Israel's Economic Arrangements Law Is the Worst Legislation There Could Be

Everything possible must be done to prevent the supplementary legislation to the State Budget Law from being passed in the Knesset.

Nehemia Shtrasler
Nehemia Shtrasler
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Shelly Yacimovich during the Labor primary election, January 13, 2015.
Shelly Yacimovich during the Labor primary election, January 13, 2015.Credit: Tomer Appelbaum
Nehemia Shtrasler
Nehemia Shtrasler

The Economic Arrangements Law, the supplementary legislation to the State Budget Law, is the worst legislation there could be. Everything possible must be done to prevent it being passed in the Knesset.

Its a law that caused us irreversible damage in 1985, when it halted raging hyperinflation and stopped workers wages from eroding further. In 1991 it added salt to the wound when it opened the economy to competition from Southeast Asia and sharply lowered the prices of textiles and electronics. Instead of a shirt costing 200 shekels, it cost 50. Instead of a television costing 4,000 shekels, it cost 1,200. That was really a disaster. For the merchants.

In 1997 it facilitated the reform in compulsory auto insurance, which cut the cost in half. To this day, the insurance companies despise it. Over the years, the bill helped bring about a series of reforms in the communications field, under which more cellular providers entered the market, people could transfer their numbers from company to company, and the price of cell phone calls and web browsing dropped sharply. Without the bill, we would be sitting today with the same big, black government-issued rotary telephone, trying to call the Internet, and the Internet wouldnt answer. And those are just a few examples.

Opposition to this supplementary budget legislation has gone on for years. It always comes from MKs who see everything backwards, for whom white is black and bad is good. One of the most radical is Shelly Yacimovich, who expresses herself bitingly against everything, including this years economic arrangements bill. This law hasnt a single reform that will spur growth or give citizens hope, she said.

Thats a lot of ignorance in one sentence. Lets take six examples of this years proposed reforms:

The poultry reform: It will lower the price of chicken after it disbands the growers cartel, which reduced production and raised prices 25 percent in the past three years.

The cornflakes reform: It will remove trade barriers for dry food imports – things like cornflakes, pasta, sugar, coffee, Coca-Cola, snacks, cookies, crackers, rice and pulses – and thus lower prices.

The goats milk reform: It will reduce the prices of goat and sheep cheeses, which are alarmingly high here.

Banking competition: It will introduce new players and thus reduce the interest that households pay.

Health insurance reform: It will reduce expensive duplicate coverage for the residents benefit.

Gas reform: It will provide industrial plants with fast and efficient gas connections to cheaper natural gas.

All these reforms, without exception, will introduce competition to the economy, reduce prices, increase growth and boost employment – exactly the reverse of what Yacimovich is saying.

The bills opponents claim that it is an undemocratic law, but the arrangements bill actually goes through quite a Via Dolorosa until it reaches the Knesset. It is screened by the finance minister and the prime minister. Then the attorney general peels off anything thats not directly related to the budget. Then it goes to the ministers, who argue with the finance minister about any reform relating to their ministries. Only then does it go to the Knesset, where it goes through the full legislative process.

The MKs have all the time in the world to study and argue about the proposed reforms. They have two full months. Let them work day and night, including Fridays and holiday eves. Why not? Now its economics time.

Much of the opposition to the law is rooted in the work of lobbyists, who get lots of money to represent interested parties, tycoons, industrialists, farmers, guilds and the big unions, all of whom oppose the arrangements bill because it cuts into their barrels of lard.

And who ends up serving these special interests? The ones who call themselves social-oriented MKs.

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