Bar-On's Bread Test

If we had a government that governed, instead of constantly worrying about public opinion, the bread crisis would never have happened. But when Industry, Trade and Employment Minister Eli Yishai wants to position himself as the great protector of the poor, and Prime Minister Ehud Olmert wants popularity at any price, we reach an embarrassing situation where for more than two weeks the bakeries are not producing price-controlled bread. And it is the poor of all people who suffer.

This popularity drive must be stopped today by Finance Minister Roni Bar-On. If he succumbs to the pressure brought by Yishai and PMO Director-General Ra'anan Dinur, we will all know we have a weak finance minister. The lobbyists and assorted other crows will line up at Bar-On's door with skyrocketing demands.

What appeared to be forming last night ahead of today's cabinet meeting is a source of great concern.

A proposal is in the works by which the price of bread will rise and a compensation system will be created for the weaker sector. Every time the price of various basic products goes up, the needy will receive compensation through their National Insurance Institute (NII) allowances.

This is a bad solution. It is a return of subsidies by the back door. Who will create the index? Who will supervise it? What products will be included? And if the prices of these products go down, will the benefits be reduced?

Until 17 years ago, the prices of milk, cheese, oil, eggs and chicken were also closely controlled. Imagine what a media tumult there would be if those products were still being controlled - with heart-rending presentations by Yishai weekly occurences.

But now, the price of chicken and eggs rises or falls without making headlines. And the basket of products that makes up the consumer price index has remained practically unchanged over recent years.

Bread is not only an economic issue; it is an emotional one. But still, what are we talking about - a rise of 30 to 40 agorot a loaf?

Mark Moshevitz, the owner of Elite, once told me that the best time for the company was during price controls "because you only had to persuade one official in the Industry Ministry, and that was easy. It's much harder to persuade the market."

So the moment bread is no longer price-controlled, bakeries will have to compete for every customer, because there are too many bakeries. The fact is that there are bakeries giving a 20 percent discount to supermarket chains on price-controlled bread to promote it.

Therefore, the finance minister has to stick to the principle of removing price controls from bread, immediately. If that decision also involves a one-time compensation for those on NII allowances, the move will be complete from a social-action perspective as well, and the issue will forever be off the public agenda.