It's possible to fool some of the people all of the time or all of the people some of the time, but it's not possible to fool all of the people all of the time, as one of America's greatest presidents, Abraham Lincoln, observed some 150 years ago. But it seems that Israel currently has some politicians who think otherwise. They are convinced that they can fool all the people all the time and profit by doing so.
One of them is Shelly Yachimovich, who was recently elected chairwoman of the Labor Party. Yachimovich is convinced that the public has no memory and no understanding, and that therefore she can fool it big-time.
Four months ago, when the cottage cheese protest was in its infancy, and when it was far from clear that it would succeed, Yachimovich opposed the protest. "I'm less enthusiastic about the cottage cheese protest," she wrote on her blog, and then she explained why: Lowering the price of cottage cheese would hurt Tnuva workers, because the moment the price went down, Tnuva's management would cut the workers' salaries.
Look where a lack of understanding with regard to economic theory can take you: Had her view prevailed, every worker in Israel - some 3 million people, including many who earn minimum wage - would have been compelled to continue paying NIS 7.30 for a container of cottage cheese (instead of the NIS 5 to NIS 6 they pay today ), and the dairy monopoly's owner (Apax ) would have continued to reap enormous profits. It is possible that Tnuva workers (who are hardly oppressed as far as salaries go ) won't get a raise this year because of the reduction in dairy product prices, but it's clear that the ones who really will be hurt by the price cuts are the Apax investment fund, which will earn lower dividends, and Tnuva's senior executives, who won't receive fat bonuses.
If this is so, then who is Yachimovich really protecting? The tycoons and the senior executives?
Now, after having been embarrassed, she has switched positions and tried to correct herself. "Common sense won; it's possible to lower prices for the benefit of the consumer," she says, in the hopes that the public will forget her earlier remarks. But there's another explanation for her turnabout: Four months ago, Yachimovich was seeking votes from the kibbutzim and Tnuva workers in Labor's leadership primary. Now, the election is over.
Her erroneous stance on the cottage cheese issue is just one example. Yachimovich also vehemently opposes one of the most important recommendations in the Trajtenberg Report, which the cabinet adopted this week: opening the economy to competition from imports by lowering customs duties on industrial goods, electronics and food products, with the goal of lowering prices. This is an important step, and we must hope the Knesset passes it. But Yachimovich says that lowering tariffs "will destroy industry and agriculture."
She evidently isn't aware that we went through a similar process once before, in the 1990s. At that time, customs duties were slashed, and Israeli industry was exposed to competition from imports. The Manufacturers Association opposed the move, using the shopworn argument that it would lead to factory closures and unemployment. But that didn't happen. Instead, companies became more efficient, employment increased, the economy developed, management quality improved and Israeli industry went up a level in terms of technology.
After imports were liberalized, Israeli industry switched to making products with a higher added value, which in turn enabled it to raise employees' salaries. And the public as a whole also benefited, because the prices of products that were exposed to competition from imports - clothing, shoes, electronics, toys, furniture, housewares, dishes, bed linens, bathroom supplies and more - dropped by 20 to 40 percent over the last decade, while the amount the public bought rose by dozens of percent, causing both the standard of living and employment to rise. Even Manufacturers Association President Shraga Brosh recently admitted that liberalizing imports was the right move, and that it propelled industry forward.
But Yachimovich objects to lowering even the enormous customs duties imposed on fresh and processed foods. She refuses to understand that the entire public is paying for the fact that staple products like meat, chicken, fish, olive oil, tomato paste, canned tuna, fresh garlic, butter, honey and other products cost twice as much here as they do in Europe or the United States. Why should we pay a tariff of 190 percent on imported meat, or 255 percent on imported honey?
If Yachimovich's demagoguery is victorious in the Knesset, we will all discover that Lincoln was wrong: It is possible to fool all of the people all of the time.
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