Some time in the wee hours of Tuesday morning, the Knesset is expected to pass the 2013-14 state budget. One of the budget’s goals was to reduce the cost of living for Israelis. But it’s difficult to lower prices, and impossible to raise living standards, when the Knesset Economic Affairs Committee is headed by Labor MK Avishay Braverman.
One reason for the social protests that erupted in 2011 was the sky-high prices of every aspect of Israeli life: housing, food and all other consumer goods. Every politician swore to do everything possible to reduce these excessive cost to help lower- and middle-class Israelis make it through the month. Every politician? Not exactly. Not Braverman.
A few days ago, at the very last second, he canceled a final discussion of the proposed reform of the Standards Institute of Israel. As a result, the reform didn’t make it into the Economic Arrangements Bill accompanying the budget, and as a result of that the Knesset will not vote on it. That means we will continue to overpay on many goods thanks to Braverman, the “champion of social justice.”
The issue has been on the agenda ever since the Trajtenberg Committee on socioeconomic reform concluded that the institute “continues to constitute a barrier that undermines consumers’ welfare” and recommended far-reaching changes in it. In the wake of this recommendation, the cabinet approved the adoption of international standards, meaning products that meet European or U.S. standards could enter Israel with no inspections and no delays. What’s good enough for Germany is good enough for us. The cabinet also decided that while any product with a potentially hazardous component should be inspected, this can now be done by recognized laboratories overseas, not only by the monopoly known as the Standards Institute of Israel.
This is a reform of unparalleled importance, because the expensive obstacle course SII forces every importer to negotiate is one of the key reasons for Israel’s high prices. The institute behaves as it does because it views itself as a representative of Israeli industry whose aim is to impede, if not preclude, foreign competition. The institute recognizes that as soon as it faces competition itself, it will have to become more efficient and will no longer have any need for an inflated staff of 700 (!).
Braverman very much wanted his committee to discuss this issue. So he promised Finance Minister Yair Lapid that he would expedite the legislation even faster than a committee controlled by the coalition would, because he believes in the reform and is a serious economist who understands its importance.
Braverman does indeed have an impressive record in his previous jobs at the World Bank and as president of Ben-Gurion University. But can he be considered a serious economist today? In a committee hearing on the matter, he said, “I’m not convinced the proposed reform will lower prices.” That’s not something any economist, even a nonserious one, would say. Any student who gave such an answer in a macroeconomics course would flunk out, never mind a professor, such as Braverman. But he would ace his “Selected problems in cynical politics” course.
And all because of the choice Braverman made when faced with either caving to pressure from SII staffers or doing the right thing. On one side, several hundred well-organized employees with the full backing of the Histadrut labor federation, Israel’s main trade-union umbrella organization which views its primary job as protecting the large monopolies that harm the general public (such as Israel Electric Corporation and the seaports). On the other, eight million Israelis who are groaning under the burden of high prices but are not organized. They aren’t a pressure group. They don’t understand what’s happening. They won’t demonstrate against Braverman, and neither will they join the Labor Party in order to vote him out in the primary. And therefore, the decision was simple: Personal interest comes first, and to hell with Israel.
When prices continue to climb, and the demonstrations against the cost of living are renewed, I suggest that social activists Daphni Leef and Itzik Elrov direct their next protest against the proper target: Braverman.