Populism for 20 agorot
Once, many people believed that it was necessary to subsidize all 'basic necessities,' because otherwise, the poor would collapse. Over the years, however, it became clear that the subsidies led to enormous waste.
It happened at exactly the right moment for Eli Yishai. He had been industry, trade and labor minister for 14 months, but no one knew exactly what he did. Now, everyone knows: Yishai is standing bare-chested against the plot to raise bread prices, because he is pro-social welfare and cares about the poor - and everyone else is evil.
This is Yishai's second round over this issue; the first was after the current government's establishment in May 2006. At the time, he declared that he would cancel a decision to raise bread prices and restore government subsidies. Then, too, Yishai won a few moments of media glory, when he held his first meeting with ministry staff at Angel's Bakery. But what happened in the end? The price hike was not canceled, subsidies were not restored, and no special compensation was offered to the poor.
Because after all, what are we talking about here? About an increase of 20 agorot per loaf - from NIS 3.65 to NIS 3.85. That is what all the fuss is about. As if poor families ate only bread. As if they did not consume eggs, milk, cheese, oil, chicken and vegetables and had no other expenses. The Central Bureau of Statistics, which investigated the issue, discovered - wonder of wonders - that even poor people consume a whole basket of products. For instance, they spend twice as much on pitas as they do on dark bread, even though pitas are more expensive.
Once, many people believed that it was necessary to subsidize all "basic necessities," because otherwise, the poor would collapse. Therefore, bread, eggs, chicken, milk and cheese were all heavily subsidized. Over the years, however, it became clear that the subsidies led to enormous waste. For instance, animals were being fed with cheap bread. Additionally, the cost of the subsidies ballooned to the point where it created serious budget problems. Therefore, all subsidies for "basic necessities" were canceled in 1990. What remained were price controls on a few types of bread and a few milk products.
Had the government been stronger then, it would have also ended price controls on bread and milk, and thereby removed the whole issue from the agenda. But that did not happen, because our government does not know how to cut: It always leaves a few loose ends.
Upon Yishai's recommendation, the cabinet decided at Sunday's meeting to set up a committee to consider "a mechanism for compensating recipients of [National Insurance Institute] allowances." In other words, a complex bureaucratic apparatus will be established, which will investigate and decide how much bread (and of which types) is eaten by recipients of old-age allowances, disability benefits and income maintenance payments. Then the committee will determine the size of the "bread allowance" for each group - two to four shekels per month. The bureaucracy will cost far more than the compensation does.
MK Yoram Marciano (Labor) has an alternative solution: Close all the bakeries that have stopped making dark bread. He does not care that the price of flour has jumped 30 percent over the last month, nor does he care that no law obligates the bakeries to make bread at all. In his eyes, all that is trivial. In the socialist government he would like to establish, the government would decide everything. It would close and open businesses, and would also nationalize them and run them better. Just like in North Korea. One can only imagine what would have happened if eggs, chicken and cheese had remained price-controlled as well. Not a week would pass without some heart-rending media crisis.
It is still not too late. The new committee itself could implement the needed revolution: ending price controls on bread. When that happens, the bakeries' golden age will end. They will have to start competing for every customer - because there is a surplus of bakeries in the market. The fact is that some bakeries give the supermarket chains discounts of 20 percent (!) on dark bread in exchange for their promise to promote its sale.
Therefore, if price controls on dark bread were lifted, it is reasonable to assume that the price would actually drop. But one thing is certain: Its quality would improve, and the disgraceful way it is handled would end. Today, because bread is a price-controlled product, the bakeries allow themselves not to wrap it, and even throw it in filthy open cartons at store entrances where it is at the mercy of every passerby. All that would stop if the bakeries began to compete for the consumer's pocketbook.
However, there is one problem with this recommendation: What would Yishai do? How could he give up his populist horse? How then would we know what he does in the Industry, Trade and Labor Ministry?