Free Competition Is a Must for Israel's Economy

The 'team of experts' is missing the point completely. We do not have a market economy in the real sense of the word. In order for there to be a market economy, one basic condition is necessary - free competition.

The protest movement is an authentic protest movement of the middle class which carries the entire economy on its back. It works hard, pays high taxes and also serves in the army. Not only does it not get any bonuses from the government, but everyone else makes a profit off it. The middle class is the beast of burden.

The problem is that the leaders of the protest movement are way off the mark their solution. The "team of experts" that was enlisted is also missing the point completely. They are good at empty slogans but their solutions are the exact opposite of what is needed. They do not understand that we do not have a market economy in the real sense of the word. Because in order for there to be a market economy, one basic condition is necessary - free competition. But free competition does not exist in large and important sectors of the Israeli economy.

A considerable part of the economy is composed of monopolies and cartels.There are rich businessmen who have giant conglomerates that harm competition. There are large workers' committees that enjoy benefits. There are tremendous import taxes that prevent imports. And there are large groups in the population (the ultra-Orthodox and settlers ) that take advantage of the state budget. All of this leads to an original economic system - an economy of extortionists.

Take for example the milk market. It is clear to all that, in order to bring down the price of milk products, the milk cartel must be dismantled and the huge custom fees (212 percent on powdered milk and 140 percent on butter ) must be lowered. That will enable cheaper imports to compete with the giants, Tnuva and Strauss.

Prime Minister Benjamin Netanyahu made a festive promise to yours truly that he would carry out the revolution because he is stronger than the agricultural lobby. So he promised. He has not been able to push through even the slightest reform. If that is so, how is it possible to speak about free competition and a market economy?

The same situation exists with regard to other food products. There is a customs fee of 190 percent on imported meat, of 230 percent on the import of potatoes, of 170 percent on the import of cucumbers, and tens of percentage points on the import of olive oil, sardines, canned olives, tomato paste, canned corn, roasted peanuts and so on and so forth. So why should we be surprised that the price of food is sky high? After all, a market economy is categorically opposed to any kind of customs fees. It is in favor of free imports.

Another example of a monopoly that mocks us is the country's ports. On Rothschild Boulevard they speak about the high cost of living, but the workers' committees at the Haifa and Ashdod ports could not care less about that. This week they declared sanctions and 20 ships are currently waiting outside the ports,unable to reach the wharf. Every day of delay costs the ship $60,000 and the result is a rise in expenses which the importers pass on to the price of the products. In a true market economy, the ports would already have been privatized and would be in competition with one another.

And then there is the Israel Electric Corporation with 2,000 unnecessary workers and a humongous debt of NIS 60 billion, which sooner or later we shall have to pay from our taxes. And let us not forget Israel Military Industries. For decades it has been receiving billions from the country's coffers, owing to a horrific lack of efficiency and surplus of workers and salaries. Then there is the government export company, Agrexco, which collapsed recently because of poor management, and the Israel Postal Authority that loses money chronically and has to be revived by the government.

There is also the monopoly over the land held by the Israel Land Administration that has led to the spiraling cost of housing because of that body's failure to market land in sufficient quantities. All these government monopolies are the complete opposite of a market economy.

The problem is that the private sector also suffers from that same illness. There are only two or three players in central branches, and that is really not sufficient. There are two big banks, three cellular companies, two gasoline companies, Yes and HOT, Supersol and Co-Op - how did they allow Supersol to buy Clubmarket? - and gigantic conglomerates that take unfair advantage of their power. In a country that wants a market economy, they should have been disbanded a long time ago.

However, since there is not much of a chance that Manuel Trajtenberg (who heads the committee of experts ) and Netanyahu will carry out the required revolution and march us on the road to a true market economy with social sensitivity, the economy of extortionists will continue to win the day. And the middle class will continue to bear the burden until it collapses.