It Is Time for a Corporate Time-out in Israel

We need to dismantle the giant conglomerates altogether and go back to small and medium-sized companies that will make diversity possible, that will make human dignity and freedom possible, and that will make competition possible.

A new protest is starting to gain momentum in Israel, this time over the price of a popular chocolate bar. Pesek Zman, which means “Time-out,” is sold in Israel for twice the price it goes for in the Unites States and Britain. It is manufactured by Strauss, a corporation that has a monopoly in Israel in the chocolate and coffee markets and prevents competitors from importing products similar to what it makes.

Only 16.5 percent of Israelis buy the chocolate bar at independent grocery stores, which are gradually being closed by the heavy hands of the chain supermarkets. Another 46 percent buy it at the supermarkets, the biggest of which is Supersol, where a demonstration was held in the summer to protest its high prices. Supersol is owned by Nochi Dankner, who owns a plethora of other companies.

On the board of one of these sits the sister of the new CEO of Bank Leumi, which lent Dankner a huge sum of money. Confused? But of course.

A graph published in The New York Times in September that accompanied an opinion piece by former U.S. Labor Secretary Robert B. Reich, a professor at the University of California, Berkeley, revealed an astounding trend: Between 1947 and 1979, there was a tremendous rise in worker productivity in the United States ‏(119 percent‏) and a parallel hike in average hourly wages ‏(72 percent‏). From 1980 to 2009, productivity continued to increase ‏(by 80 percent‏), but with hardly any increase in average hourly wages ‏(7 percent‏).

Where did the money from this excellent productivity go, if not to the workers? To the 5 percent of Americans with the highest incomes, who now account for 37 percent of all consumer purchases, according to recent research from Moody’s Analytics that Reich cited.

This top 5 percent ‏(or at least half of them − the men‏) are, in effect, everyone else’s proprietors. In the two decades since the downward trend began, the conglomerates were established − those economic creatures that are responsible for “greater efficiency” and “consolidation” and that buy up the small businesses and the people who used to be their owners, and pay them salaries that get gradually smaller and smaller. These conglomerates transfer their production to countries where they can pay the workers even less than they pay them at home.

They turn into monsters the size of a country; they put inordinate pressure on politicians; they pay less and less in taxes; and they accumulate more and more businesses and properties and crush the workers. Up to a certain point, the expansion and efficiency may have worked in our favor: lower prices, a bigger selection, a wonderful “shopping experience” and “convenience.”

But now the conglomerates are primarily preoccupied with trying to manipulate us in all kinds of ways that will make us buy far too much, and certainly not much more cheaply − and above all, to be dependent on them, or on their fellow conglomerates, and to earn less and less. The economic challenge is the least of our problems. The more substantive one is that the structure of the giant conglomerates has led to a situation in which fewer and fewer of us are independent. The vast majority of us work for someone else, under a range of working conditions.

It’s essentially slavery. We don’t have the possibility of working for ourselves because every moment someone is threatening to buy us up and we don’t have completely free choice. Because when there are so few proprietors, there is no real democracy. What does it matter who we vote for if everything gets “fixed” afterward in any case? When there are so few proprietors, there is only one standard in culture, television and advertising; and we are all required to toe the line.

What is needed is to dismantle the giant conglomerates altogether and go back to small and medium-sized companies that will make diversity possible, that will make human dignity and freedom possible, and that will make competition possible. We need to get rid of the concept that bigger is always better, and move away from the myth of growth to “prosperity without growth,” as British economist Tim Jackson postulates in his book of that name.

When it transpires that the connections between the new ‏(and excellent, I’m sure‏) Bank Leumi CEO and these proprietors make it difficult for her to act without a conflict of interest, then it will be a good opportunity to see that big banks give big money ‏(ours!‏) to men with big eyes who want to be big proprietors. Smaller banks have fewer possibilities of “leveraging” − that is, risking − our money.

If in the past it seemed that we were less likely to lose our money in big firms, today it is clear that large companies must decentralize if they are to lower the risk faced by consumers. Bank Leumi is presently owned by the state, by us. This provides an excellent chance to start this process, by making it possible for the new CEO, Rakefet Russak-Aminoach, to make history and divide Leumi into two or three medium-size banks which will work for the citizens, for a change, as we start the path toward becoming our own proprietors.