Take a look at what happened to the big advocate of competition, the free market and the need to reduce government intervention in the market. He has suddenly changed his spots and become an enthusiastic supporter of a Bolshevik law that intervenes significantly in the market, prevents competition and sets profit margins, all in the style that once prevailed in Eastern Europe until the collapse of Communism.
I'm talking about Prime Minister Benjamin Netanyahu, who all of a sudden decided to abandon his free-market ideology and support the Authors Law, because of a cynical political calculation. Netanyahu knows that as soon as he put his weight behind the demands of well-known authors, he would win plaudits and be subject to far less criticism from the left. He already has the right wing in his pocket, so this is his way of becoming the perfect etrog (citron) - of giving both sides of the political map cause to keep him safe from attack, to protect him like religious Jews guard the citron from harm on the Sukkot holiday, because he is promoting their interests.
This week Netanyahu said that "the People of the Book must be encouraged to read, both for pleasure and for knowledge." The prime minister made this statement even though he knows this law will have precisely the opposite effect. As the new law pushes up book prices, the People of the Book will buy fewer books and read less - so there will also be less of the kind of pleasure and knowledge that comes from reading. The consumers who will be able to continue to purchase books at the artificially increased prices will belong to the upper class. As rich elites keep reading, low-income earners and young couples will be priced out of the bookstores - which is precisely what happened here a decade ago, before the price revolution in the book industry.
The government intervention mandated by the draconian law, which the coalition decided this week to support when it comes up for a vote in the Knesset, is surprising because the time for such intervention is when a given sector of the market suffers from a lack of competition, when monopolistic forces cause prices to rise. That's exactly what happens with banks, for example. In such a case, there is room to set a ceiling for common fees.
But the situation is reversed in the book industry, where there is stiff competition among the increasing number of publishing houses as well as between the two largest bookstore chains - Steimatzky and Tzomet Sfarim - and where book prices have been steadily decreasing over the past decade. In other words, in this case the government is intervening in an effort to raise prices, to harm the consumer, and to impose a writers and publishers tax. This is a strange precedent to set.
Former Antitrust Commissioner Ronit Kan had previously found, in a detailed report, that there was no reason to intervene in the book sector because it is competitive, growing and dynamic. The current commissioner, David Gilo, agrees. According to Gilo, in 2010 "positive competitive trends were found in the sector, with the consumer price on the decline and the total proceeds for publishers on the rise."
The law itself is full of absurdities stemming from the arrogance of those who believe they are smarter than the market forces and know precisely how much money each component of the production chain should be making. The law posits, for instance, that publishers should be the ones to set book prices and that the price cannot be reduced for a year-and-a-half from the date of publication.
That is insane. What happens if it turns out that a publisher was mistaken in predicting the level of demand and the book just doesn't sell? What if there's a financial crisis, if unemployment goes up, wages fall and the demand for books drops? Then too, the price cannot be lowered, and the publisher will lose money.
The arbitrary decision that bookstores will not be able to offer discounts or lower prices for the first year-and-a-half means that a cultural gap will develop between those in the top income brackets, who will pay full price for the books shortly after they come out, and the rest of the population, including those living outside the center of the country, who won't be doing so. Out there, they'll have to wait 18 months until the price goes down. And so it will be that the latest book will be the topic of conversation on Tel Aviv's Rothschild Boulevard, but not in Sderot. In other words, this is a discriminatory law that runs counter to social justice.
The law will also be a blow to Israeli culture, because young writers won't get a chance with publishers unable to offer discounts for their work. The culture will lose out on new voices, and the growth we have witnessed in the last few years - the significant increase in the number of Israeli novelists, poets and books - will wind down.
The publishers say that the two large bookstore chains are exploiting their power and suffocating them with excessive demands. It is worth looking into this. If true, it is something that needs to be dealt with, and that should be Gilo's task. But it's a long road between that and passing a Bolshevik-style law the likes of which we have never seen.
Netanyahu sees all the uproar surrounding the law and is laughing to himself. He is already being praised by writers and publishers. The cynical manuever has been a success.