The Trajtenberg committee, appointed by Prime Minister Benjamin Netanyahu in response to the summer 2011 social protest movement, was one of the most important and influential committees of recent decades.
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Headed by economics Prof. Manuel Trajtenberg, it was appointed in August 2011 and delivered its recommendations on September 26 of that year. Despite its importance, the government has been trying for months to keep the minutes of the committee's closed sessions from public view, sending them to the State Archives with the provision that they be released in 15 years.
Sunday, after leaks of the minutes to the press, the planning and budgeting committee of the Council for Higher Education, a committee that Trajtenberg also heads, released some of the confidential minutes. The Prime Minister's Office was asked to release the rest, but no response has yet been forthcoming.
The Movement for Freedom of Information filed suit demanding that the minutes be released to the public, claiming there is no justification in hiding their contents. In response last week, the Prime Minister's Office hinted that the minutes would be released.
The minutes reveal that the committee's members agreed that the high cost of living was due in great part to the weakness of government regulators. They have insufficient information, and stand helpless against an army of lobbyists, lawyers and consultants to the tycoons, it was said during the sessions.
"Two key features that greatly affect the cost of living, as we see it, are government regulation and the lack of competition, or faulty competition under the regulatory guidelines. These two factors work in synergy, affecting one another," said Shlomi Frizet, chief economist at the Antitrust Authority, at one of the committee's discussions on the cost of living.
Weak regulation, poor competition at fault
Trajtenberg agreed that the government had failed as a regulator. Frizet argued that the problem lay in the flawed training of regulators and in their lack of sufficient and specific knowledge, as well as in the lack of adequate staff required to fulfill their role. He added that regulators had to face powerful market players, mostly the large corporations, where the problems originated. These corporations are well-connected and have the best accountants, lawyers, economists and lobbyists at their disposal, it was said by committee members.
Trajtenberg's attempts to spare the economists from blame was resisted by Frizet. "I don't know if they are worse than the lawyers, but they too are in the thick of it, Manuel," he argued. "When these corporations come up against the regulators, they know precisely what they want and why they want it. They argue their case powerfully and put things in a light that is best suited to their interests, leaving the regulators in a professionally inferior position," he added. "I'm not blaming anyone, only trying to imagine the scenario. There is lots of money at stake, with consumer interests in the mix. The way the chips fall in the end is not always in keeping with what we had in mind in terms of regulatory intervention in the economy".
The treasury's accountant general, Michal Abadi-Boiangiu, tried to defend some of the regulators, saying there is quite a disparity in their professional qualifications and way of thinking. But Frizet proceeded to give examples of weak regulation, selecting the Nesher cement company as a leading case in point.
"As a government-controlled monopoly operating under guidelines regulating its profitability, Nesher is getting a 12% return on its active capital. This seems high in relation to risk levels, in an area with a single manufacturer with stable and predictable demand."
He cited a further example, in which the Hadera Paper Corporation monopoly asked for protection by banning the import of corrugated cardboard from Spain and Germany. It received a sweeping ban on imports from all of the countries in the European Union. "I don't think we should use the protection instrument so forcefully, but I won't say more at this stage," he stated.
Even though the Trajtenberg report was ratified in its entirety in October 2011, some sections require specific approval. To date, many recommendations have not yet been implemented. According to Improvement of Government Services Minister Michael Eitan and a website that tracks the implementation of the report's recommendations, only 26 of the committee's 139 recommendations have been implemented. A further 22 were rejected and 88 are in limbo. One is in the process of being carried out, and two are in dispute by the relevant agencies.
Panel members were in agreement that the public is ignorant when it comes to economic issues. "Public attention is focused on the budget deficit, but our explanations are not understood," said Shiri Perciger-Cohen, a committee member responsible for social networking. "The protesters are intelligent, but don't understand issues like the the Economic Arrangements Bill - they are ideological and opinionated."
Trajtenberg commented that these activists were fighting a guerrilla war in the trenches, and that he admired their determination and persistence. However, he was shocked at the level of ignorance displayed by the public, even on basic economics. In several discussions he suggested telling the public that while some issues were being dealt with, not all of them could be addressed. "We have to be careful not to raise expectations."
The minutes show a surprising degree of interest by committee members in events on the ground, including conflicts among the protesters themselves. Shahar Cohen, another committee member in charge of negotiating with the protesters, said that efforts should be made to counter the demonization of the committee. The protesters, he claimed, were serious people intent on learning about the economic issues involved. Frizet, however, stated that his visit to the tents revealed a total lack of trust in the committee. Only with great effort was he able to start a dialogue with protesters, but their basic feeling was that the state had abandoned them.
Other committee members thought it unproductive to talk to the protesters, saying the committee should focus its efforts on communicating through the media.