters of water, they will be able to increase agricultural exports. Ahrele Devorai, a farmer from Moshav Paran, says: "There are clients hungry for our goods, we get orders we cannot fill because we don't have enough water." They estimate that the additional water would make it possible to increase exports by NIS 70 million.
The solution is simple: stop subsidizing water to farmers and cancel quotas. The minute the price of water is realistic, there will be no need for bureaucrats to decide on quotas. Efficient farmers will buy more water and total agricultural exports will rise - good for the country and for the farm sector.
A veteran farmer from the Arava moshav Ein Yahav told me he is willing to pay a realistic price for water, if he could just get his hands on all the water he needs. This should be the next revolution: competition in the water sector.