Two steps back
Once when Ariel Sharon was Industry and Trade Minister, he managed to wreak havoc on Israeli industry by shutting the door in its face and preventing it from competing internationally.
Once when Ariel Sharon was Industry and Trade Minister, he managed to wreak havoc on Israeli industry by shutting the door in its face and preventing it from competing internationally. He even managed to damage our efficiency in sectors in which the country had a comparative advantage. The only thing Sharon wanted to do during that period (from 1984 to 1990) was to shut out all competing imports by imposing heavy restrictions, such as insisting imported pencils include details written in Hebrew.
Today, his successor is trying to copy his every sorry way. She has discovered that the crisis in our factories is due to imports, so her office hurries to impose restrictions on imports to save local jobs and prevent unemployment. Everything apart from that, you see, is AOK. The budget is under control, all our infrastructure has been built, trains are steaming ahead in every direction, roads and intersections are all in place, the unemployed have their every wish fulfilled, education levels in the outer lying areas are superb. So what's left? Just the import problem.
The policy of opening our industry to outside competition began in 1991 due to a historic coincidence. Moshe Nissim replaced Sharon as trade and industry minister,
Yitzhak Modai took over at the Treasury and Dan Meridor completed the jolly threesome as head of the committee for "import exposure." The trio paved the way for importing goods from southeast Asia, South America and eastern Europe, leading to an across-the-board drop in prices over the past ten years, which, in turn, has raised our standards of living. Who can't but notice how clothing prices have fallen by tens of percent; who doesn't remember when television sets cost $1,000 (as opposed to NIS 1,000 today)? Who yearns for the days when you had to rob a bank to replace a bathtub? And whoever buys notepads and boxes of pencils today for just a few shekels should recall that once we used to buy just one pencil per child due to its exorbitant price.
Let's take the example of the plywood factory that makes boards for the furniture industry and is now in receivership. If we impose restrictive duties on imported boards, then the factory might continue for a bit longer until the next crisis comes along, however, the price of Israeli-made furniture, kitchens and closets will rise due to an increase in the price of raw materials. As a result, demand for the products will drop, and the jobs currently in danger will again be jeopardized. In other words, we will all suffer a drop in living standard, and we still won't manage to save jobs.
But Industry and Trade Minister Dalia Itzik thinks only in terms of the political short term, and cries of import duties and "saving factories" make good sound bites. However, these are bad solutions that will only set the economy back, and will solve nothing - apart from the minister's public image.
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