Abandon the lathe and go to Jerusalem
Dalia Itzik found it incredible that Felix Zandman had treated her this way. How could he have dared to approach Minister without Portfolio Shmuel Avital, who is responsible for coordinating social affairs, and tell him about Vishay Intertechnology's woes?
Dalia Itzik found it incredible that Felix Zandman had treated her this way. How could he have dared to approach Minister without Portfolio Shmuel Avital, who is responsible for coordinating social affairs, and tell him about Vishay Intertechnology's woes? Where did he find the gall to actually meet with Prime Minister Ariel Sharon and receive promises from him regarding grants? "That is my job," the minister of trade and industry said to herself. "I am the one who is supposed to meet with the industrialists, to hear their weeping, to give them an understanding tap on the shoulder, and to decide how much money to give them. Only then will they understand that I am the one who calls the shots in the Israeli economy. Only then will they and their employees owe me a huge debt. Then I can issue a press statement about all the rescue operations I have carried out. And the central committee of the Labor Party will give me a standing ovation."
Apparently, Zandman (who, for years, has specialized in obtaining benefits from Israelis governments) recently laid off hundreds of workers. In his plants in Beersheba and Dimona (which manufacture simple electronic components), he has today only half the number of employees (1,600 instead of 3,200) to which he had committed when he received $150 million in grants from the state. However, what can industrialists do when demand for their products dwindles? And if product demand diminishes, then what is the point of keeping a promise to have a 3,200-member staff?
The humorous-but-also-sad part of Itzik's arguments is that she herself has made the bed in which she is now lying. It was Itzik who supported the creation of a special ministerial committee, headed by the prime minister, that would be responsible for dealing with the "problems of manufacturing plants in distress." The moment the committee was established, the green light was given to the owners and executive directors of industrial plants to stop working on the lathes and begin working the prime minister. After all, how much profit can be obtained from restructuring measures in contrast with the prospects of obtaining in one fell swoop tens of millions of shekels from the bottomless pit that Sharon has opened in Jerusalem?
Initially, only a trickle of requests was submitted from well-known manufacturing companies like Acre's Kiryat Haplada steel manufacturing plant, Polgat in Kiryat Gat and the textile plant in Horfesh. Then came the turn of the plywood plants - Taal and Kelet Afikim. Next in line was Phoenicia Glass Works in Yeruham, which immediately began to threaten laying off all its workers. Recent new additions to the line include the Arigei Matzuba textile plant, Israel Spandex, Kelil Yofi and Best Carton. So far, the list contains 70 manufacturing plants (and this is not the final figure).
This is how Itzik, Avital and Sharon have turned the clock of the Israeli economy back 20 years - to the days of crude governmental intervention in the economy. Sharon, who never displayed much understanding of economics, is repeating the mistakes he made when he held the trade and industry and national infrastructures portfolios. Itzik and Avital are novices in making such errors.
The upshot of this individualized policy will be that those who scream the loudest, those who are the closest to the corridors of power and those who are experts at creating illusions will be the ones to get the cash and thus enjoy an unfair advantage over plant owners trying to pull themselves out of the mud by their own bootstraps. The plants that survive will be precisely those that need a major overhaul and restructuring process because they are simply not built for efficient competition in the marketplace. Some of these plants suffer from poor management, while others are simply utilizing the opportunity of making a fast profit at the taxpayers' expense.
The truth is there is no economic genius or governmental committee on earth that could possibly determine which plants really deserve a helping hand. As past experience has demonstrated, those who do not deserve to be helped are precisely the ones who are given the cash. In this case, the government can dish out enormous amounts of money which will lead to distortions, make the tax burden heavier, prevent infrastructural investments and not really increase the number of jobs.
The time has come for Itzik, Avital and Sharon to realize they are not equipped to play the role of God. They cannot intervene in the market's mechanism and improve it. Their intervention will only cause distortions and damage. If they do not see this point, they should recall those states that believed they could outsmart market forces. These states no longer exist, however, Itzik, Avital and Sharon passionately long for the Union of Soviet Socialist Republics, East Germany and Albania.