First They Protested, Then They Paid

Welcome to an upside down world. Israelis who demonstrated and protested end up having to pay the price.

Anyone who has been to the supermarket in the past few days has seen that food prices have gone up. When the media did comparative studies, they found that the Rosh Hashanah meal this month will cost us a great deal more than last year.

Part of this can be attributed to the increased prices of raw materials, electricity, water, gasoline and taxes. But part of it stems from the weakening of the social protest movement. A year ago, the protesters threatened to boycott the big food manufacturers, including Tnuva and Strauss, as well as supermarket chains from Super-Sol to Co-Op. This year there is no protest movement and there are no demonstrations, so the manufacturers and marketers are allowing themselves to raise prices. The failure of the social protest movement on the issue of high retail prices is merely one item within a much broader failure, which was also registered on the issues of housing, education and taxes.

But let's begin with the prices. In June 2011, the protests against the price of cottage cheese began, bringing to the fore of public consciousness the fact that prices of food in Israel are higher than they are in Europe and the United States. The people who were involved in the protest believed that it was possible to bring down the prices through public pressure. But that works only for a short while. They did not understand that the high prices of food were the result of high custom rates, trade fees and obstructions to imports such as those posed by the Standards Institute, which prevent competition and make it possible to raise prices.

The Trajtenberg committee, which understood the issue inside out, recommended that customs be abolished and the other obstructions removed. But then the agricultural lobby went into action, and the food manufacturers and workers committees used their connections at the top and put pressure on the Finance Ministry not to remove the protectionist measures. Recently Finance Minister Yuval Steinitz announced that customs were being reduced, but in a symbolic way and over many years, so that the prices will not come down soon. The customs were not reduced at all on products like canned tuna and oil, and on dairy products, too, almost nothing was done.

The dairy economy has remained an economy that is planned from above, in Soviet fashion, with production quotas and a "target price." The high customs on milk and dairy products have not been brought down, there are no imports, and so we will continue to pay much more than in Europe and the United States for milk, cheese and yogurt.

Following the cottage cheese protest, the housing protest was born on Rothschild Boulevard in Tel Aviv. In their innocence, the protesters believed they would get "affordable housing" from the state. In other words, that the state would subsidize the prices of land and development for them so they would be able to buy cheap apartments in Tel Aviv. They didn't understand that their pressure would lead to only one thing - that the construction of subsidized apartments for the ultra-Orthodox would be accelerated, and that if the state were to build affordable housing, it would go to the very poorest classes and not to the middle class that was demonstrating.

And indeed, the ones who are now enjoying the subsidized housing are the ultra-Orthodox. Instead of giving preference to applicants who checked off the box "going to work," Housing and Construction Minister Ariel Atias instead gave the nod to those who filled high numbers in the box "number of years married" - and it is clear which population is married longest.

In addition, when a new town is being built in Harish, that minister uses various means to ensure that the subsidized apartments will go to the ultra-Orthodox. After all, these are the people who vote for him.

The protest leaders also missed an opportunity on free education for three- and four-year-olds. They did not understand that the moment there is free education, the ones who will get most benefit from it will be the ultra-Orthodox, the Bedouin and the Arab Muslims. While those who demonstrated on Rothschild Boulevard have two or three children, the ultra-Orthodox and the Bedouin have eight, nine or ten, so they will benefit more than anyone else from free education for young children.

And herein lies the sting: Who pays for the subsidized housing construction for the ultra-Orthodox and the free education for the young? After all, most of the ultra-Orthodox don't work, and the salaries reported by the Bedouin and the Arabs are so low that they pay almost no income tax. Since the economy is not a free lunch, there was no choice but to raise the taxes paid by the middle class - that is to say, the people who protested and who work hard. And indeed it is only recently that income tax, value-added tax, corporate tax, taxes on the stock market and National Insurance Institute payments were raised.

Welcome to an upside down world. Those who demonstrated and protested end up having to pay the price.