At the start of August, a team of economists at the Finance Ministry finished working on a comprehensive report.
Back then, the public debate on Israel's economic and social future was escalating to new heights, the result of several processes. The first began in October 2010, when Prime Minister Benjamin Netanyahu declared the establishment of a committee to improve the Israeli economy's competitiveness, which became popularly known as the "economic concentration committee."
Then on July 14, the first tents began popping up on Rothschild Boulevard: The grassroots protest that would make headlines around the world had begun. About two weeks later, on Saturday night July 30, the protest movement led the biggest demonstration that Israel had ever seen.
On August 10, Netanyahu set up another committee, headed by economic adviser Manuel Trajtenberg. The prime minister also noticed that his economic concentration committee had fallen apart; people had left or resigned. He began taking steps to prevent its utter dissolution.
All these processes put economic concentration smack in the middle of the public discourse and created a yawning need for reliable data, numbers the government, the Finance Ministry, the economic concentration committee and the Trajtenberg committee could use to shape recommendations.
Such information was crucial to the public interest. It was needed to prove whether a problem really exists, what its dimensions are and whether it has weakened or worsened over the years. Such information would also put the lie to disinformation and misunderstandings.
And exactly at this critical time, the economists at the Economics and Research Department of the Tax Authority, an arm of the Finance Ministry, finished a report based entirely on empirical data. The report's title: "Activity by the business groups in Israel: Situation report on the state of economic concentration."
The report contains a wealth of statistics, grouped into dozens of tables and charts. It features analyses and a bibliography of the studies that provided background and supplied a basis for comparison.
The data on which the report is based is not only comprehensive, it's the exclusive property of the Finance Ministry, specifically the Tax Authority. It's the database of the annual tax reports filed by all of Israel's companies, private and public. It contains information not only about the companies, but about the wages they pay their employees and managers. There is no better, broader and more up-to-date set of data than this.
The conclusions of the treasury economists are quite definitive. First and foremost, the authors conclude that not only does economic concentration plague Israel, it grew worse in the period they studied, 2002 to 2008.
They also conclude that economic concentration constitutes a "systemic risk" to the economy: The owners of the pyramidal holding companies manage to channel more and more of the profits made by the group companies to themselves, the "concentration groups" do not create jobs, and the wages they pay their workers are lower than at companies outside the great business pyramids.
They also found that the wage gap between executives and rank-and-file workers stayed the same at companies outside the big conglomerates. In them the gap widened.
A month has passed since the document was finished, but it remained in the hands of a few Finance Ministry people. It did not reach the economic concentration committee. It wasn't sent to the Trajtenberg committee and certainly wasn't published in the public domain. It isn't clear if the prime minister got a copy. TheMarker was first, on Wednesday, to reveal its content.
The data in the tables and charts, together with the analysis by the economists of the Economics and Research Department of the Tax Authority, is economic and social dynamite.
The report significantly strengthens the opinion that economic concentration is afflicting Israel and is causing significant economic damage. It also completely contradicts a report by economist Yaakov Sheinin published in May. Sheinin's report, commissioned by Nochi Dankner's IDB group, the biggest holding company in the land, concluded that economic concentration in Israel is not exceptional.
The treasury report clearly links economic concentration to claims about inequality of income distribution. It states that economic concentration isn't just a main cause of this inequality, it worsens it. The report also underscores the urgent need to find mechanisms that diminish economic concentration for good.
The top people at the Finance Ministry owe an explanation for sitting on the report. Also, if the economic concentration committee and Trajtenberg committee didn't receive access to it before, or at least to its underlying data, they may have to stop before releasing their recommendations and do more homework. And reopen their doors to allow the public to have its say again.