Are Israel's Left-wing Polticians the Newest Adherents of the Free Market?

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Nitzan Horowitz at Sheba Medical Center in October.

It was interesting to hear over the weekend the health minister praising Pfizer for developing its new COVID-19 drug, which appears to significantly lower the odds of older people developing serious illness.

Health Minister Nitzan Horowitz’s comments are interesting because he upholds a socialist viewpoint assuming the state knows what to do and how to act better than any private company. Horowitz has always been against the private market, and especially against companies with hefty profits, but he’s run into a problem here. He knows that private companies took a huge risk and succeeded in developing a vaccine that has protected humanity. Nor is there any argument that without the profit motive, Pfizer and other companies would not have embarked on this pursuit, and the world would be stuck much deeper in the pandemic.

Meanwhile, Israel poured hundreds of millions of shekels into the Biological Institute in Nes Tziona, which is a government institution, and the institute’s vaccine development project was a total failure, sending all that money down the drain. So, maybe the private sector is preferable after all?

This is in addition to the surprising support given by Horowtiz and Transportation Minister Merav Michaeli to the package of reforms that was passed by the Knesset at the end of the week, reforms that bolster the private sector, boost competition and ease imports. This includes the reform that will free the importation of thousands of products without the (governmental) Israel Standards Institute throwing a wrench into the works.

Every product that has proper European approval will be able to be brought into Israel, which will lead to lower prices on thousands of products, from cosmetics to electronics. Then there is the reform for the banking system, which will increase competition for customers and thus bring down interest rates and fees.

Another example: Eliminating the Chief Rabbinate’s kashrut monopoly, which will generate competition and bring down the cost of kosher food in restaurants and hotels. And another reform: simplification of the process for obtaining a business license, which will make it easier for new businesses to open. Also noteworthy is the raising of the retirement age for women, which Michaeli once fiercely opposed.

While these are all very important reforms, the budget did not solve all our problems. There are critical issues that were left out. For example, work relations in the public sector was not addressed at all – neither workers’ committees’ unlimited ability to declare strikes, nor the absolute tenure that obviates the possibility of sound management. Public sector wages were not cut either. Private sector workers alone were left to bear the burden during the pandemic. They alone had to endure wage cutbacks, bankruptcies and layoffs.

Another thing to criticize is Finance Minister Avigdor Lieberman having agreed to the major addition to Israel Defense Forces pensions, which were already high and paid out at a very young age. The agriculture reform was also taken out of the Economic Arrangements Bill, meaning the egg cartel will continue collecting inflated prices from us, and we’ll keep overpaying for fruits and vegetables too.

Several other important clauses were removed from the Arrangements Bill, such as a tax on private medical services and mandatory reporting by apartment landlords of rental income. The new regulatory authority was rendered toothless and the promise to establish a metropolitan transit authority in Gush Dan was not kept. The changes in arnona (municipal taxes) were also removed from the Arrangements Bill because mayors objected, and they wield a lot of power in party central committees.

Also worth noting is that, despite all of Lieberman’s talk about the ultra-Orthodox party chiefs keeping core curriculum studies out of schools in order to maintain their grip on their public, he did not cut anything from the large budget that goes to Haredi education.

Lieberman promises that the agriculture reform will be instituted in early 2022, and that the rest of the clauses will be inserted in the 2023 budget, but we all know that whatever a finance minister does not accomplish in his first year on the job, he won’t ever be able to do.  

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